Freight Insurance During Economic Uncertainty

Introduction: why uncertainty makes freight riskier

When the economy is unpredictable, freight moves don’t stop — but the risk profile changes fast. Demand swings can lead to last‑minute route changes, storage delays, carrier substitutions and tighter budgets. At the same time, inflation can push up replacement costs, repair costs and general average contributions.

For UK businesses importing components, exporting finished goods, or moving stock between sites, freight insurance is one of the simplest ways to stabilise cashflow. The goal isn’t to “buy peace of mind” in a vague sense — it’s to make sure a single incident doesn’t wipe out margin, breach a contract, or stall operations.

This guide explains how freight insurance works, what typically goes wrong during economic uncertainty, and how to structure cover so it actually responds when you need it.

What is freight insurance (and what it isn’t)

Freight insurance (often called cargo insurance or goods in transit insurance) covers loss of or damage to goods while they’re being transported. Depending on the policy, it can apply to:

• Imports and exports

• UK domestic transit

• Road, sea, air and rail

• Multi‑modal shipments (for example, road to port, sea crossing, then road again)

• Temporary storage in transit (subject to policy terms)

It’s important to separate freight insurance from other things that sound similar:

• Carrier liability: the haulier/shipping line’s legal liability is usually limited by international conventions and contract terms. It may not reflect the full value of your goods.

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

• Trade credit insurance: covers non‑payment by customers, not physical loss or damage.

In uncertain times, many businesses assume “the carrier will pay if something happens”. In practice, carrier liability is often capped, exclusions are common, and disputes can take months.

Why economic uncertainty increases freight claims (and claim severity)

Economic uncertainty doesn’t directly cause a container to fall off a ship — but it creates conditions where incidents become more likely and more expensive.

1) More route changes and re‑routing

When schedules change, goods may be diverted to different ports, trans‑shipped more often, or moved via unfamiliar carriers. Each handover is a point where:

• Packaging is stressed

• Documentation errors happen

• Security controls vary

2) Longer dwell times and storage delays

Backlogs, port congestion, customs delays and labour shortages can leave goods sitting:

• In containers for longer

• In temporary storage yards

• On trailers overnight

The longer goods sit, the higher the exposure to theft, water ingress, temperature issues and handling damage.

3) Cost inflation and underinsurance

If you insured the same shipment value you used two years ago, you may now be underinsured. Replacement cost inflation, higher freight charges and higher duty/VAT can all increase the “true” value at risk.

4) Increased theft and fraud

Tighter economic conditions can correlate with higher theft attempts, including:

• Trailer theft

• Load hijacking

• “Ghost” carriers

• Fraudulent collection using forged paperwork

5) Cashflow pressure leading to riskier decisions

When budgets are tight, businesses may:

• Reduce packaging quality

• Skip surveys

• Use cheaper carriers

• Increase excesses without understanding the impact

Those choices can be fine if managed — but they need to be aligned with policy conditions.

The main types of freight insurance cover

Policies vary, but most freight insurance solutions fall into a few common structures.

All risks (Institute Cargo Clauses A)

Often described as “all risks”, this is the broadest form of cargo cover. It typically covers physical loss or damage from external causes, subject to exclusions.

Common exclusions can include:

• Inherent vice (goods deteriorating due to their nature)

• Ordinary leakage/ordinary loss in weight or volume

• Insufficient packing

• Delay (even if caused by an insured event)

• War/strikes (usually offered as extensions)

Named perils (Institute Cargo Clauses B or C)

These are more limited and cover only specific listed events (for example, fire, explosion, vessel grounding, collision). They can be cheaper but are easier to “miss” with modern claims like theft from unattended vehicles or handling damage.

Stock throughput (for manufacturers and distributors)

If you’re moving goods frequently and want one joined‑up approach, stock throughput can combine:

• Stock at premises

• Goods in transit

• Sometimes storage at third‑party locations

This can reduce gaps between property and transit policies — useful when supply chains are volatile.

