Cargo Insurance

Cargo insurance is a financial protection policy that covers goods against loss, damage, theft, or delay during air transportation. It provides financial protection against loss or damage in transit and extends coverage beyond the limited liability that airlines carry under international conventions. Under the Montreal Convention, airline liability is capped at 26 SDRs (approximately $34) per kilogram, making additional insurance essential for valuable shipments where actual value exceeds this minimal coverage.

A technology manufacturer ships semiconductors valued at $75,000 via American Airlines Cargo on AWB 001-45867321, where 001 is the AWB prefix identifying American Airlines as the issuing carrier. With cargo insurance covering the full declared value plus 10% uplift, the shipper receives complete compensation if the shipment is damaged, rather than being limited to the carrier's maximum liability of approximately $34 per kilogram. A pharmaceutical company transporting temperature-sensitive medications from Frankfurt to Miami on Lufthansa Cargo flight LH8345 with AWB 020-98765432 purchases all-risk cargo insurance to protect against both physical loss and delays that could render the time-sensitive medications unusable.

• air cargo insurance
• freight insurance
• cargo cover
• cargo policy
• goods in transit insurance
• all risk cover

What is the difference between cargo insurance and the declared value option when shipping by air?

The declared value option is not cargo insurance; it is a way of increasing the carrier's own level of liability coverage. For air cargo carriers, this comes out to 50 cents per pound per shipment, up to $100,000. Cargo insurance, however, provides comprehensive coverage for the full value of goods and covers risks that carrier liability does not, including acts of nature, theft, and mysterious disappearance.

How much does cargo insurance typically cost for air freight shipments?

Air cargo insurance will cost less for similar coverage levels compared to other types of international transport, such as marine shipping. Coverage should be set at the commercial invoice value plus freight costs plus a standard uplift - typically 10 to 15 percent - to account for loss adjustment expenses, replacement procurement costs, and any additional charges incurred during a claim.