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Talk to our experts- Cargo insurance
- Cargo insurance is insurance on goods against loss or damage while they are in transit. Each Incoterms rule addresses which party, if any, must provide it, and it is separate from the carrier's own liability for the freight, which US law can cap, for example at $500 per package on ocean shipments to or from US ports.
Also called: Shipping insurance
How it works
Cargo insurance covers loss of or damage to goods during transit, and one document that shows it is in place is the insurance certificate. The International Trade Administration (trade.gov) says an insurance certificate assures the consignee that insurance will cover loss and/or damage to the cargo during transit, and that one can be obtained from your freight forwarder or insurance carrier.
- Air: an airway bill can serve as an insurance certificate for a shipment by air.
- Letters of credit: you can present an insurance policy instead of an insurance certificate, but not an insurance certificate instead of an insurance policy.
- Who buys it: trade.gov says each Incoterms rule addresses which party, if any, is obligated to provide for cargo insurance coverage.
Two Incoterms 2020 rules name the level of cover, the International Chamber of Commerce (ICC) says. Under CIF, which is reserved for maritime trade, the Institute Cargo Clauses (C) remain the default level of coverage, and the parties can agree to more. CIP requires a higher level of cover, compliant with the Institute Cargo Clauses (A) or similar clauses.
Cargo insurance vs. carrier liability
A carrier is liable for the freight it moves, but US law allows that liability to be limited:
- Motor carriers: under 49 U.S.C. 14706, a motor carrier or freight forwarder subject to federal jurisdiction under that law issues a receipt or bill of lading and is liable for the actual loss or injury to the property. For property other than household goods, it may set rates under which its liability is limited to a value established by the shipper's written or electronic declaration or by written agreement, if that value would be reasonable under the circumstances.
- Ocean carriers: under the Carriage of Goods by Sea Act, for shipments to or from US ports in foreign trade, the carrier is not liable for more than $500 per package, or per customary freight unit for goods not shipped in packages, unless the shipper declared the nature and value of the goods before shipment and it was inserted in the bill of lading.
Some motor carriers must also hold cargo security of their own. For household goods motor carriers, federal rules at 49 CFR 387.303(c) require security to compensate individual shippers for loss of or damage to their property: $5,000 for household goods on any one motor vehicle and $10,000 at any one time and place. This is general information, not legal or insurance advice.
Cargo insurance is also different from export credit insurance. trade.gov says export credit insurance does not cover physical loss or damage to the goods shipped to the buyer, or any of the risks for which coverage is available through marine, fire, casualty or other forms of insurance.
Example
A distributor imports 10 packages by ocean, each worth $3,000, for $30,000 in all. One package arrives destroyed. No value was declared on the bill of lading, so the carrier's liability for that package cannot exceed $500. The gap is $3,000 - $500 = $2,500, the gap a cargo insurance policy written for the full value is meant to cover.
On Shopify
For parcels, Shopify offers insurance with its shipping labels. As of October 28, 2026, Shopify says that if you ship from the United States and buy shipping labels, you can buy shipping insurance for up to $5,000 USD of coverage against loss, theft or damage. On the Grow, Advanced or Plus plan with Shopify Payments, up to $200 USD is included on each eligible label. Purchased cover costs $0.89 USD per $100 USD domestically and $1.29 USD per $100 USD internationally, and claims can be filed 24 hours after shipping and up to 120 days from the shipping date. For freight beyond parcel labels, trade.gov says an insurance certificate can be obtained from your freight forwarder or insurance carrier.
How Uncap helps
Uncap's packaging and shipping supplies page describes what a pallet order carries: "A pallet of corrugate is dimensional weight, freight class, liftgate, residential surcharge, appointment delivery, and a rate that can exceed the goods."
Sources
Frequently asked questions
What is meant by cargo insurance?
Cargo insurance is cover for goods against loss or damage while they are in transit. The insurance certificate that proves it, which trade.gov says can come from a freight forwarder or insurance carrier, assures the consignee that insurance will cover loss or damage to the cargo during transit.
What does cargo insurance cover?
Cargo insurance covers physical loss of or damage to the goods in transit, up to the insured value and on the policy's terms. For parcels, Shopify's label insurance, for example, protects shipments against loss, theft or damage.
Is cargo insurance the same as carrier liability?
No. Carrier liability is the carrier's legal responsibility for the freight, and US law limits it in some cases: ocean carriers, on shipments to or from US ports in foreign trade, to $500 per package under the Carriage of Goods by Sea Act unless the shipper declared the goods' nature and value in the bill of lading, and motor carriers, for property other than household goods, to a reasonable value the shipper declares or agrees to in writing. Cargo insurance covers the goods for the insured value.
