Cargo Insurance Explained: A UK Guide for Importers & Exporters

Overview

Cargo insurance can protect businesses against financial losses when goods are lost or damaged during transportation. But what does it cover, who needs it, and how does it work with Incoterms?

For UK importers and exporters, international shipping involves more than freight costs and delivery schedules. Goods may pass through warehouses, ports, airports, carriers and multiple handling points before reaching their destination.

Cargo insurance can help businesses manage the financial risk associated with loss or damage to goods in transit.

However, cargo insurance is not the same as carrier liability, and having an Incoterm that mentions insurance does not necessarily mean your goods have comprehensive protection.

Here is what UK businesses need to know.

What Is Cargo Insurance?

Cargo insurance provides financial protection for goods against covered risks while they are being transported.

Depending on the policy, it can apply to:

Coverage depends on the policy wording, insured value, exclusions, transport route and type of goods.

For businesses shipping high-value machinery, electronics, automotive components, pharmaceuticals or other commercially important goods, appropriate insurance can be an important part of supply chain risk management.

Is Cargo Insurance Mandatory in the UK?

Cargo insurance is not generally compulsory for every shipment.