Top 5 Risks Covered Under Cargo Insurance (and What’s Not)
- Interns @btwimf.com
- Jul 19
- 2 min read
Updated: Jul 24
Shipping cargo around the world exposes your business to many risks, including rough weather, mishandling, delays, theft, and piracy. While cargo insurance is crucial, knowing what it covers and what it excludes is key to ensuring you're protected.
What Does Cargo Insurance Cover? (Cargo Insurance India)
Cargo insurance in India offers financial protection during transit by sea, air, road, or rail. Key risks typically covered include:
Physical loss or damage: This includes damage from fire, collisions, capsizing, sinking, or mishandling.
Water damage and jettison: This covers goods affected by flooding, heavy seas, or container leaks.
Theft, pilferage, and piracy: This protects against cargo theft, particularly in high-risk maritime areas.
Natural disasters: This covers storms, earthquakes, floods, and similar natural events.
General average and salvage: This includes shared losses when cargo is thrown overboard or sacrificed to save a ship.
Non-delivery or partial loss: You receive financial compensation for total or partial cargo loss.
You can choose between All-Risk coverage for broad protection or Named-Perils to insure against specific risks.
What Cargo Insurance Doesn’t Cover
To avoid surprises during claims, it’s important to know the standard exclusions, which often include:
Inherent vice: This covers damage from the natural qualities of the goods, like rust or spoilage.
Improper packaging: If damage is due to poor packing, claims may be denied.
Wear and tear or leakage: Gradual degradation during transit is not covered.
Transit delays or market loss: Financial losses from late delivery are excluded unless otherwise covered.
War, terrorism, strikes, civil unrest, nuclear events: These situations require special endorsements, such as SRCC or war risk clauses.
Unseaworthiness or carrier insolvency: Coverage isn't available if the carrier was unfit or bankrupt during transit.
Quick Coverage Summary
Covered | Excluded |
Fire, collision, water damage | Spoilage, rust, inherent vice |
Theft, piracy, natural disasters | Poor packaging, wear & tear |
Jettison/general average, non-delivery | Transit delays, market loss |
Risk-specific additions via All-Risk policy | War, terrorism, nuclear events, strikes |
Carrier insolvency, unseaworthiness |
Why This Matters
A clear understanding of what is included and what is excluded helps you:
Avoid coverage gaps
Choose the right policy: All-Risk vs. Named-Perils
Add endorsements for war, delays, or SRCC when needed
Ensure smooth claim settlements through tailored insurance
Final Takeaway
Cargo insurance is essential, but only when you fully understand its scope. Matching coverage with the specific risks of your route and type of cargo helps you manage costs, avoid gaps in coverage, and ship confidently.
📚 Sources & References
This article is informed by reputable industry and insurance sources:
Insights on common cargo insurance exclusions—such as inherent vice, improper packaging, and vessel unseaworthiness—have been drawn from detailed analyses by freight and insurance experts. In particular, the concept of inherent vice and its impact on claims is well-documented in industry reports.
Standard cargo insurance coverage—covering risks such as physical damage, piracy, natural disasters, general average, and non-delivery—is confirmed by several marine insurance guides.
Technical definitions of exclusions—covering war, strikes, terrorism, nuclear events, and carrier insolvency—are aligned with official cargo policy standards
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