Customs and Border Logistics Freight Insurance: A Practical UK Guide

Introduction: why “border risk” is different

Moving goods is never just about the miles. The highest-risk moments often happen at the border: documents are checked, loads are opened, pallets are moved, and shipments can sit in limbo while customs queries are resolved. For UK importers, exporters, freight forwarders and logistics operators, these pinch points create a unique mix of exposures: physical loss or damage, theft, contamination, temperature excursions, mis-declaration, and delay.

Customs and border logistics freight insurance is designed to reduce the financial shock when something goes wrong during international transit and the border process. It can sit alongside (or sometimes be confused with) carrier liability, freight forwarder liability, marine cargo insurance, and stock-throughput policies. The key is matching the policy to who owns the goods, who controls the movement, and which parts of the journey create the biggest loss potential.

This guide explains what customs and border logistics freight insurance is, what it typically covers, common exclusions, and how to set up cover that actually responds when you need it.

What is customs and border logistics freight insurance?

In practice, this phrase usually refers to cargo (goods in transit) insurance that specifically contemplates:

• International movements (air, sea, road, rail)

• Border handling and customs inspection

• Temporary storage at ports, airports, bonded warehouses, and inland clearance sites

• Multi-leg journeys with multiple subcontractors

• Increased theft risk and handling damage at transfer points

It’s not a single standard product name across the market. You’ll often see it arranged as one of the following:

• Marine cargo / goods in transit insurance (for the cargo owner)

• Stock throughput (for businesses with frequent shipments and storage, combining transit + storage)

• Freight forwarder liability / logistics liability (for the service provider’s legal liability)

• Haulier’s liability / carrier liability (for the carrier’s legal liability)

The most important distinction: cargo insurance protects the goods themselves (on an “all risks” basis subject to exclusions), while liability covers protect your legal liability to someone else. Many losses at the border don’t neatly fit carrier liability, and liability limits can be far lower than the value of the goods.

Who should consider it?

You’ll usually want to review border-focused freight insurance if you are:

• A UK importer bringing in goods from the EU or worldwide

• A UK exporter shipping to the EU or global customers

• A manufacturer shipping high-value components or finished goods

• An eCommerce brand importing stock in bulk and distributing domestically

• A freight forwarder, customs broker, or 3PL managing international movements

• A business shipping temperature-controlled, fragile, or theft-attractive goods

If your shipments are high frequency, high value, or time-critical, border risk can become a material part of your overall risk profile.

The “who insures what” problem at the border

Border losses often become a blame game. A pallet is damaged during inspection. A container is unsealed and items go missing. A load is held because paperwork doesn’t match. Everyone points to someone else.

A clean insurance setup starts with three questions:

1. Who owns the goods at each stage? (Incoterms matter.)

2. Who is responsible for arranging insurance? (Supplier, buyer, forwarder?)

3. What is the maximum value at risk? (Goods value + freight + duty + VAT + anticipated profit.)

Incoterms and insurable interest (quick, practical view)

Incoterms define who pays for transport and where risk transfers, but they don’t automatically guarantee insurance is in place.

• Under CIF/CIP, the seller arranges insurance (but the level of cover may be minimal).

• Under EXW/FCA/FOB, the buyer often needs to arrange cargo insurance.

If you’re relying on a supplier’s insurance, ask for the certificate and confirm:

• The insured value basis (invoice value? includes freight/duty?)

• The conditions (Institute Cargo Clauses A/B/C)

• The deductible/excess

• Any exclusions relevant to your goods (temperature, theft, fragile items)

What does a good policy typically cover?

Coverage varies by insurer and wording, but strong customs and border logistics freight insurance will often address the following.

1) Physical loss or damage to goods in transit

This is the core: damage from handling, impact, crushing, water ingress, fire, collision, and many other perils.

Many cargo policies are written on Institute Cargo Clauses (ICC).

• ICC (A) is commonly described as “all risks” (still subject to exclusions).

• ICC (B) and ICC (C) are more limited “named perils” forms.

For border-heavy movements, ICC (A) is usually the starting point for broader protection.