Annual open cover vs single shipment

• Annual open cover: designed for regular shippers. You declare shipments (or they’re automatically covered within limits) and the policy runs continuously.

• Single shipment: useful for occasional shipments, high‑value one‑offs, or when you need bespoke terms for a specific movement.

In uncertain markets, annual open cover is often the most practical option because it avoids last‑minute “did we remember to insure this?” problems.

Key policy features to get right (especially during uncertainty)

This is where freight insurance either becomes a reliable safety net — or a frustrating document that doesn’t pay.

Basis of valuation: what value is actually insured?

Cargo is commonly insured on a valuation basis such as:

• Invoice value

• Cost price

• Cost + freight + 10% (a common approach)

During inflationary periods, you should check whether your valuation basis still reflects:

• Current replacement cost

• Increased freight charges

• Duty and other import costs

• The profit element you’d need to stay whole

If you’re exporting, consider whether you need to insure to selling price to protect margin.

Limits: per conveyance, per container, per location

Uncertainty often leads to consolidation (fewer, larger shipments). That can push you over:

• Per vehicle limits

• Per container limits

• Accumulation limits at ports or storage yards

Make sure your policy matches how you actually ship today, not how you shipped last year.

Excess (deductible): keep it realistic

A higher excess can reduce premium, but it can also turn frequent “medium” losses into self‑insured costs. During tight cashflow periods, a manageable excess is often better than a low premium.

War and strikes extensions

Geopolitical risk and industrial action can rise during uncertain periods. Many cargo policies require separate clauses for:

• War risks

• Strikes, riots and civil commotions

If you ship through higher‑risk regions or rely on ports prone to disruption, these extensions can be critical.

Temperature-controlled and perishable goods

If you ship pharmaceuticals, medical devices with temperature requirements, food, or other sensitive goods, you may need:

• Temperature deviation cover

• Refrigeration breakdown cover

• Data logger requirements

• Specific packing and handling conditions

Theft and unattended vehicle conditions

Road theft is a common claim area. Policies may include conditions about:

• Approved locks and immobilisers

• Tracking requirements

• Overnight parking (secure compounds only)

• Maximum unattended time

If your operations involve overnight stops or driver changes, align procedures with the policy wording.

Packaging and “insufficient packing” disputes

Insurers can decline claims where damage is attributed to poor packaging. During cost‑cutting periods, packaging often changes.

Practical steps:

• Document packing standards

• Use photos at dispatch

• Keep supplier packaging specs

• For fragile/high‑value goods, consider pre‑shipment surveys

Incoterms: who should insure, and when does risk transfer?

A common cause of uninsured losses is misunderstanding Incoterms. Incoterms define responsibilities for costs and risk transfer between buyer and seller.

Examples (simplified):

• EXW (Ex Works): buyer takes risk very early — often from the seller’s premises.

• FOB (Free On Board): risk transfers when goods are on board the vessel.

• CIF/CIP: seller arranges insurance, but the level of cover may be minimal unless specified.

During uncertainty, contracts change quickly. If you switch Incoterms, you may accidentally create a gap where neither party has arranged adequate insurance.

Tip: align your freight insurance with your most common Incoterms and build a simple internal checklist for sales/procurement.

Common claims scenarios in uncertain markets (and how to reduce them)

Scenario 1: Theft from a parked trailer

A load is stolen overnight when a driver parks in an unsecured area due to delays.

Risk controls:

• Use secure parking networks

• Require high‑security locks and seals

• Implement “no stop” routes for high‑theft lanes

• Vet carriers and subcontractors

Insurance considerations:

• Confirm theft is covered under your clause

• Check unattended vehicle conditions

• Ensure per‑vehicle limits are adequate

Scenario 2: Water ingress and condensation in containers

Goods arrive with water damage due to condensation (“container rain”) or compromised seals.

