Cargo Insurance from China: What It Covers and When You Need It
By Hasan Olwan, in Yiwu since 2009 · Last updated: November 4, 2026
The short answer: cargo insurance from China is worth buying when losing the shipment would hurt your business more than you can absorb. A carrier’s liability is usually limited by law or contract, so it can pay far less than your invoice. A policy pays for covered losses under its own terms, and those terms decide everything.
“Shipping included” doesn’t answer the question that matters: who pays if the cartons arrive wet, crushed or short? A well-known carrier doesn’t change that answer. Carrier liability and cargo insurance are two different things.
This guide covers the difference between them, what each level of cover includes, how CIF and CIP affect you, and what to do when goods arrive damaged. It’s general information, not advice on your policy, so confirm the details with your insurer before you rely on them.
Do you need cargo insurance?
Start with one question: if this shipment were lost tomorrow, could you pay for a replacement and still meet your bills? If the answer is no, make insurance a priority.
| Your situation | What to check first |
|---|---|
| Losing the shipment would stop your business | Cover that matches the value of the goods and the risks you worry about |
| The supplier says the goods are insured | The certificate, who can claim, and the exclusions |
| You already have a policy for regular shipments | Whether this product, value and route are included |
| You plan to carry the risk yourself | Whether you can actually fund a replacement order |
This is a way to decide, not a legal rule that every importer must buy cover. Don’t compare premiums alone. Compare the premium with the loss you’d be left holding.
Carrier liability vs cargo insurance
Carrier liability is what the carrier owes you for loss or damage under the contract of carriage and the law that applies to it. Cargo insurance pays for insured losses under the policy, up to the insured value and limits.
| Carrier liability | Cargo insurance | |
|---|---|---|
| Based on | Contract of carriage and applicable rules | Your policy and its terms |
| How much you recover | Often capped, and the cap may not match your invoice | Tied to the insured value, limits and deductible |
| The key question | Is the carrier legally responsible? | Is this loss inside the policy? |
Here’s why that gap matters. These are the common limits:
- Sea, to or from the US (COGSA): up to $500 per package or customary freight unit, according to law firm Benesch’s comparison of cargo liability regimes.
- Sea, under the Hague-Visby Rules: up to 666.67 SDR per package or unit, or 2 SDR per kilogram, whichever is higher, according to the same source.
- Air, under the Montreal Convention: 26 SDR per kilogram since December 28, 2024, which ICAO put at about $35 when it announced the change in October 2024.
SDR (Special Drawing Rights) is a unit of account from the International Monetary Fund, so its dollar value moves over time. Which rules apply depends on your route and contract, and a carrier also has defenses that can reduce what it owes. Don’t treat these limits as a promise of payment.
Light, high-value goods need the most attention, because a per-kilogram limit can sit far below what they’re worth.
Clauses A, B and C: what the cover includes
Many cargo policies use the Institute Cargo Clauses, or wording based on them. The 2009 versions of Clauses A, Clauses B and Clauses C set three levels of cover:
| Level | What it covers |
|---|---|
| Clauses A | All risks of loss or damage, except what’s excluded |
| Clauses B | Named risks only: everything in C, plus earthquake, volcanic eruption, lightning, washing overboard, entry of sea, lake or river water, and total loss of a package dropped during loading or unloading |
| Clauses C | Named risks only: fire or explosion, the vessel stranded, sunk or capsized, land transport overturned or derailed, collision, discharge at a port of distress, general average sacrifice and jettison |
This is the part most people get wrong: “all risks” doesn’t mean everything. Clauses A still excludes ordinary leakage and wear, packing that isn’t good enough for the trip, inherent vice (damage caused by the nature of the goods themselves), and delay, even when an insured risk caused the delay.
So don’t accept “fully covered” as an answer. Ask for the name and date of the clauses, any added terms, and the exclusions. Then ask about your own risk directly: glass breakage, wet cartons, theft, or heat damage.
General average deserves a mention. When a ship’s crew sacrifices some cargo or pays extraordinary costs to save the voyage, cargo owners can be asked to contribute, even if their own goods arrived unharmed. All three sets of clauses cover general average and salvage charges, subject to their exclusions.
Exclusions worth reading twice
Exclusions vary by policy. As one published example, Maersk’s cargo insurance terms list these possible exclusions and conditions:
- Inherent vice and ordinary leakage or wear
- Delay, even when a covered risk causes it
- Rust, scratches and denting on used goods
- Temperature damage for goods in a non-temperature-regulated container
- Packing that isn’t suitable for the trip, unless the provider packed the goods
- Certain countries, unless agreed in writing
The same terms warn that incomplete information can invalidate the insurance, so describe your goods accurately. A lost selling season is also a different thing from physical damage, so don’t assume it’s covered.
Inspection and insurance do different jobs. A pre-shipment inspection can find bad goods and weak packing before they leave China. Insurance deals with covered losses after that. Don’t use one to replace the other.
