Cargo Insurance for Ecommerce Sellers

What carrier liability actually covers

• ✗ Limited liability under COGSA (Carriage of Goods by Sea Act) typically capped at $500 per shipment
• ✗ Trucking liability often capped at $0.50 per pound
• ✗ Air freight liability capped per the Warsaw or Montreal Convention
• ✗ No coverage for "acts of God" — storms, accidents not caused by carrier
• ✗ Burden of proof on YOU to demonstrate carrier negligence

What cargo insurance covers

• ✓ Damage from collision, grounding, capsizing, or rough seas
• ✓ Theft and piracy
• ✓ Fire, explosion, and water damage in transit or at port
• ✓ Damage from heavy weather and acts of God
• ✓ General average contributions (when ship is in distress, all cargo owners share the loss)
• ✓ Coverage from manufacturer to your warehouse, not just port to port

The container overboard

Ship hits heavy seas off the coast of California. 47 containers go overboard. Carrier liability pays $500 per shipment. Cargo policy pays full insured value.

The port theft

Container sits at the LA port for 6 days. Pried open at night, half the inventory stolen. Cargo insurance covers theft. Carrier liability does not.

The general average

Ship runs aground. All cargo owners required to contribute proportionally to the salvage cost (general average). Cargo policy pays your share. Without it, you owe the contribution before your goods are released.

The water damage

Shipping container develops a leak in transit. 30 percent of inventory is water damaged on arrival. Cargo policy pays the loss. Carrier denies — they cannot be proven negligent.

The hijacking

Trucking incident on the I-10 corridor. Cargo stolen at gunpoint from a parked truck. Cargo / inland marine pays the full value. Trucker's liability covers a fraction.

The recall in transit

Manufacturer issues a recall while goods are in transit from China. Goods must be destroyed on arrival. Recall endorsement on cargo policy covers destruction costs.

Cargo Insurance FAQ

What is the difference between cargo insurance and inland marine?

Cargo insurance is one type of inland marine. Inland marine covers business property in transit over land or stored at off-site locations. Cargo insurance specifically covers freight in transit by ship, rail, truck, or air. Most ecommerce sellers need an inland marine policy that includes cargo coverage.

Does my freight forwarder's insurance cover my cargo?

No, not at full value. Carrier liability under maritime and trucking law is capped at very low limits — often $500 per shipment regardless of what is inside. Carriers also require you to prove negligence, which is difficult and time-consuming. Cargo insurance covers full insured value with much fewer hurdles.

How much does cargo insurance cost?

Cargo insurance typically costs around 0.5 percent of the total value of the cargo. Some sellers pay 0.2 percent for low-risk routes and goods, others pay up to 2 percent for high-risk routes or fragile cargo. Annual policies for small business shippers average around $350 per year.

Does cargo insurance cover acts of God?

Yes, with the right policy. Marine cargo insurance specifically covers damage from heavy weather, storms, hurricanes, and acts of God in transit. Carrier liability does not cover these — they are specifically excluded as outside the carrier's control.

Do I need cargo insurance if I import small quantities?

Even small shipments are exposed. A single $20,000 container of supplements lost at sea is your loss without cargo insurance. Even one bad shipment can wipe out months of profit. Most ecommerce sellers importing internationally should carry cargo coverage.

What is general average and why does it matter?

General average is a maritime law concept. When a ship is in distress and the captain takes action to save the voyage (jettisoning cargo, putting into port for repairs), ALL cargo owners share the cost proportionally. You can be required to pay your share before your goods are released — even if your goods were undamaged. Cargo insurance covers this.

Does cargo insurance cover goods at the warehouse before shipment?

Cargo policies can be written "warehouse to warehouse" — covering goods from the manufacturer's loading dock to your warehouse. This is the most comprehensive option and what we recommend for ecom sellers importing internationally.

Our Specialties

Get Your Online Business Protected Today