Customs Brokerage Services & Freight Insurance: A Practical UK Guide for Importers and Exporters

Introduction: why these two services belong in the same conversation

If you import or export goods, two things can make or break a shipment: getting customs cleared without delays, and protecting the value of the cargo while it’s in transit. Customs brokerage services help you navigate declarations, duties, VAT, commodity codes, and border processes. Freight insurance (often called cargo insurance) protects your goods financially if they’re lost, damaged, or stolen.

Handled well, brokerage and insurance reduce disruption, protect cashflow, and keep customers happy. Handled poorly, you can face storage charges, missed delivery windows, rejected entries, unexpected duty bills, and disputes over who is responsible when something goes wrong.

This guide explains how customs brokerage services work in the UK, what freight insurance covers, and how to align both with your contracts and Incoterms.

What is a customs broker (and what do they actually do)?

A customs broker (or customs agent) is a specialist who prepares and submits customs declarations and supporting information to HMRC and border systems, ensuring your goods comply with UK import/export rules.

In practice, a good broker will:

• Classify goods correctly using commodity codes (HS codes)

• Determine duty rates and whether any reliefs apply

• Calculate import VAT and advise on VAT treatment

• Prepare and submit import/export declarations

• Manage supporting documents (commercial invoices, packing lists, certificates)

• Handle safety and security filings where required

• Liaise with carriers, freight forwarders, ports, and HMRC

• Advise on special procedures (temporary admission, inward processing, customs warehousing)

• Help you avoid common compliance errors that trigger inspections and delays

Broker vs freight forwarder vs carrier

These roles often overlap, so it’s worth being clear:

• Carrier: physically moves the goods (airline, shipping line, haulier).

• Freight forwarder: organises transport, routing, consolidation, and documentation; may offer customs services.

• Customs broker/agent: focuses on customs declarations and compliance; may be part of a forwarder.

Many businesses use a forwarder that also provides brokerage. Others appoint a specialist broker and keep transport separate.

Why customs clearance delays are expensive (even when goods aren’t damaged)

Freight insurance is designed for physical loss or damage. Customs issues create a different type of cost: delay.

Common delay-related costs include:

• Demurrage and detention charges (containers held at port)

• Storage charges at terminals or bonded facilities

• Missed delivery slots and contractual penalties

• Production downtime (if parts don’t arrive)

• Spoilage (especially for temperature-sensitive goods)

• Customer churn and reputational damage

This is why the best approach is prevention: strong customs processes plus the right insurance structure.

The core customs documents you’ll need (and why they matter)

Your broker can only work with what you provide. The most common documents include:

• Commercial invoice: must be accurate on description, value, currency, seller/buyer details, and Incoterms.

• Packing list: helps verify quantities, weights, and packaging.

• Transport document: bill of lading, airway bill, or CMR.

• EORI number: UK EORI for importing/exporting.

• Certificates and licences: depending on goods (e.g., controlled items).

• Proof of origin: if claiming preferential duty rates under a trade agreement.

Errors in description, value, or origin are among the biggest triggers for HMRC queries.

Commodity codes, valuation, and origin: the “big three” compliance risks

1) Commodity code classification

Commodity codes determine duty rates and sometimes whether goods are restricted. Misclassification can lead to underpaid duty, penalties, and retrospective bills.

2) Customs valuation

Customs value is not always the same as the invoice total. It can include freight, insurance, commissions, assists, and other costs depending on the valuation method.

3) Country of origin

Origin affects duty rates and eligibility for preference. “Made in” isn’t always straightforward when components come from multiple countries.

A broker can advise, but you remain responsible for the accuracy of information provided.

Where freight insurance fits: what it is (and what it isn’t)

Freight insurance (cargo insurance) covers goods while they are being transported. Depending on the policy, it can cover:

• Sea freight

• Air freight

• Road haulage

• Rail

• Multimodal movements (door-to-door)

It is not the same as:

• Carrier liability: limited compensation under conventions and contracts.

• Marine hull insurance: covers the vessel, not your cargo.

• Trade credit insurance: covers non-payment by customers.

Why relying on carrier liability is risky

Carriers typically have limited liability, often based on weight or package limits, and may exclude certain causes. If you ship high-value, low-weight goods (electronics, medical devices, specialist components), carrier liability may be nowhere near enough.

Freight insurance is designed to cover the cargo value (and often additional costs) rather than a capped liability figure.

Common freight insurance cover types (in plain English)

Cargo insurance is often described using “clauses” that indicate how broad the cover is.

• All Risks (broad cover): covers most accidental loss or damage, subject to exclusions.

• Named Perils (limited cover): covers only specified events (e.g., fire, collision).

• Total Loss only: the narrowest option, typically for bulk or low-value cargo.

Your broker or insurer will help match the cover to the goods, route, and packaging.

Typical exclusions and gaps to watch for

Even broad cargo cover has exclusions. Common examples include:

• Inherent vice (goods deteriorating due to their nature)

• Inadequate packaging

• Delay (often excluded)

• Ordinary leakage, ordinary wear and tear

• Insolvency of carrier (varies)

• War and strikes (often separate extensions)

• Unattended vehicle theft conditions (for road)

The key is not to assume “all risks” means “everything.” Ask for the wording and confirm the main exclusions.

Incoterms: who should arrange freight insurance?

Incoterms set out responsibilities between buyer and seller, including who arranges transport and who bears risk at different points.

A few examples:

• EXW (Ex Works): buyer takes risk early; buyer usually arranges insurance.

• FOB (Free On Board): risk transfers when goods are loaded on the vessel; buyer often insures the sea leg.

• CIF (Cost, Insurance and Freight): seller must arrange insurance (but minimum cover may be limited).

