Cargo Insurance: What It Covers, Excludes and When Cover Ends

Cargo insurance (also called freight insurance) is a policy that pays for physical loss of or damage to goods while they are in transit. Under the standard Institute Cargo Clauses (A) 1/1/09 wording, cover is “all risks” but subject to listed exclusions, and it runs only between the points the transit clause defines. This guide is general information about how the standard wording works, not insurance, legal or medical advice.

Short answer

Cargo insurance covers physical loss or damage to the shipment itself, on the terms of the policy wording. In the widely used Institute Cargo Clauses (A), the insuring clause covers all risks of loss or damage except what Clauses 4 to 7 exclude. Packing prepared by the shipper, a cargo’s own inherent vice and delay are among those exclusions, and cover starts and stops at defined points rather than covering the whole journey automatically.

Definition and scope: cargo insurance and freight insurance

“Freight insurance” and “cargo insurance” describe the same product: insurance of goods in transit, as distinct from the carrier’s own liability. The Lloyd’s Cargo Claims and Recoveries Manual (September 2019) describes the Institute Cargo Clauses as standard wordings agreed by the London market and widely used, or closely copied, around the world. They were revised in 1982 and again in 2008, and reissued as ICC 1/1/09. Old and new wordings exist side by side, so the first thing to establish is which wording a given policy uses.

Two points of scope from the same manual are often missed. “All risks” does not mean that all loss or damage, however it occurs, is covered: it covers fortuitous loss, meaning loss that is unexpected or accidental, not what is inevitable. And it covers physical loss or damage, not purely financial or consequential loss; the manual’s example is loss of market because goods arrive late.

How the standard wording works in practice

What Clause (A) covers

Clause 1 of ICC (A) 1/1/09 states that the insurance “covers all risks of loss of or damage to the subject-matter insured except as excluded by the provisions of Clauses 4, 5, 6 and 7”. Clause 2 adds general average and salvage charges. The exclusions are where most disputes start, so they are set out below.

What Clause (A) excludes

Clause	Excluded (paraphrased from the wording)	Why it matters for fragile or sensitive supplies
4.1	Loss caused by the wilful misconduct of the Assured	Applies to the policyholder’s own conduct.
4.2	Ordinary leakage, ordinary loss in weight or volume, ordinary wear and tear	Expected losses are not fortuitous.
4.3	Insufficient or unsuitable packing or preparation, where carried out by the Assured or their employees, or before the insurance attaches; packing includes stowage in a container	Shipper-prepared packing is the Assured’s responsibility under the wording.
4.4	Inherent vice or nature of the subject-matter	Lloyd’s defines inherent vice as a natural condition within the cargo that can cause deterioration without any external accident.
4.5	Delay, “even though the delay be caused by a risk insured against”	Marine underwriters traditionally do not cover loss arising from delay, including to perishable cargo.
4.6	Insolvency or financial default of the vessel’s owners or operators, if the Assured is aware	Financial failure of the carrier is not a transit peril.
4.7	Nuclear weapons or reactions	Not specific to supplies.
5	Unseaworthiness of the vessel or unfitness of the container where the Assured is privy to it	Depends on the Assured’s knowledge.
6, 7	War and strikes, riots and terrorism	Excluded from (A); the policy wording must be checked for separate war or strikes cover.

When cover starts and ends

Clause 8 (the transit clause) attaches the insurance “from the time the subject-matter insured is first moved in the warehouse or at the place of storage” for the purpose of immediate loading. It ends on the first of several events: completion of unloading at the final warehouse named in the policy; election of another storage or distribution warehouse; or the expiry of 60 days after discharge overside at the final port of discharge. Clause 10 requires prompt notice of a change of destination.

Where it matters for labs, clinics and supply decisions

The sourced points above translate into a pre-shipment checklist. Each item traces to a clause or to the Lloyd’s manual; none is a recommendation about a particular insurer or product.

• Which wording applies. Confirm whether the policy uses ICC 1/1/82 or 1/1/09 (Lloyd’s manual).
• Who packed it. Under Clause 4.3, inadequate packing or container stowage done by the Assured is excluded, so the packing is part of the insurance question, not only a handling one.
• Whether the cargo can deteriorate on its own. Inherent vice is excluded (Clause 4.4); a delay is excluded even when a covered risk caused it (Clause 4.5). A consignment whose value depends on arriving on time may need cover that the standard marine wording does not give; the policy wording decides.
• Where cover begins and ends. Compare the named destination with the actual final warehouse; moving goods to other storage ends cover (Clause 8).
• Insurable interest. The Assured must have an insurable interest in the goods at the time of loss to recover (Clause 11).
• Duties after a loss. The Assured must take reasonable measures to avert or minimise loss and preserve rights against carriers (Clause 16), and act with reasonable despatch (Clause 18). Clause 15 states that the insurance does not benefit the carrier or other bailee.

Who arranges cover

Which party buys the insurance depends on the contract term, not on the policy. For example, the site’s FOB vs CIF comparison explains that under CIF the seller buys a minimum level of cover, and the Incoterms guide notes that CIP carries a higher insurance requirement than CIF. For the sea-freight side of buying supplies, see FOB terms for medical supplies, and for the documents that accompany a shipment, the proforma invoice guide.

Common misunderstandings

• “All risks means everything.” It does not; the Lloyd’s manual says so directly, and Clauses 4 to 7 list what is excluded.
• “The carrier’s liability replaces insurance.” Clause 15 states that the insurance does not extend to benefit the carrier; the two are separate arrangements, and Clause 16 requires the Assured to preserve rights against carriers.
• “Late delivery is covered if something insured caused it.” Clause 4.5 excludes delay even then.
• “Cover lasts until the goods are used.” It ends at the points in Clause 8, including 60 days after discharge at the final port if nothing earlier ends it.
• “Every cargo policy is Clause (A).” Narrower forms exist, offering restricted cover; this guide covers only the (A) wording.

FAQ

Is cargo insurance the same as freight insurance?

Yes: both mean insurance of goods against physical loss or damage in transit, separate from the carrier’s liability.

Does cargo insurance cover delay?

Not under the standard ICC (A) wording: Clause 4.5 excludes loss caused by delay even when the delay results from an insured risk, and Lloyd’s notes that marine underwriters traditionally do not cover it.

When does cover start under the standard wording?

When the goods are first moved in the warehouse or at the place of storage for the purpose of immediate loading (Clause 8.1).

Does it cover poor packing?

Not where the packing or preparation was insufficient or unsuitable and was done by the Assured or their employees, or before the insurance attached (Clause 4.3).

Sources

• Institute Cargo Clauses (A) 1/1/09, wording as reproduced in a copy hosted at acerislaw.com (PDF; a law-firm-hosted copy, not the IUA/LMA original, and its header reads “1/1/09 (for use only with MAR Policy Form)”), checked 2026-11-03.
• Lloyd’s, Cargo Claims and Recoveries Manual (September 2019), checked 2026-11-03.
• Incoterms facts are drawn from CASRAI’s own Incoterms guide, which cites the ICC.