If you export or import goods regularly, you’ve probably faced this moment: a shipment is delayed, damaged, or simply disappears somewhere between the factory floor and the buyer’s warehouse. When that happens, the question that matters most is simple — who pays for it?
For a surprising number of Indian exporters and importers, the honest answer is “we’re not sure.” Cargo insurance exists precisely to remove that uncertainty, yet it remains one of the most misunderstood parts of international shipping. This guide walks through what cargo insurance actually covers, how cover levels differ, and how to think about it for your next shipment.
Why cargo insurance isn’t optional, even when it feels optional
A common assumption is that once goods are handed to a freight forwarder or shipping line, they’re automatically insured. They’re not — at least not in the way most shippers expect. Ocean and air carriers operate under liability regimes (such as the Hague-Visby Rules for sea freight) that cap their liability per package or per kilogram, often at a fraction of the goods’ actual value. If a container is lost overboard or a consignment is damaged in a warehouse fire, the carrier’s liability payout can be a small percentage of what the cargo was actually worth.
Cargo insurance is a separate commercial policy, arranged by the shipper (or on the shipper’s behalf), that covers the real value of the goods — not the carrier’s limited liability.
What cargo insurance actually protects against
A standard marine cargo policy typically covers:
Physical loss or damage to goods while in transit — by sea, air, or road — including events like vessel sinking, grounding, collision, fire, and rough handling. Many policies also cover general average contribution (a shared-cost mechanism in maritime law where all cargo owners on a vessel contribute toward losses incurred to save the ship and cargo in an emergency, even if their own goods weren’t damaged). Broader policies extend to total loss, partial loss, and sometimes theft, pilferage, and non-delivery, depending on the clause selected.
The clause system: why “cargo insurance” isn’t one single product
This is the part most shippers never get a clear explanation of, and it’s the single biggest source of claim disputes. Cargo insurance is typically structured around the Institute Cargo Clauses (ICC), an internationally recognised framework with three main tiers:
ICC (A) — All-Risk Cover. The broadest tier. It covers loss or damage from any external cause, unless specifically excluded (such as inherent vice, wear and tear, or war and strikes, which usually need separate add-ons). This is generally the right choice for high-value or fragile cargo — electronics, pharmaceuticals, precision machinery.
ICC (B) — Named Perils, Mid-Tier. Covers a defined list of perils: fire, explosion, vessel capsizing, collision, earthquake, washing overboard, and water damage during loading/unloading, among others. It’s narrower than (A) but still reasonably comprehensive for many general cargo types.
ICC (C) — Named Perils, Narrowest. Covers only major casualty events — fire, explosion, vessel sinking or capsizing, collision. It typically excludes things like water damage from rough handling or inadequate stowage. It’s the cheapest tier, and also the one most likely to disappoint a shipper who assumed “insured” meant “covered for anything that could go wrong.”
The practical takeaway: before accepting a quote, ask specifically which ICC clause applies. “We’ll insure your cargo” means very different things under (A) versus (C), and the price difference is often smaller than shippers expect relative to the protection gained.
Per-shipment cover vs. open policies
If you ship occasionally, a single-shipment (or “specific”) policy — a one-off certificate covering one consignment — is usually the right fit. You declare the shipment details and value, pay a premium based on that value, and you’re covered for that voyage.
If you ship regularly, an open cover (or open policy) is usually more efficient. It’s an annual arrangement that automatically covers all qualifying shipments within agreed terms, so you’re not requesting a new certificate every time a container leaves the factory. This also reduces the risk of a shipment accidentally going out uninsured because someone forgot to request cover for it — a more common problem than it should be.
How claims actually work
The single biggest reason shippers hesitate to invest in proper cargo cover is uncertainty about the claims process. In practice, it follows a fairly standard sequence:
Notify the insurer (or your broker/forwarder) as soon as loss or damage is discovered — ideally within 24-48 hours, and always before accepting delivery without noting the damage on the carrier’s documentation. Preserve evidence: photograph the damage, keep the damaged packaging, and don’t dispose of anything until a surveyor has had the chance to inspect it. A surveyor is typically appointed to assess the extent and cause of the loss, particularly for higher-value claims. Once the survey report and supporting documents (invoice, packing list, bill of lading/airway bill, survey report) are submitted, the insurer processes settlement — timelines vary, but straightforward claims with complete documentation move considerably faster than ones missing paperwork.
The practical lesson: documentation discipline at the time of damage — not after — determines how smoothly a claim goes.
Who should prioritise this, specifically
While any exporter benefits from cargo cover, it matters most for industries where cargo value, fragility, or sensitivity is high: pharmaceuticals and healthcare products (temperature sensitivity and high per-unit value), gems and jewellery (extreme value density in small shipments), electronics and IT hardware (fragility and high replacement cost), and automotive components (precision parts where even minor transit damage can render a part unusable).
If your shipments fall into any of these categories and you’re currently shipping without specific cargo cover — relying only on the carrier’s limited liability — it’s worth a direct conversation about what’s actually at risk on your next consignment.
Where this fits with your freight forwarder
Most Indian freight forwarders don’t underwrite insurance themselves — they’re not licensed insurers. What a forwarder typically does is arrange cover through a tie-up with a licensed insurer or broker, folding the insurance request into the same process as booking the shipment, so you’re not managing two separate vendors for one consignment. That’s the model we follow for Marine Cargo Insurance at Infiniti Freight — we arrange tailored cover through our insurance partner network as part of handling your shipment, rather than leaving you to source it separately.
If you’d like to understand what cover would look like for your specific shipment profile, our Marine Insurance page walks through the options, or you can go straight to requesting a quote with cargo insurance included.