• DAP/DDP: seller bears more responsibility; seller typically insures.

A common trap with CIF

Under CIF, the seller must provide insurance, but it may be the minimum level (often not “all risks”). If you’re the buyer and you need broader protection, you may still want your own cargo policy.

How customs brokerage and freight insurance work together

These services intersect in several practical ways:

1. Accurate values: customs value and insured value should be consistent and well-documented.

2. Documentation: the same invoice, packing list, and transport documents support both customs and claims.

3. Risk control: brokers can flag routes, ports, or goods that attract inspections; insurers may have conditions based on theft hotspots or packaging.

4. Claims support: a broker can help evidence what was shipped and when, while the insurer needs proof of loss and the extent of damage.

A joined-up approach reduces disputes and speeds up recovery.

What does freight insurance typically cover in a claim?

Depending on the wording, a cargo claim may include:

• The value of goods lost or damaged

• Reasonable costs to minimise loss (e.g., salvage, reconditioning)

• Surveyor fees (sometimes)

• General average contributions (marine shipments)

• Additional costs such as freight charges (if insured value includes them)

The policy will specify how the insured value is calculated. A common approach is invoice value plus freight plus a percentage uplift (to cover anticipated profit).

How much does freight insurance cost?

Premium depends on:

• Goods type and fragility

• Packaging and handling

• Route, mode of transport, and transhipments

• Claims history

• Sum insured and policy structure

One-off shipment vs annual open cover

• Single shipment policy: useful for occasional shipping.

• Annual open cover: designed for regular importers/exporters; you declare shipments periodically.

For frequent shippers, open cover is often more efficient and can reduce admin.

Choosing a customs broker: a practical checklist

Not all brokers are equal. When comparing providers, ask:

• Which UK ports/airports do you cover?

• Do you handle both import and export declarations?

• Can you advise on commodity codes and origin evidence?

• Do you support special procedures (warehousing, inward processing)?

• What’s your process for resolving HMRC queries?

• How do you manage document collection and audit trails?

• What are your cut-off times for same-day clearance?

• Do you have experience with my product category?

If you operate in a regulated sector (e.g., medical devices, chemicals, food), sector experience matters.

Choosing freight insurance: what to confirm before you buy

To avoid nasty surprises, confirm:

• The exact cover level (all risks vs named perils)

• Whether it’s warehouse-to-warehouse (door-to-door)

• Any theft conditions for road transport

• Temperature control requirements (if applicable)

• War/strikes extensions if shipping internationally

• Claims notification time limits

• How insured value is calculated

• Any exclusions that are particularly relevant to your goods

Claims: what to do if goods arrive damaged

Fast, organised action makes claims smoother.

1. Inspect immediately on arrival and note damage on delivery documents.

2. Take photos/video of outer packaging, inner packaging, and the goods.

3. Keep all packaging until the insurer confirms it’s no longer needed.

4. Notify the carrier promptly and follow their claims process.

5. Notify your insurer/broker as soon as possible.

6. Gather documents: invoice, packing list, transport docs, survey report (if required).

If you have a customs broker and a freight forwarder involved, keep them in the loop. They can help evidence the shipping timeline and handling points.

Risk management tips that reduce both customs and cargo problems

A few practical habits reduce the likelihood of delays and losses:

• Standardise product descriptions and commodity codes in your ERP

• Use consistent Incoterms across suppliers and purchase orders

• Improve packaging specifications and document them

• Use tamper-evident seals and track-and-trace where appropriate

• Pre-clear documentation before goods arrive

• Keep origin evidence organised (supplier declarations, manufacturing records)

• Review your cargo policy annually as product mix changes

When you should speak to an insurance broker

If any of these apply, it’s worth getting advice rather than buying the cheapest cover:

• You ship high-value goods with low weight

• You rely on just-in-time deliveries

• You ship internationally with multiple transhipments

• You have temperature-sensitive or fragile goods

• Your contracts use Incoterms that shift risk in unexpected ways

• Your customers require proof of insurance or specific cover limits

A specialist commercial insurance broker can help align policy wording with your real-world shipping and contractual risks.

FAQs

Do I need a customs broker to import into the UK?

Not legally in every case, but most businesses use one because declarations are technical and errors can be costly. If you import regularly, a broker often saves time and reduces risk.

Is freight insurance mandatory?

Usually not, but it’s strongly recommended. Carrier liability is limited and may not reflect the value of your goods.

Does freight insurance cover customs delays?

Typically no. Delay is commonly excluded, although some specialist covers may exist. The best protection is strong customs compliance and planning.

Can I insure goods under CIF if the seller already provides insurance?

Yes. The seller’s insurance may be minimum cover. If you need broader “all risks” protection or higher limits, you can arrange your own policy.

What’s the difference between cargo insurance and marine insurance?

Cargo insurance is a form of marine insurance focused on goods in transit. “Marine” is often used broadly to include sea, air, and land transit covers.

What information will an insurer need to quote freight insurance?

Typically: goods description, value, packaging, routes, modes of transport, frequency of shipments, and any previous claims.

Conclusion: protect the shipment, protect the business

Customs brokerage services and freight insurance solve different problems, but they work best together. Brokerage reduces the risk of clearance delays and compliance issues. Freight insurance protects your balance sheet when goods are lost or damaged.

If you want fewer surprises at the border and fewer financial shocks in transit, align your Incoterms, tighten your documentation, and make sure your insurance cover matches the real value and risk profile of your shipments.

Call to action

If you’d like help reviewing your freight insurance options or making sure your cover aligns with your shipping terms, speak to a specialist commercial insurance broker. A quick review can highlight gaps, reduce risk, and give you confidence that your goods are properly protected from warehouse to destination.