2) Theft and pilferage at high-risk points

Theft risk increases at:

• Ports and airports

• Inland clearance depots

• Bonded warehouses

• Trailer yards and service stations

• Cross-docking and transhipment hubs

Insurers may apply conditions such as:

• Approved locks and security devices

• Overnight parking restrictions

• Tracking requirements for high-value loads

• Minimum security standards for storage locations

3) Loading, unloading and transhipment risks

Border processes often involve:

• Pallets being broken down for inspection

• Containers being opened and resealed

• Goods being moved between vehicles or storage areas

A common cause of loss is simple handling damage. Ensure the policy doesn’t unintentionally restrict cover during these stages.

4) Temporary storage and bonded warehousing

Shipments can pause at:

• Port/airport sheds

• Bonded warehouses

• Freeports or customs-controlled areas

• Inland bonded facilities

Cargo policies may include “warehouse-to-warehouse” cover, which can extend to temporary storage, but the time limits and definitions matter. If you routinely hold goods for longer periods, stock throughput or a dedicated storage policy may be more appropriate.

5) General average and salvage

For sea freight, general average can be a nasty surprise. If a vessel sacrifices cargo or incurs extraordinary costs to save the voyage, cargo owners may be asked to contribute.

Cargo insurance can cover:

• General average contributions

• Salvage charges

6) Duty and VAT exposure (where insurable)

If goods are lost after import clearance, you may still face duty/VAT issues depending on circumstances and customs procedures.

Some policies can be arranged to insure duty as part of the insured value. This is especially relevant for higher duty categories.

7) Delay and consequential loss (often limited)

A major border pain point is delay: customs queries, missing paperwork, inspection backlogs, strikes, and IT outages.

Important: standard cargo policies usually do not cover pure delay or loss of market unless a specific extension is added.

If your business is highly time-sensitive (seasonal products, just-in-time manufacturing, chilled goods), ask about:

• Delay in start-up / business interruption solutions

• Deterioration of stock (for temperature-controlled goods)

• Rejection and disposal costs (where available)

Common exclusions and “gotchas” at the border

Most claim disputes come from exclusions or conditions. Watch these closely.

Inherent vice and nature of the goods

If goods spoil or deteriorate due to their own nature (e.g., perishables without a covered external cause), insurers may decline.

Insufficient packaging

Border inspections can be rough on packaging. If packaging is inadequate for the normal rigours of transit, cover may be restricted.

Temperature and refrigeration failures

For chilled/frozen goods, you may need:

• A temperature-controlled cargo extension

• Requirements for calibrated data loggers

• Maintenance and alarm conditions for reefer units

Unattended vehicles and overnight security

Theft claims can fail if conditions weren’t met (e.g., parked overnight in an unsecured location).

War, strikes, riots and civil commotion

These are often excluded by default and require separate clauses/extensions.

Sanctions and prohibited trade

Sanctions compliance is strict. If a shipment breaches sanctions, insurers may be unable to pay.

Misdeclaration and documentation errors

Cargo insurance is not a “paperwork mistake” policy. If the loss is purely financial due to a customs declaration error, you may need:

• Customs liability / errors & omissions cover (for brokers/forwarders)

• Professional indemnity for advisory services

Cargo insurance vs carrier liability: why it matters

Many businesses assume the carrier will pay if something goes wrong. In reality:

• Carrier liability is often limited by international conventions

• Liability depends on proving negligence or breach of contract

• Certain causes (delay, inadequate packaging, inherent vice) may be excluded

Cargo insurance is designed to pay the cargo owner (subject to terms) without needing to win a liability argument.

A practical approach is:

• Cargo owner buys cargo insurance for the goods

• Logistics providers buy liability insurance for their legal exposures

• Contracts clearly define responsibilities and limits

What to insure: setting the right value

Underinsurance is common. Consider insuring on one of these bases:

• Invoice value + freight

• Invoice value + freight + duty

• CIF/CIP value

• 110% of invoice value (commonly used to include profit and incidental costs)

Also consider:

• Peak season stock values

• Single shipment maximum (your “any one conveyance” exposure)

• Accumulation risk at ports/warehouses (multiple shipments in one place)

Policy structures that work well for frequent cross-border trade

Option A: Annual open cover / floating policy

Good for regular shippers. You declare shipments periodically and the policy automatically covers movements within agreed parameters.

Pros:

• Consistent cover

• Less admin than buying per shipment

• Easier claims process

Option B: Stock throughput

Combines:

• Incoming transit

• Storage at your premises/warehouses

• Outgoing transit

Pros:

• Fewer coverage gaps between transit and storage

• Better for businesses holding imported stock

Option C: Single shipment cover

Good for occasional shipments or unusually high-value moves.

