Freight Insurance: What It Covers, What It Does Not, and What You Are Probably Missing

Freight insurance is the topic that every freight forwarder mentions in their service pitch and very few explain accurately to their clients. The gap between what clients think their cargo insurance covers and what it actually covers is where disputes live — and where freight forwarders lose clients they should have kept.

The three ICC clauses and what they actually cover

ICC (C) — the most restrictive

Covers only major named perils: stranding, sinking, collision, fire, explosion, and jettison. Cargo that arrives damaged from condensation, rough handling at the terminal, or theft from an intact container is not covered. ICC (C) is often quoted as the cheapest option and is frequently the default.

ICC (A) — the broadest

Covers all risks of physical loss or damage to the cargo, subject to exclusions. This is the clause that most cargo owners should be on for commercial shipments of any meaningful value. The exclusions still matter: wear and tear, inherent vice, inadequate packing, delay, and deliberate damage by the insured are all excluded under all clauses.

The exclusions most clients do not know about until they claim

• Inadequate packing: if cargo is damaged because it was not packed to withstand normal conditions of the intended journey, the claim is excluded.
• Inherent vice: some cargo deteriorates or damages other cargo through its own natural properties — fruit that over-ripens, rubber that sweats. These are excluded.
• Delay: even if the delay is caused by a covered peril, loss purely from delay is excluded.
• ## The freight forwarder's liability position

In most cases, the freight forwarder's liability for loss or damage to cargo is capped at a fraction of the cargo value — often SDR 2 per kilogram, which translates to roughly USD 2.70 per kilogram. This is why recommending appropriate cargo insurance to clients is not just a service — it is a risk management obligation.

Key Takeaways

1. ICC (C) covers only named major perils — not theft, condensation damage, or terminal mishandling. ICC (A) covers all risks subject to exclusions.

2. Inadequate packing, inherent vice, and delay are excluded under all clauses — even ICC (A). Clients learn this at claim time, not at booking time.

3. A freight forwarder's own liability is typically capped at SDR 2 per kg — roughly USD 2.70/kg. Recommending adequate cargo cover is both a service and a risk management obligation.

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