Cargo Insurance for E-commerce Businesses (International Shipping)

If you sell online and ship internationally, cargo insurance isn’t a “nice to have” — it’s the difference between a painful write-off and a recoverable loss when goods are lost, stolen, damaged, delayed, or caught up in customs issues. For UK e-commerce businesses, the risk profile is unique: you’re often shipping high volumes of smaller parcels, using multiple carriers and fulfilment partners, and relying on Incoterms and platform rules that can shift liability in ways that aren’t always obvious.

This guide explains what cargo insurance is, what it covers, where e-commerce businesses get caught out, and how to choose the right policy for international shipping.

What is cargo insurance?

Cargo insurance (also called goods in transit insurance or marine cargo insurance) protects the value of goods while they’re being transported. Despite the “marine” label, it typically covers international transit by sea, air, road and rail — including multimodal shipments.

For e-commerce businesses, cargo insurance can apply to:

• Imports into the UK (stock coming from overseas suppliers)

• Exports from the UK (orders shipped to customers abroad)

• Stock moving between warehouses or fulfilment centres

• Shipments handled by couriers, freight forwarders, postal services, and consolidators

The key point: carrier liability is not the same as cargo insurance. Carriers often have limited liability, strict claim time limits, and exclusions that can leave you significantly out of pocket.

Why cargo insurance matters for international e-commerce

International shipping adds layers of risk that domestic delivery doesn’t:

• Multiple handovers (supplier → forwarder → airline/ship → customs → last-mile carrier)

• Longer transit times and more storage points

• Greater exposure to theft, pilferage, and misrouting

• Customs inspections and repacking damage

• Temperature and humidity exposure (especially for cosmetics, electronics, supplements, and food-adjacent products)

• Political risk, strikes, and port disruption

Even if you’re using a major courier, the compensation you receive for a lost parcel may be capped at a level far below your retail value — and sometimes below your cost price.

Common loss scenarios (real-world e-commerce examples)

Here are typical claim scenarios we see for international e-commerce shipments:

• A pallet of best-selling stock is damaged by water during port storage.

• A consolidated shipment goes missing after a warehouse scan error.

• Parcels are stolen from a last-mile depot overseas.

• Goods are crushed due to poor stowage in a container.

• Fragile items arrive broken because of repeated handling and repacking.

• Customs opens cartons for inspection and reseals them poorly, causing damage.

• A shipment is delayed and seasonal stock loses value (e.g., holiday inventory).

Cargo insurance won’t fix operational disruption, but it can protect your balance sheet.

What does cargo insurance typically cover?

Coverage depends on the policy wording, but cargo insurance is usually arranged on one of these bases:

• All Risks (Institute Cargo Clauses A): The broadest cover, subject to exclusions.

• Named Perils (Institute Cargo Clauses B or C): Covers only specific risks (more limited).

For e-commerce businesses shipping internationally, “All Risks” is often the starting point because parcel networks and high handling frequency increase the chance of accidental damage.

Typical insured events

Depending on your cover level, cargo insurance may respond to:

• Loss of goods (missing cartons, theft, non-delivery)

• Physical damage (impact, crushing, water damage)

• General average contributions (shared maritime loss events)

• Salvage charges (costs to protect or recover goods)

• Jettison (goods thrown overboard to save a vessel)

What about returns and reverse logistics?

Many e-commerce businesses underestimate the risk and cost of returns. Some cargo policies can be extended to cover return shipments, but this must be specified. If you ship internationally with a generous returns policy, ask for cover that matches your reverse logistics reality.

What cargo insurance usually does NOT cover (key exclusions)

Most cargo policies have exclusions that can surprise e-commerce operators:

• Inadequate packaging: If packaging isn’t suitable for the journey, claims can be declined.

• Inherent vice: Goods that deteriorate naturally (e.g., certain perishables).

• Delay: Pure financial loss due to delay is often excluded unless you buy specialist cover.

• War, strikes, riots, civil commotion: Often excluded unless added back via extensions.

• Unseaworthiness/unsuitability: If you knowingly ship in unsuitable conditions.

• Cyber or system failures: Some policies exclude losses arising from cyber events.

Because e-commerce often ships smaller parcels, packaging and labelling are frequent claim friction points. Document your packaging standards and keep evidence.

Carrier liability vs cargo insurance: the gap that hurts

A major reason businesses buy cargo insurance is that carrier compensation is limited.

Carriers may rely on international conventions (for example, CMR for road, Warsaw/Montreal for air) that cap liability per kilogram, not per item value. That means a lightweight, high-value product (electronics, jewellery, premium cosmetics) can be massively underinsured if you rely on carrier liability alone.

Also, carriers often require:

• Proof of value

• Proof of handover and tracking milestones

• Notification within strict time limits

• Evidence of packaging adequacy

Cargo insurance can provide broader protection, clearer claims routes, and higher limits aligned to your exposure.

Who should arrange cargo insurance? (Incoterms and responsibility)

In international trade, responsibility depends on your contract terms and Incoterms.

If you import stock

If you buy goods from overseas suppliers, you might be on terms where the supplier is responsible for shipping insurance — or you might be responsible from the moment goods leave their premises.

Common pitfalls:

• Assuming the supplier’s insurance covers your interest (it may not).

• Assuming “CIF” means you’re fully protected (the supplier may buy minimal cover).

• Not being named as an insured party.

If you export to customers

If you sell direct-to-consumer internationally, you may be responsible for goods until delivery (and sometimes beyond, depending on consumer law, platform policies, and your own returns promise).