Risk controls:

• Use desiccants and moisture barriers

• Inspect container condition before loading

• Use appropriate dunnage and bracing

Insurance considerations:

• Ensure “all risks” cover where possible

• Keep loading photos and inspection records

Scenario 3: Handling damage during trans-shipment

Extra handling occurs because of re‑routing and the goods are dropped or crushed.

Risk controls:

• Clear handling instructions on packaging

• Use shock indicators for sensitive equipment

• Choose carriers with suitable equipment

Insurance considerations:

• Named perils cover may not respond; all risks is safer

Scenario 4: General average after a major incident

A vessel incident leads to a general average declaration. Cargo owners may have to contribute to shared losses before goods are released.

Risk controls:

• Understand your exposure on high‑value sea shipments

Insurance considerations:

• Ensure general average and salvage charges are covered

• Have documents ready to speed up security release

What information insurers and brokers need (so cover is accurate)

To get the right terms, you’ll usually need to provide:

• Nature of goods (including fragility, theft attractiveness, temperature sensitivity)

• Annual turnover and estimated transit values

• Maximum value any one conveyance/container

• Typical routes and modes (UK, EU, worldwide)

• Packing methods and who packs (supplier, you, 3PL)

• Security measures (tracking, locks, secure parking)

• Claims history (even if nil)

• Incoterms used

During uncertain periods, update this information more often. A policy set up on last year’s shipping pattern can quietly become inadequate.

Claims: how to make sure you get paid quickly

When something goes wrong, speed and documentation matter.

Best practice steps:

1. Notify promptly: tell your broker/insurer as soon as you suspect loss or damage.

2. Preserve evidence: photos, seals, packaging, CCTV where possible.

3. Mitigate loss: take reasonable steps to reduce further damage (for example, moving goods to dry storage).

4. Keep paperwork: invoice, packing list, bill of lading/CMR, delivery notes, survey reports.

5. Use a surveyor when required: some policies require surveys above certain values.

A simple internal “claims pack” template can save days when teams are under pressure.

Freight insurance checklist for uncertain times

Use this as a quick review:

• Are shipment values updated for inflation, freight and duty?

• Do limits match today’s consolidation and container values?

• Are war/strikes extensions in place where needed?

• Do theft conditions match real driver behaviour and routes?

• Are Incoterms consistent with who insures and when risk transfers?

• Are packing standards documented and consistent?

• Do you have a claims process and evidence checklist?

How Insure24 can help

If you’re moving goods in or out of the UK — or distributing stock domestically — we can help you structure freight insurance that fits your routes, values and risk controls.

We’ll typically look at your shipping pattern, maximum single shipment exposure, and the practical realities (delays, storage, subcontractors) so you’re not relying on assumptions when a claim happens.

FAQs

Do I need freight insurance if the carrier has insurance?

Carrier insurance usually relates to the carrier’s legal liability, which can be limited and may not match your cargo value. Freight insurance is designed to protect your financial interest in the goods.

Is delay covered under freight insurance?

Delay itself is commonly excluded, even if caused by an insured event. Some policies may offer limited extensions, but you should assume delay is not covered unless clearly stated.

What is general average and why does it matter?

General average is a maritime principle where cargo owners share certain losses and costs after a major incident. Without cargo insurance, you may have to pay a contribution to release your goods.

Can I insure to selling price rather than invoice cost?

Often yes, depending on the insurer and policy structure. This can be important if you want to protect margin rather than just cost.

What’s the difference between annual open cover and single shipment cover?

Annual open cover provides ongoing protection for regular shipments, usually within agreed limits. Single shipment cover is arranged for a specific movement.

Does freight insurance cover theft from an unattended vehicle?

It can, but it often comes with strict security conditions (secure parking, locks, tracking). Make sure your procedures match the policy requirements.

Call to action

If you want a quick review of your current freight insurance — or you’re arranging cover for a new route, a higher‑value shipment, or a change in Incoterms — get in touch with Insure24 for a straightforward, UK‑based quote and advice.