Pros:

• Simple

• Tailored to the specific movement

Claims: how to protect your position when customs gets involved

When a shipment is held, opened, or damaged at the border, speed and documentation matter.

Immediate steps

1. Notify your insurer/broker promptly (don’t wait for the situation to “sort itself out”).

2. Preserve evidence: photos, seal numbers, packaging condition, temperature logs.

3. Request written notes from the warehouse/terminal/customs area where possible.

4. Mitigate loss: re-pack, re-ice, move to cold storage, separate damaged goods.

Survey and salvage

Insurers may appoint a surveyor. Cooperate, but keep your own records. If goods can be salvaged or sold at reduced value, document the process.

The paperwork that wins claims

• Commercial invoice and packing list

• Bill of lading / airway bill / CMR

• Proof of value and freight costs

• Customs documents (where relevant)

• Condition reports and delivery notes

• Correspondence about holds/inspections

Risk management that can reduce premiums and losses

Insurers like predictable processes. Practical improvements include:

• Strong packaging standards and documented packing instructions

• Seals, seal logs, and photo evidence at handover points

• Approved route planning and secure parking rules

• GPS tracking for theft-attractive loads

• Temperature monitoring with alerts for reefer shipments

• Vetting subcontractors and maintaining a carrier/forwarder approval list

• Clear Incoterms and contract wording to avoid coverage gaps

Choosing the right partner: questions to ask

When arranging customs and border logistics freight insurance, ask:

• Is cover warehouse-to-warehouse and what are the time limits?

• Which ICC clause applies (A/B/C) and what extensions are included?

• Are theft conditions realistic for our routes and operations?

• Are bonded warehouses/ports included as “ordinary course of transit”?

• Can we include duty and other landed costs in the insured value?

• What are the any one conveyance and any one location limits?

• How are claims handled when multiple parties are involved?

Quick examples (real-world scenarios)

Example 1: Inspection damage

A pallet of precision components is opened for inspection and re-wrapped poorly. Water ingress occurs during onward road transit.

• Cargo insurance may respond (subject to packaging/handling terms).

• Carrier liability could be disputed due to multiple handlers.

Example 2: Theft after seal broken

A container is unsealed at a port inspection area and later resealed. On arrival, cartons are missing.

• Cargo insurance may respond if theft is covered and conditions are met.

• Evidence (seal numbers, photos, inspection records) becomes critical.

Example 3: Temperature excursion during customs hold

A chilled shipment is held for document checks. The reefer unit alarms but no action is taken for hours.

• Standard cargo cover may not respond without a temperature extension.

• A specialist perishable/reefer wording may be needed.

FAQs

Is freight insurance the same as marine cargo insurance?

Freight insurance is often used as a casual term for cargo insurance. Marine cargo insurance is the traditional market name even when goods move by road or air.

Does cargo insurance cover customs delays?

Usually not for pure delay. Some extensions exist, but they’re not standard. If delay causes physical damage (e.g., spoilage) and you have the right extension, it may be covered.

If the carrier is at fault, do I still need cargo insurance?

Yes, because carrier liability limits can be low and proving fault can be slow. Cargo insurance pays faster and can pursue recovery from the carrier later (subrogation).

What’s the difference between freight forwarder liability and cargo insurance?

Forwarder liability covers the forwarder’s legal liability to the customer. Cargo insurance covers the goods themselves for the cargo owner.

How much should I insure for?

Commonly invoice value plus freight, often uplifted to 110% to include profit and incidental costs. Consider duty and VAT where appropriate.

Conclusion: insure the border, not just the journey

Customs and border logistics create concentrated risk: more handling, more waiting, more parties, and more opportunity for things to go wrong. The right freight insurance programme combines clear responsibility (Incoterms and contracts), appropriate cargo cover (often ICC A with relevant extensions), and realistic security and temperature controls.

If you’re shipping regularly, consider an annual open cover or stock throughput policy to reduce gaps. And if your goods are high value, theft-attractive, or temperature sensitive, make sure the policy is built for those realities.

Need help reviewing your current setup? A quick review of your routes, values, Incoterms and storage points is usually enough to identify the biggest gaps and the most cost-effective fixes.