Cargo Insurance for China Imports: Limits of Carrier Liability and How to Cover Real Risk
Carrier liability for lost or damaged cargo is limited by international convention and full of exclusions, so the bill of lading or air waybill alone rarely covers your loss. Cargo insurance closes that gap. The standard terms are the Institute Cargo Clauses: Clause C covers major casualties, Clause B adds more named perils, and Clause A is the widest 'all risks' cover (subject to exclusions like inherent vice and inadequate packing). Insure for the goods value plus freight and a margin — commonly 110% of invoice value. Who arranges it follows the Incoterm: under CIF the seller buys it (often only to Clause C and only to the destination port), while under FOB/EXW the buyer should arrange their own cover from origin. Premiums are typically a small fraction of cargo value but vary by commodity and route, so request a current quote rather than assuming a rate. File claims promptly with survey evidence.
- Carrier liability is limited by convention and excludes most practical risks — insure separately.
- Institute Clauses A/B/C range from all-risks (A) to major-casualty-only (C).
- Declare around 110% of invoice value (goods + freight + margin) as the insured amount.
- Under FOB/EXW the buyer should arrange cover from origin; CIF cover may be thin and port-only.
- Premiums vary by commodity and route — request a current quote, do not assume a rate.
On this page
Why carrier liability is not enough
When cargo is lost or damaged, many importers expect the carrier to make them whole — but the carrier's liability under conventions such as the Hague-Visby or Warsaw/Montreal rules is capped at a low limit per package or per kilo, and excludes numerous causes (improper packing, inherent vice, delay, acts of God). A container lost overboard is paid at a fraction of its value. Cargo insurance exists to cover the gap between that limited liability and your actual loss.
The Institute Cargo Clauses
Marine cargo insurance uses the Institute Cargo Clauses, which set three levels of cover. Clause C is the narrowest, covering major casualties like fire, sinking and collision. Clause B adds named perils such as theft and some water damage. Clause A is the widest, an 'all risks' basis that covers loss or damage from any external cause except listed exclusions. Even Clause A excludes poor packing, inherent vice and wilful misconduct, so packing and product stability still matter.
| Clause | Scope | Best for |
|---|---|---|
| C | Major casualties only | Low-value, sturdy cargo on short hops |
| B | C plus named perils (theft, some water damage) | Mid-value general cargo |
| A | All risks (external causes), few exclusions | High-value or sensitive cargo |
How much to insure
Insure for the commercial value of the goods plus freight and a margin for charges, most commonly 110% of the invoice value. Insuring only the goods value leaves the freight and expected margin exposed; insuring far above market value can invite a query at claim time. Set the insured amount to what you would need to replace the shipment and continue the sale.
Who arranges cover by Incoterm
Under CIF the seller buys insurance, but often only to Clause C and only to the destination port — which may leave the expensive last mile and the wider risks uninsured, and the buyer cannot claim directly if the seller chose a weak clause. Under FOB, CFR, EXW or DAP the buyer bears the risk for most of the journey, so the buyer should arrange their own policy from origin. The practical rule: do not assume the seller's CIF policy is adequate; verify the clause and the covered leg.
If your supplier arranges CIF insurance, ask for the clause and the covered leg in writing. Clause C to the port of arrival leaves the inland leg and many perils outside cover.
Making a claim that pays
Claims fail most often because the loss was accepted without notation at delivery, or because evidence was not gathered. The single habit that protects you is to inspect and record condition at the moment the cargo is handed over.
- Note the damage or shortage on the delivery receipt at the time of delivery.
- Notify the carrier and insurer promptly within the policy time limit.
- Obtain a survey report or photographic evidence of the condition.
- Provide the policy, invoice, packing list, transport document and survey.
- Submit the claim and cooperate with the adjuster through settlement.
Next steps
Tell us your cargo type, value, route and Incoterm and we will advise the right clause, quote a current premium, and arrange cover from origin so the policy matches where the risk actually sits.