What Is Import and Export Cargo Insurance?

What Is Import and Export Cargo Insurance?

Import and export cargo insurance provides financial protection for goods during international transportation — whether by sea, air, road, or rail.
When risks such as fire, explosion, vessel sinking, collision, loss, or damage occur, the insurer compensates the shipper or consignee according to the insurance contract.

The main purpose of cargo insurance is to minimize financial losses for exporters or importers in case of unforeseen incidents.

>> Read More: What is Freight Insurance?

When Do Businesses Need to Buy Cargo Insurance?

The need for insurance depends on the Incoterms used in the sales contract:

• Under CIF or CIP, the exporter must purchase cargo insurance.
• Under FOB, CFR, or EXW, the importer is responsible for insurance coverage.
  

Note: If the insurance policy or certificate is not properly endorsed or transferable, the beneficiary may face difficulties when filing claims — especially across different languages, time zones, or jurisdictions.

What Documents Are Included in Cargo Insurance?

What Documents Are Included in Cargo Insurance?

When purchasing cargo insurance, businesses receive an Insurance Policy or Insurance Certificate, which can be:

• To a named person: Non-transferable.
• To order: Transferable by endorsement — the most common form in international trade.
• To bearer: Transferable by possession but rarely used due to higher risks.
  

Under UCP 600, the insured amount must be at least 110% of the CIF or CIP value, covering additional costs and expected profit.

>> Read More: The Impact of Incoterms on Costs and Responsibilities in International Trade

Cargo Insurance Conditions (ICC 01/01/2009)

Cargo Insurance Conditions (ICC 01/01/2009)

The Institute Cargo Clauses (ICC) issued by the Institute of London Underwriters define three main levels of coverage:

Clause A – All Risks

The broadest coverage, protecting against all external risks of loss or damage, including:

• Fire, explosion, vessel sinking, overturning
• Seawater or rain entering the vessel or container
• Dropping of packages during loading/unloading
• Piracy, earthquake, lightning
  

Exclusions:

• Loss due to inherent vice or nature of the goods
• War and strike risks (covered separately)

Best for: High-value or fragile goods requiring comprehensive protection — e.g. electronics, textiles, precision machinery.

Clause B – With Average (WA)

Moderate coverage, excluding minor risks like piracy or dropping, but still protecting against:

• Fire, explosion
• Vessel sinking, collision, grounding
• General Average sacrifice
• Washing overboard

Best for: Durable goods such as wood, steel, or construction materials.

Clause C – Free of Particular Average (FPA)

Basic coverage, only for major accidents such as:

• Fire, explosion
• Vessel sinking or overturning
• Heavy collision
• General Average

Best for: Low-value or sturdy goods — e.g. coal, cement, scrap metal.

Quick Comparison of ICC A / B / C

War and Strike Insurance Clauses

a. Điều kiện bảo hiểm chiến tranh

a. War Risks Clause

Covers losses caused by:

• War, civil war, revolution, rebellion
• Capture, seizure, or detention
• Mines, torpedoes, or other war weapons
  

Validity: From loading at the port of departure until unloading at the final port, up to 15 days after vessel arrival.

b. Strike Risks Clause

Covers losses due to:

• Strikers, locked-out workers, riots
• Terrorist or politically motivated acts

Excludes: Indirect losses from prolonged strikes or production disruptions.

Important Notes for Cargo Insurance Documents

Important Notes for Cargo Insurance Documents

• Insurance must take effect no later than the shipment date.
• A full set of original insurance documents is required.
• The insured value should be based on CIF/CIP + 10% expected profit.
• Ensure the goods description matches the invoice and bill of lading exactly.

>> Read More: Packing Standards for Oversized Cargo

Cargo Insurance Premium Calculation

The premium depends on:

• Insurance clause (A, B, or C)
• Mode of transport (sea, air, road)
• Type of goods (value, risk level, characteristics)
• Timing and claim history

Formula: Insurance Premium = Rate (%) × Insured Value (CIF + 10%)

Is Cargo Insurance Mandatory?

Cargo insurance is not mandatory by law, except when:

• Required by sales contract (e.g., CIF, CIP)
• Required by banks under L/C transactions
• The goods are hazardous, flammable, or perishable

However, in practice, most businesses should obtain cargo insurance to prevent unexpected losses throughout the international logistics chain.

Benefits of Cargo Insurance for Businesses

• Financial protection against loss or damage
• Enhanced credibility in international trade
• Smooth L/C payment processing
• Reduced risk of disputes between parties

Cargo insurance under ICC 2009 (A, B, C, war, strike) is not just financial protection — it’s a strategic risk management tool ensuring smooth, secure, and reliable international operations.

Import and Export Cargo Insurance with KFLV

Import and Export Cargo Insurance with KFLV

International shipments face risks — from fire or loss to damage in transit. Don’t let these incidents disrupt your supply chain or reputation.

With years of experience in logistics and partnerships with reputable insurers, King Freight Logistics Vietnam (KFLV) offers:

• Expert consultation on suitable ICC A/B/C insurance clauses for each shipment type
• Support in preparing, endorsing, and transferring insurance documents
• Combined shipping + insurance solutions to optimize cost and time

Hotline: +84 (0) 938 188 796
Email: cs1@hcm.kfkingfreight.com
Contact us today to ensure your shipments are fully protected throughout their international journey.