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In international logistics, thousands of tons of goods are transported daily. Yet, even with the most meticulous planning and organization, no cargo is completely immune to risks: damage during transit, theft, natural disasters, accidents, or disruptions at ports or customs. That’s why cargo insurance has become an essential element of a responsible approach to international trade. Properly arranged insurance with Dragon Logistics helps avoid financial losses, maintain partner trust, and ensure the continuity of supply chains.
Why is cargo insurance necessary?
Every international shipment involves several stakeholders: the supplier, transport company, warehouse, carrier, customs, and final recipient. At each stage, situations may arise that lead to cargo damage or loss — and even the most reliable carrier can’t guarantee protection from force majeure.
Cargo insurance is a mechanism for transferring risk from the company to the insurer. In the event of an insured incident, the company receives financial compensation, which helps minimize losses and maintain financial stability.
Depending on the type of coverage, the policy may protect against the following risks:
- damage to or total loss of cargo due to accident, fire, flooding, explosion, etc.;
- theft or robbery during transportation or storage;
- damage resulting from improper cargo handling (e.g., during loading/unloading);
- unexplained loss of the transport vehicle or vessel;
- natural disasters — floods, hurricanes, earthquakes, storm conditions;
- political risks — confiscation, arrest, military actions (usually included as optional coverage).
Delays or spoilage of perishable goods can also be insured separately — for example, in the case of cold chain products.
What types of cargo insurance exist?
There are four main types of cargo insurance:
- single shipment insurance (one-time policy) — issued for a specific shipment. Ideal for companies making irregular deliveries or fulfilling one-time contracts. Offers flexibility without long-term obligations;
- general policy — a long-term agreement between the company and the insurer. All shipments within a set period (usually one year) are automatically insured under pre-agreed terms. Convenient for exporters, importers, and logistics firms with regular deliveries;
- all risks insurance — the most comprehensive coverage, protecting against nearly all possible events except those explicitly excluded in the contract. This is the most widely used type in international practice, albeit also the most expensive;
- limited coverage insurance — protects against specific risks only, such as damage due to accident or natural disaster. It’s more affordable but offers significantly less protection.
How to minimize risks and avoid losses?
To make insurance a truly effective financial protection tool, it’s crucial to approach the process thoughtfully:
- accurately assess the cargo’s value — the insured amount should reflect the true value of the goods, including transportation, customs fees, and profit margin. Underinsurance leads to partial compensation, while overinsurance may result in claim denial;
- always insure valuable or fragile goods, even if not required by law;
- choose All Risks coverage, if your budget allows, for maximum protection;
- work exclusively with licensed insurers experienced in international transport and with a solid market reputation;
- carefully review policy details — what is covered, exclusions, duration, claim procedures, and required documentation.
Also, make sure to meet packaging and labeling standards. Improper packaging can be a valid reason for the insurer to reject a claim. Keep proof that the cargo was properly packed and labeled. Avoid “gray” or unofficial packaging — it’s one of the most common reasons for insurance claim refusals.
Cargo insurance isn’t just a formality or a piece of paperwork. It’s a real tool for protecting your business against financial losses, supply chain disruptions, and damage to customer relationships. In today’s world — with its wars, crises, inflation, and climate-related threats — an insurance policy becomes a key part of a resilient business strategy. By protecting your cargo, you’re protecting your business, your reputation, and your company’s future. Dragon Logistics is your reliable partner in that mission.