What cargo insurance is

It insures the financial interest of the cargo owner — the shipper, the consignee or any other party bearing the risk — against destruction, loss of or damage to goods in transit. The policy applies to road, rail, sea, river and air transport, including multimodal shipments, transshipment and intermediate storage if they are stated in the contract.

Coverage terms

Russian practice uses three classic options:

  • "All risks" — loss and damage from any cause are covered except exclusions (wilful misconduct, improper packing, inherent vice of the cargo, delay, war risks, etc.).
  • "With particular average" — damage from listed events is covered: road accidents, wreck, fire, natural disasters, the vehicle going missing.
  • "Free of damage except in case of wreck" — the narrowest cover, mainly total loss of the cargo.

In foreign trade, the Institute Cargo Clauses (A), (B) and (C) of the Institute of London Underwriters are also used: A is the broadest, C the minimum.

How cargo insurance differs from carrier liability

A carrier is liable for the safety of goods within limits set by law and transport codes, and in international road haulage by the CMR Convention, where liability is capped at a unit of account per kilogram of gross weight. In addition, the carrier is released from liability if it proves the damage was caused by circumstances it could not prevent. A carrier's liability policy protects the carrier, not the owner of the goods. Valuable and light cargo, such as electronics or pharmaceuticals, may be left almost unprotected without its own insurance.

Incoterms and the obligation to insure

Incoterms delivery terms determine when risk passes from seller to buyer. Only two terms expressly require the seller to insure the goods for the buyer's benefit:

  • CIF — for sea transport; under Incoterms 2020 minimum cover on clauses of type C is sufficient;
  • CIP — for any mode of transport; under the 2020 edition broad cover on clauses of type A is required.

The sum insured under these terms is at least 110% of the contract price. Under other terms (EXW, FCA, FOB, DAP, etc.) insurance is not compulsory, but the party bearing the risk at a given moment usually insures it. Check which Incoterms edition your contract refers to: the 2010 and 2020 rules differ.

A requirement to insure cargo may also appear in a supply contract under 44-FZ or 223-FZ (Russia's procurement laws) or in the terms of a bank financing the shipment.

Types of contracts

  • Single policy — for one shipment.
  • Open (general) policy (Article 941 of the Civil Code) — for regular shipments of similar goods throughout the contract term. The policyholder reports each shipment to the insurer within an agreed time, usually through declarations or bordereaux.

What drives the cost

  • Type and properties of the cargo: fragility, temperature control, attractiveness to thieves.
  • Value of the consignment and the sum insured.
  • Mode of transport, route, high-risk regions, transshipment and storage.
  • Coverage terms and the deductible.
  • Packing, security, vehicle tracking, reliability of the carrier and forwarder.
  • Loss record on past shipments and annual volume under an open policy.

You can make a rough estimate with the calculator, but the insurer sets the final rate based on your request.

How to choose an insurer

  • Check the Bank of Russia licence and the company's experience in cargo insurance.
  • Find out who will handle claims abroad: does the insurer have surveyors and average agents in the countries you need?
  • Compare exclusion wording, especially for theft, refrigerated cargo and delay.
  • See company profiles in the insurer directory.

If cargo is damaged or lost

  1. On delivery, record the damage in the transport documents (waybill, CMR, bill of lading, air waybill) and draw up a commercial report or shortage report.
  2. Notify the insurer immediately and call its surveyor or average agent before the cargo is removed or disposed of.
  3. Send a written claim to the carrier within the set deadlines — this preserves the insurer's right of recourse against it (Article 965 of the Civil Code).
  4. Collect documents: the policy or certificate, contract, invoice, packing list, transport documents, photos and reports.

Common mistakes

  • A buyer on FOB or FCA terms assumes the seller has insured the cargo.
  • Insurance only to the port, without delivery to the consignee's warehouse.
  • Failing to file declarations under an open policy — unreported shipments are not insured.
  • Signing delivery documents without reservations despite visible damage.
  • Poor packing: damage due to improper packing is usually excluded.

Related types: commercial property insurance for goods in storage, general liability. To get offers from several insurers, send a request to Polis Re specialists.