Who arranges it? CIF, CIP and your risk
Under Incoterms 2020, CIF and CIP require the seller to buy insurance. The ICC Academy sets out how they differ:
| CIF | CIP | |
|---|---|---|
| Transport | Sea and inland waterway only | Any mode, including multimodal |
| Your risk starts | When goods are on board at the port of shipment | When goods reach the first carrier |
| Default cover | Clauses C (minimum) | Clauses A or similar (maximum) |
Notice what both have in common. The seller pays for transport and insurance, but the risk moves to you early, before the main journey. If something goes wrong at sea, you’re the one dealing with the insurer.
Under other terms, such as FOB, you decide whether to insure. See FOB vs CIF vs DDP for who pays what, and check where your risk starts against where your cover starts. A gap between the two is yours to carry.
If the supplier arranges the policy, ask for the document early and check who can claim, the description of the goods, the route and the value. A line in a chat isn’t proof of cover. Put the requirement in your contract too.
Check the whole journey, not just the ship
Whether you ship by sea or air, ask what the cover includes. Does it start at the factory? Does it pass through a consolidation warehouse? Does it end at the port, or at your warehouse?
Under the standard clauses, cover starts when goods are first moved in the warehouse for immediate loading, and it can end at several points: unloading at the final warehouse, a move into storage outside the ordinary course of transit, or 60 days after discharge at the final port, whichever comes first. Your policy may differ, so read it.
For shared containers, ask about the extra handling at pickup and consolidation. Don’t assume “marine” cover includes every stage before and after the voyage.
How much does cargo insurance cost?
There’s no single rate for all goods and routes. Price depends on the product, the risk and the insurance market, and taxes or fees may sit on top of the quoted premium. Get a current quote and compare these on the same basis:
- Premium: what you pay for the cover
- Insured value: what the goods are insured for, and whether it includes freight
- Limit: the most the policy will pay
- Deductible: the part of a loss you pay yourself
A low premium isn’t a good deal if the cover ends early or the exclusions are wide. Add insurance as its own line when you calculate your landed cost, or find out exactly where it sits inside an all-in quote.
Checklist before you accept a policy
Ask for written answers to these:
- Insurer: who is the insurer, and who receives a claim?
- Claimant: are you the party who can claim?
- Goods: is the product, its condition and any storage need described accurately?
- Value: what’s the currency and basis of value, and what limits apply?
- Route: does it include pickup, consolidation, the main leg and delivery?
- Start and end: exactly when does cover begin and stop?
- Storage: is planned storage covered, and under what conditions?
- Exclusions: are breakage, water, theft and heat covered for this product?
- Deductible: what will you pay yourself?
- Claims: what’s the notice channel, the deadline and the document list?
If the product, route or storage plan changes, ask for a review before the goods ship.
What to do if goods arrive damaged or short
Don’t wait until you know the full cost before you report it. Terms like Maersk’s require notice as soon as possible, and deadlines vary by carrier, route and policy. Check yours right away.
- Record it. Photograph the cartons, the damage, the marks and the numbers. Note which items are damaged or missing.
- Give notice. Tell the carrier and the insurer. Include the shipment reference, the problem and the date you found it, and keep proof you sent it.
- Keep the evidence. Don’t throw away damaged goods or packaging until you’re told what to do. Take reasonable steps to stop further damage.
- Build the file. Certificate, bill of lading, invoice, packing list, photos and messages.
- Calculate the loss. List the items, quantities and values. Add a survey or repair quote if asked.
- Follow up. Get a claim reference, and don’t accept a final settlement before you’ve spoken with your insurer.
Time limits matter on the carrier side too. Benesch notes a one-year limit to sue under COGSA and Hague-Visby, counted from delivery or from when the goods should have been delivered. Ask a qualified adviser about your own case.
Frequently asked questions
Is cargo insurance mandatory?
Not as a general rule. CIF and CIP make the seller buy cover when you use them, and a bank or contract may ask for it. Check what applies to your deal.
Does my shipping price include insurance?
Not necessarily. Ask for written confirmation and a certificate showing the cover, the value and who can claim. Carrier liability alone isn’t full-value insurance.
Is CIF insurance enough?
It depends on your goods. The default under Incoterms 2020 is Clauses C, which is minimum cover, though you can agree on more. Fragile or valuable goods often need more.
Does “all risks” cover delay and poor packing?
Not under standard Clauses A, which exclude delay and unsuitable packing in the circumstances they describe. Your policy’s wording is what counts.
Summary
- A carrier’s liability is capped, and the cap can sit far below your invoice.
- Clauses A is the widest cover, C is the narrowest, and both have exclusions.
- Under CIF and CIP, your risk starts before the main journey.
- Check that your cover starts and ends where your risk does.
- Report damage right away, and keep the evidence.
Planning an order from China? Tell us the product, quantity and destination. We’ll quote the shipment, and you can ask us what’s included before you decide on cover.