The shipment of goods always involve risks. Cargo can get delayed, damaged or lost during transit, so needs to have appropriate insurance coverage is of paramount importance to shippers/cargo owners. As an active participant in the movement of goods, it is Just Ship It Logistics‘s duty to ensure that people and companies who avail of its services understand the importance of having their cargo insured in the event that delay, damage or loss happens. We aims to provide people, especially prospective shippers, with the necessary information on freight insurance

The Importance of Insuring

Insurance safeguards shippers in the event that their cargoes are either lost, damaged or delayed during transit. A basic cargo insurance policy provides cover against accidental damage and other common risks, while a comprehensive all-risk policy includes protection against specific dangers such as damage during loading, theft, negligence, and others. The cost of insurance and the compensation that can be claimed depending on the value of the goods in transit, and on whether the journey is domestic or international.

Many things can happen during transit: Goods can get damaged as a result of a hauler getting into an accident, or they can be stolen. Such incidents can affect profitability, productivity, and even goodwill. These risks can be mitigated by getting the appropriate insurance coverage before goods are moved from Point A to Point B. Without insurance coverage, shippers receive minimum protection for their goods as freight forwarders and carriers normally have limited liability should goods under their care are lost, damaged or delayed.

Insurance 101: Common Terms and Principles

Insurable Interest

Considered the basis of all insurance policies, insurable interest refers to that thing that, when damaged or lost, will cause financial burden to the policyholder. Shippers/cargo owners availing of insurance coverage for their goods must be able to demonstrate how the loss or damage of their cargoes will be detrimental to them or their business.

Duty of Utmost Good Faith

Shippers have the duty to supply all relevant and factual information about their goods on the outset. The information serves as the basis for calculating the insurance premium. Underwriters and brokers are also obligated to inform shippers of any exclusion clauses in the policy. These clauses, which stipulate the circumstances wherein the insured will not receive compensation, are often written in small prints, so it is a must for anyone availing of an insurance policy to read through Them.

Duty to Act as Though Insured

The terms of sale agreed upon in a commercial transaction specify which party is responsible for the costs of goods being transported. The terms also indicate how the risk of loss or damage will be managed, the cargo delivery points, and at what point the risk is transferred from one party to another.

Managing Risk

The terms of sale agreed upon in a commercial transaction specify which party is responsible for the costs of goods being transported. The terms also indicate how the risk of loss or damage will be managed, the cargo delivery points, and at what point the risk is transferred from one party to another.

Contract of Indemnity

This refers to the amount of compensation agreed upon by the shipper/cargo owner and the insurer in case goods are lost or damaged.

Managing Risk

Cost, Insurance and Freight (CIF)

The seller has the responsibility to deliver the goods on board the vessel at the port of shipment, as well as pay for transport and minimum insurance coverage
to the given port of destination. Under CIF, the buyer assumes all risks once the cargo is on board the vessel but is not responsible for the costs until the freight reaches the port of destination. CIF is only applicable to the transport of goods via ocean and inland waterways.

Carriage and Insurance Paid To (CIP)

This can be used for all transport modes, whereby the seller is responsible for arranging the carriage of the goods to the specified port of destination, as well as insuring the goods.

Risk Coverage Options

Insurance provides protection from financial loss to shippers/cargo owners in the event that their goods get damaged or lost while in transit. Aside from the basic contract stipulations, various clauses can be added for wider coverage.

Institute "A" Clauses

While these clauses command the highest premium, they also provide the most risk coverage to traders, with the exception of wars and strikes. Coverage for such events can be included in other appropriate clauses.

General Average

Used in the global maritime industry to mitigate financial loss, general average requires both ship and cargo owners to make monetary contributions to offset losses resulting from the salvage of a vessel in distress. When triggered, this clause can be costly to shippers/cargo owners with no insurance coverage.

Institute "B" and "C" Clauses

These provide coverage for certain risks, whereby the responsibility for damage or loss can be reasonably attributed to a particular party. Institute “C” clauses come at a lower price but offer less coverage.

Acts of God and Acts of War

Under international law, carriers are not liable for unforced acts of nature such as earthquakes, nor will they be responsible for loss or damage of goods caused by wars, civil unrests, and piracy. It is prudent for shippers/cargo owners to get additional coverage when shipping goods to high-risk areas.

Franchise and Excess

Franchise refers to the factor that determines the minimum threshold of an insurance company’s financial responsibility. If the losses exceed the franchise amount, the insurance company covers the full damage, but will not pay any amount for losses that do not surpass the franchise value specified on the insurance policy.

Excess, on the other hand, determines how much of the claim should be covered by the insured person or company. The insured agrees to be responsible for an agreed amount of loss, while the insurer only covers the amount over the agreed amount.


Insurance policies normally exclude terrorism. Coverage for loss or damage of goods resulting from acts of terrorism requires additional premium.

Freight Forwarders’ Limited Liability

While millions of shippers around the world rely on freight forwarders for the transport of their goods, as well as booking, storage, and customs clearance, relying on them for claims can be an arduous task. Not only do they have limited liability, but it also difficult to prove that the liability for the loss or damage of goods lies with them since there are other parties (haulers, airlines, vessel owners) involved in the movement of cargoes. It is, therefore, necessary for shippers/cargo owners to arrange for insurance coverage for their goods before shipment.

Filing for Claim on Insurance Policy

In the event that goods are lost or damaged while in transit, the consignee or cargo owner should follow the following procedures:

  • Conduct a thorough inspection of all the goods, taking note of damaged and/or missing items.
  • Prevent or minimize further damage by taking appropriate measures.
  • Document all expenses incurred while carrying out the aforementioned steps for reimbursement from the insurer.
  • Keep shipping container, packing materials, damaged merchandise and shipping documents as evidence.
  • Contact the insurer (or broker, if appropriate) to arrange for a survey of the damage.
  • File a letter of claim with the freight forwarder or carrier. The letter should include:
    • Company name and voyage/flight number, if applicable
    • Sea waybill, bill of lading or air waybill, if applicable
    • Date of arrival at destination
    • Cargo description
    • Container number
    • Amount being claimed

Combining transport execution and transport management services

The consignee or cargo owner also needs to send the full details of the claim to the insurer. If the claimant is using Incoterm CIF or CIP, the letter of claim should also include:

  •  Commercial invoice
  • Insurance policy details and certificate number
  • Bill of lading or air waybill number, if applicable
  • Any correspondence with the freight forwarder regarding the
  • loss or damage
  • Survey report

Similar procedures should be followed by the seller if they carried the risk at the time of loss or damage.


While we are happy to ship your products everywhere, we love working in local areas to provide easy shipments to our neighbors. Our talented team is prepared to use proven freight management technology to easily ship, track, and deliver items in your area.

Canada is our home and we know it very well. Let us help you to get your products or equipment anywhere in Canada in record time. We know how to get it there safely, and are happy to ship skids of all sizes!

We love Canada, but our services don’t stop there. Our team knows how to get your products across borders, through Customs, and more. We know how to get your shipment where it needs to go as quickly as possible. Our services make it easy for you to invoice shipments, understand tariffs, and navigate shipping regulations.

Our team is more than prepared to help your shipment travel, and we can easily manage deliveries all around the world. Let us handle importing and exporting your shipments so that all you have to do is wait for them to arrive. We are available 24/7 to manage any questions and concerns, or simply talk you through any of the rules surrounding imports and exports.

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