If you use Delivered Duty Paid (DDP) style shipping, you may carry more responsibility than you realise.

Policy types for e-commerce: annual open cover vs single shipment

Annual open cover (recommended for regular shippers)

An open cover policy insures shipments automatically within agreed parameters. It’s ideal if you:

• Ship frequently (daily/weekly)

• Use multiple carriers or routes

• Import and export

• Need predictable budgeting and streamlined claims

You declare shipments periodically (monthly/quarterly) or via integration with your shipping data, depending on insurer and broker setup.

Single shipment cover

This can work if you ship occasionally, or if you have one-off high-value shipments (e.g., a container of new product launch inventory). It’s less efficient for high-volume e-commerce.

Key details to get right (so claims don’t fail)

Cargo insurance is powerful, but only if the details match your operations.

1) Sum insured and valuation basis

Decide how goods are valued:

• Cost price

• Cost + freight

• Cost + freight + duty

• Selling price (retail)

Many e-commerce brands prefer a basis that reflects landed cost and margin, but insurers will want clarity and evidence.

2) Limits per conveyance and per shipment

If you ship in pallets, cages, or containers, you need limits that reflect worst-case loss:

• One pallet lost

• One container damaged

• One courier van theft

3) Geographic limits and routes

List where you ship:

• EU, USA/Canada, Middle East, Asia-Pacific

• High-risk territories

Some destinations may require additional terms.

4) Packaging and packing standards

Set internal standards and keep them consistent:

• Double-wall cartons for heavier items

• Void fill and corner protection

• Tamper-evident seals for high-value goods

• Moisture barriers for sea freight

If you outsource fulfilment, ensure the 3PL’s packing process meets your policy requirements.

5) Claims process and evidence

Build a simple internal checklist:

• Photos of damage (outer and inner packaging)

• Carrier tracking screenshots

• Commercial invoice and proof of value

• Packing list and dispatch records

• Customer communication timeline

Speed matters. Late notification can reduce or void claims.

Add-ons and extensions worth considering

Depending on what you ship and how you ship it, consider:

• War and strikes extensions (common for international routes)

• Theft and non-delivery extensions (especially for parcel networks)

• Stock throughput cover (covers goods from supplier through storage to dispatch)

• Warehouse/fulfilment stock cover (if you hold stock in multiple locations)

• Temperature-controlled cover (if you ship sensitive goods)

• Exhibition or trade show cover (for international events)

For many e-commerce businesses, stock throughput can be a smart simplification because it reduces gaps between marine transit and warehouse insurance.

How cargo insurance interacts with other business insurance

Cargo insurance is one piece of the risk puzzle. You may also need:

• Commercial combined insurance (property, business interruption, liability)

• Product liability (especially for consumer goods sold overseas)

• Professional indemnity (if you provide advice, design, or services)

• Cyber insurance (if you rely on online sales and customer data)

• Employers’ liability (if you have staff)

A common gap is assuming your warehouse policy covers goods “in transit” — or assuming cargo insurance covers storage. The boundary matters, and it’s fixable with the right structure.

Choosing a cargo insurance policy: a practical checklist

When comparing options, focus on these questions:

• Do we ship parcels, pallets, or containers — and what’s the maximum value in one movement?

• Are we importing, exporting, or both?

• Do we use a 3PL, Amazon FBA, or overseas fulfilment centres?

• What Incoterms do we buy under, and what do we promise customers?

• Do we need cover for returns?

• Do we ship high-value, theft-attractive, or fragile items?

• What evidence can we reliably produce if a claim happens?

A good broker will translate your shipping reality into policy language that stands up at claim time.

FAQs: Cargo insurance for international e-commerce shipping

Do I need cargo insurance if my courier offers “insurance” at checkout?

Courier add-ons can help, but they may have strict exclusions, low limits, and complex claims processes. A dedicated cargo policy can be broader, more consistent across carriers, and better aligned to your true exposure.

Is cargo insurance expensive?

Cost depends on goods type, routes, packaging, claims history, and values shipped. For many e-commerce businesses, the premium is small compared to the financial impact of one major loss event.

Does cargo insurance cover theft from a porch or customer address?

Usually not — cargo insurance typically ends at delivery to the named destination. If you need cover beyond delivery, you’ll need to discuss extensions and your delivery terms.

Can I insure shipments going to multiple countries?

Yes. Open cover policies commonly include broad territories, but some destinations may be excluded or require special terms.

What if I use Amazon FBA or an overseas fulfilment centre?

You may need a combination of cargo insurance and stock/warehouse cover that specifically includes third-party locations. Don’t assume the platform’s protection replaces your own insurance.

What’s the difference between cargo insurance and goods in transit insurance?

“Goods in transit” often refers to domestic transit, while “cargo/marine cargo” is commonly used for international and multimodal shipping. The wording matters more than the label — confirm exactly what journeys are insured.

Next steps: get the right cover for your shipping model

Cargo insurance should match how you actually ship: your carriers, your routes, your packaging standards, your fulfilment partners, and your customer promises. Done properly, it reduces financial shocks, protects cash flow, and helps you scale internationally with confidence.

If you want, share:

• Your typical shipment values (average and maximum)

• Top destinations (EU/USA/etc.)

• Whether you import stock, export orders, or both

• Whether you use a 3PL/Amazon FBA

…and I’ll outline the most sensible cargo insurance structure and the key policy clauses to request.