Home » All-Risk Cargo Insurance: Your Questions Answered

All-Risk Cargo Insurance: Your Questions Answered

by | Jun 25, 2024 | Blog Post

Cargo insurance is essential for any business that ships goods, especially international. But with so many options available, it can be confusing to know what type of coverage you need.


Why Cargo Insurance Matters

Many businesses mistakenly believe they’re covered for everything by their carriers’ liability insurance. However, carrier liability has strict limits that often don’t reflect the full value of your cargo. The chart in the Question and Answer PDF provides a clear overview of these limitations.

Even beyond these limitations, there are other situations where standard coverage might not be enough. For example, imagine a scenario where a maritime law called “General Average” applies. In such cases, all cargo owners share the financial burden of reducing a ship in distress, even if their cargo is undamaged. All-Risk cargo insurance protects your business from these unexpected costs.


Why Don’t Companies Purchase Cargo Insurance?

Because they’re willing to take the chance that all their cargo will arrive damage free, all the time. But is it worth the risk? In California, a full truckload of footwear worth USD $846,000 was stolen. In Kentucky, thieves got away with a trailer of electronics worth USD $1 million. Homeowners understand that catastrophic events like fires are rare, but they insure anyway because, without insurance, they could not financially withstand the loss. Global shippers should look at cargo insurance the same way.

What are Common Misperceptions about Cargo Insurance?

That carriers will reimburse them for the full value of their cargo. Not true. Another misperception is that the only time coverage is needed is when cargo is lost or damaged. Actually, a maritime law referred to as “General Average” forces all cargo owners to share the cost of losses and vessel recovery after an incident at sea. It happened when the Evergreen-operated Ever Given got stuck in the Suez Canal in 2021, and more recently when Maersk’s Dali vessel collided with a bridge in Baltimore. In such cases, uninsured cargo owners pay out of their own pocket, while All-Risk Cargo Insurance policy holders are covered.

What is All-Risk Cargo Insurance?

All-Risk Cargo Insurance covers your cargo’s full value from the moment it’s picked up until it reaches its final destination (typically 110% of the cargo value). This comprehensive coverage protects against a wide range of risks, including:

  • Accidents
  • Natural disasters
  • Theft
  • Handling/Storage mishaps


What is the Payout for All-Risk Cargo Insurance VS. the Carrier’s Liability Insurance?

The actual cost of the insurance, on a shipment-by-shipment basis, is small compared to the product value. It’s possible, but unlikely, that your company’s blanket insurance policy would match what is offered under All-Risk Cargo Insurance. Buying separate cargo insurance can actually cut your company’s insurance premiums by reducing claims made under your blanket policy.


What are the Benefits? 

The costs of All-Risk Cargo Insurance is minimal compared to the potential financial losses you could face without it. In the downloadable PDF, you’ll find a table that compares the payout you’d receive under standard carrier liability vs. All-Risk Cargo Insurance. The difference is significant.


What’s the Easiest Way to Manage Your Risk? 

Getting All-Risk Cargo Insurance is simple. Just reach out to your Dimerco global freight specialist to start a conversation.