Freight Insurance Explained: Coverage Types and Claim Steps for China Shipments

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Why Insurance Matters (Carrier Limits Are Low)

Air (Montreal Convention): liability commonly around ~22 SDR/kg.

Ocean (Hague‑Visby/COGSA): 666.67 SDR/package or 2 SDR/kg (or $500/package under US COGSA).

Road (CMR): ~8.33 SDR/kg.
Conclusion: Insurance protects full value beyond carrier limits.

Coverage Types (What’s Actually Protected)

Institute Cargo Clauses (A)

“All‑risks” subject to standard exclusions; best for general cargo.

Institute Cargo Clauses (B/C)

Named‑perils; narrower than ICC(A); sometimes chosen for budget/risk profile.

War & Strikes

Add‑ons for war/civil unrest/strikes/riots where excluded by default.

Warehouse‑to‑Warehouse

Extends cover from seller’s to buyer’s premises within time limits.

Special Endorsements

Reefer, project cargo, DG—requires specific wording and compliant packing.

Valuation, Deductibles, and Exclusions

Common Insured Value

CIF + 10% (invoice + freight + insurance + uplift) or invoice + freight + duty/taxes + agreed uplift.

Deductibles

Applied per claim; lower deductibles mean higher premiums.

Key Exclusions

Inherent vice, ordinary leakage/wear, inadequate packing, delay without physical damage, willful misconduct, sanctions/illegality.

General Average (GA) Explained

If GA is declared, cargo interests contribute to losses/salvage.

Insurance typically issues GA guarantees and handles adjustments.

Documents to Keep (For Insurance and Claims)

Commercial invoice, packing list, B/L or AWB, pre‑/post‑delivery photos, survey report, delivery receipt with exceptions, incident reports, correspondence.

Claim Time Limits (Typical — Check Policy/B/L)

Air (Montreal Convention 1999)

Written complaints often within 14 days (damage) or 21 days (delay); action generally within 2 years.

Ocean (Hague‑Visby/COGSA)

Notice promptly (often within 3 days for apparent damage); suit generally within 1 year.

Road (CMR)

Notice typically within 7 days; suit limits vary by jurisdiction.

Step‑by‑Step: How to File a Cargo Claim

  1. Mitigate loss; keep packaging
  2. Notify insurer, carrier, forwarder in writing; reserve rights
  3. Collect evidence (photos, tallies, seals, temp logs)
  4. Arrange survey if material damage
  5. Submit claim pack (invoice, PL, B/L or AWB, COI, survey, repair/replacement quotes, correspondence)
  6. Follow up; cooperate on subrogation; typical 2–8 weeks for straightforward cases

Best Practices to Avoid Denials

Export‑grade packing and bracing (ISTA/carrier guidelines)

Accurate declarations (commodity/value/HS/DG)

Inspect on delivery and note exceptions on POD

Use dataloggers for reefer

Choose warehouse‑to‑warehouse cover; declare correct voyage legs

Our Approach (What [Brand] Can Arrange)

All‑risks cover via A‑rated insurers; same‑day COI

Insured value options (invoice + freight + uplift); GA guarantee included

Dedicated claim support and surveyor coordination with clear SLAs

FAQs

Does “all‑risk” cover everything?

No—standard exclusions apply (e.g., inadequate packing, delay without damage, inherent vice). Endorsements may be needed.

Can I insure used or second‑hand goods?

Often yes, but may require higher deductibles or special terms.

Do I still need insurance if the carrier is liable?

Yes. Carrier liability is limited and fault‑based; insurance pays per policy terms then subrogates.

Can I add war/strikes coverage?

Yes. Common for certain lanes or unrest periods; premiums vary.

Sources & References

  1. IATA on Montreal Convention limits: https://www.iata.org
  2. International Group of P&I Clubs: https://www.igpandi.org
  3. UK guidance on marine cargo insurance: https://www.gov.uk/guidance/marine-cargo-insurance