Consumers were given a rare insight into the perils of international shipping this year when the Ever Given blocked the Suez canal. After six days, the throughway was finally cleared, putting an end to the uncertainty within global trade and stock markets.

Even when international canals are flowing freely, around 1,300 containers are lost each year. What happens if you’re next? Well, when it comes to shipping insurance, it’s better to have it and not need it than need it and not have it.

In this guide, we’ll break down different types of shipping and marine cargo insurance, including what coverage they offer, the pros and cons of each and who’s responsible at any one time. Read on to learn more.

• The different types of shipping insurance and what they cover
• What’s not covered by shipping insurance
• Shipping insurance pros and cons
• How else can you protect yourself?

The different types of shipping insurance and what they cover

CIF – Cost, Insurance and Freight

Cost, Insurance and Freight is a type of marine cargo insurance where the seller is responsible for all costs and risks until the goods arrive at the buyer’s port. 

This means that the seller has liability during transit, loading, and marine (or rail, sea, or road) transport –– all the way until the goods have arrived at the buyer’s destination country.

The buyer only becomes responsible for the remainder of the journey: starting during the unloading process and ending at the buyer’s final destination (like a shopfront or warehouse).

FOB – Free on Board

Free on Board is a similar type of marine cargo insurance. However, the transfer of responsibility occurs slightly earlier in the logistical plan. The seller is responsible for the risks and associated costs of loading the vessel for dispatch from the country of origin. Associated costs include arranging for transit and loading fees. 

However, once goods have been loaded (technically as they pass the ship’s rails in the origin country), the buyer immediately assumes responsibility for the remainder of the journey.

GIT – Goods in transit

As its name suggests, goods in transit (GIT) shipping insurance protects goods only while they’re travelling. For example, your goods arrive at a port and you need to transport them to your warehouse. 

You, or your haulage company, will use a GIT policy to protect them while unloading and the final leg of the journey. 

Learn more about the various incoterms on the Austrade website.

What’s not covered by shipping insurance

Marine cargo insurance covers a wide range of goods. But, for the right price, you can get almost anything insured. In general, providers won’t cover the following as standard:

• Livestock
• High-risk items like money, gemstones, precious metals, or jewellery
• Other hazardous items (for example, flammable chemicals)
• Losses resulting from poor, defective, or insufficient packaging
• Shortages in weight (especially ullage – or evaporation – of liquids)
• Delays
• Wear and tear due to natural conditions (like temperature variation)
• War and terrorism
• Government action like confiscation or requisition

Additionally, insurance providers will have a maximum value limit on goods they’re willing to cover, so if your products have high margins, you may need to shop around to find a good deal.

Moreover, providers may only cover the landed cost of the goods, while others will reimburse you up to the total retail value (though their policies will cost more). Therefore, make sure you’re clear on your indemnity in case something goes wrong.