Many importers assume that if something goes wrong at sea, the shipping line pays. In most cases it doesn't, or not much. With ships being attacked, diverted and delayed in 2026, cargo insurance has gone from nice-to-have to essential.
The shipping line's liability is limited
Under the international rules that govern most sea freight (the Hague-Visby Rules), a carrier's liability for lost or damaged cargo is capped at roughly 666.67 SDR per package or 2 SDR per kilo, whichever is higher. An SDR is worth a little more than £1.
For a pallet of electronics or a container of branded clothing, that can be a small fraction of the real value. And the carrier isn't liable at all for many causes of loss, including perils of the sea, fire not caused by their fault, and acts of war.
General average: the risk most people don't know about
When a ship faces an emergency (a fire, a grounding, or an attack), the master may sacrifice some cargo or incur extra costs to save the vessel and everything on it. Under maritime law, those costs are shared by everyone with cargo on board, in proportion to its value. This is called general average.
When it's declared, your goods won't be released until you provide security for your share, which can be a large percentage of the cargo's value, even if your goods weren't damaged. Without insurance, you pay that yourself, upfront. With insurance, your insurer provides the guarantee and your cargo is released.
Fires on large container ships and the attacks of 2026 have made general average more common than many importers realise.
What cargo insurance covers
Policies are usually based on the Institute Cargo Clauses:
- Clauses (A): "all risks". The widest cover, protecting against loss or damage from any cause except listed exclusions.
- Clauses (B) and (C): narrower cover for named perils only, such as fire, sinking, collision and general average.
- War and strikes: covered by separate clauses, usually added to the policy. Given this year's events, check you have them.
Why now
- Conflict at sea. Attacks in the Red Sea and around the Strait of Hormuz have damaged ships and cargo.
- Longer voyages. Rerouting around Africa means more time at sea, more handling, and more exposure.
- Bigger ships. One incident affects thousands of containers, and every cargo owner shares the general average.
- It's not expensive. Cargo insurance usually costs a small percentage of the goods' value, much less than the potential loss.
What to check
- Whether your supplier is insuring the goods (under CIF terms, they should be) and for how much. CIF only requires minimum cover.
- That war and strikes risks are included.
- That the insured value includes freight and a margin, usually 110% of the invoice.
- How to make a claim, and what evidence you'll need.
We can arrange cargo insurance with every shipment. Ask us for a quote.
General information, not insurance advice. Cover depends on the policy wording.