Freight Insurance for Marketplaces (Amazon & eBay Sellers): A UK Seller’s Guide

Introduction: why marketplace sellers need freight insurance

If you sell on Amazon or eBay, your reputation is only as strong as your delivery performance. A single lost pallet, a soaked carton, or a container delayed at the wrong time can wipe out margin, trigger negative feedback, and create cashflow headaches.

Many sellers assume the courier or freight forwarder will “sort it out” if something goes wrong. In reality, carrier liability is limited, claims can take time, and the paperwork burden often sits with you.

Freight insurance (also called cargo insurance or goods-in-transit insurance, depending on the journey) is designed to protect your stock while it’s moving through the supply chain—whether that’s a small parcel to a UK customer, a pallet to an Amazon fulfilment centre, or a container coming into the UK from overseas.

This guide explains what freight insurance is, how it works for Amazon and eBay sellers, what to watch out for in the small print, and how to choose cover that fits your fulfilment model.

What is freight insurance?

Freight insurance is insurance for goods while they are being transported. It can apply to:

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

• Domestic UK deliveries (courier, pallet networks, own vehicles, third-party hauliers)

• Multi-leg journeys (supplier to port, port to warehouse, warehouse to Amazon FBA, and onward)

The goal is simple: if your stock is lost, stolen, or damaged while in transit (and sometimes while temporarily stored during transit), the policy can reimburse you for the insured value—subject to terms, conditions and exclusions.

Freight insurance vs carrier liability: the key difference

A common (and expensive) misunderstanding is thinking the carrier’s liability equals insurance.

Carrier liability is usually:

• Limited by law or contract (often by weight, not by value)

• Dependent on proving carrier fault

• Subject to strict time limits and documentation

Freight insurance is:

• Based on the value of your goods (up to the insured limit)

• Designed to respond to insured events, not only carrier negligence

• Often faster and clearer when you have the right paperwork

For marketplace sellers, this matters because many products are lightweight but high value (electronics accessories, branded cosmetics, premium homeware). A weight-based liability settlement can be a fraction of your true loss.

Why Amazon and eBay sellers are exposed

Marketplace selling creates a few unique risk points:

• Tight delivery expectations: late deliveries can trigger poor feedback, A-to-z claims, or performance issues.

• Stock concentration: a single inbound shipment might represent weeks of sales.

• FBA inbound complexity: multiple handovers (supplier, forwarder, port, UK haulage, Amazon intake) increase the chance of a dispute about where the damage occurred.

• Returns and reverse logistics: goods moving back to you can be damaged or lost too.

• Seasonality: Q4 peak, Prime Day, and promotional periods increase volume and pressure on networks.

Freight insurance won’t fix every operational issue, but it can protect your balance sheet when the unexpected happens.

What freight insurance typically covers

Cover varies by insurer and policy type, but common insured events include:

• Loss of goods (missing cartons, lost pallet, container not delivered)

• Theft (from vehicle, depot, port area, or during a stop)

• Accidental damage (impact damage, crushing, punctures)

• Water damage (rain ingress, burst pipes, container leaks)

• Fire and explosion

• General average (for sea freight, where cargo owners share certain losses)

• Transhipment and handling damage (during loading/unloading)

Some policies can also include:

• War and strikes extensions (more common for international shipments)

• Temperature-controlled goods extensions (if you sell perishable or sensitive stock)

• Concealed damage provisions (with strict notification rules)

Common exclusions and limitations (what catches sellers out)

Freight insurance is not a blank cheque. Typical exclusions and limitations include:

• Inadequate packaging: if cartons are weak, poorly sealed, or not suitable for the journey.

• Inherent vice: goods that naturally deteriorate, leak, or spoil without an external event.

• Wear and tear / gradual damage: scuffing, minor abrasion, or slow moisture exposure.

• Delay-only losses: many policies don’t cover pure financial loss from delay (unless you buy specific extensions).

• Unattended vehicle theft conditions: theft from an unattended vehicle may be excluded unless security requirements are met.

• Improper stowage: especially relevant for containers and pallets.

• Restricted commodities: some items (e.g., high-value electronics, alcohol, tobacco, certain cosmetics, lithium batteries) may need special terms.

• Unexplained shortage: missing items without evidence of an insured event can be difficult.

The practical takeaway: your packaging, documentation, and shipping processes are part of your “risk profile.” If you want claims to be paid smoothly, you need to ship like you expect a claim to be audited.

Policy types marketplace sellers should know

1) Single shipment (one-off) cover

Useful if you only ship occasionally or you have a particularly high-value consignment.

Best for:

• New sellers testing imports

• One-off bulk buys

• Expensive inbound shipments

2) Annual open cover (turnover-based)

This is common for businesses shipping regularly. You declare shipments (or turnover) and the policy automatically covers consignments within agreed parameters.

Best for:

• Regular importers

• High shipment frequency

• Sellers scaling quickly

3) Goods in Transit (UK)

Often focused on domestic transport within the UK (couriers, hauliers, own vehicles). It can be arranged as part of a broader commercial combined package.

Best for:

• UK wholesalers and D2C brands

• Sellers moving stock between sites

• Regular pallet movements to FBA

4) Stock throughput cover (end-to-end)

A more integrated approach that can cover goods from supplier through transit and storage, sometimes including fulfilment and distribution.

Best for:

• Brands with warehousing

• Multi-channel sellers (Amazon, eBay, Shopify)

• Businesses wanting fewer coverage gaps

How to set the right insured value

A key decision is what value you insure. Common options include:

• Cost price (what you paid the supplier)

• Cost + freight + duty/VAT (more realistic for importers)

• Selling price (sometimes available, but can be restricted)

For most marketplace sellers, a sensible approach is to insure:

• Cost of goods

• Plus freight and shipping charges

• Plus duty and import VAT (where applicable)

• Plus a reasonable uplift (often used to reflect overhead and expected profit, where allowed)

The aim is to avoid being “made whole” only on the cheapest part of the journey.

Amazon FBA: where freight insurance fits

If you use Fulfilment by Amazon (FBA), you typically have at least two major legs:

1. Supplier to your UK location (or directly to Amazon)

2. Inbound delivery to Amazon fulfilment centres

Key points:

• Amazon’s responsibility starts and ends at specific points. If goods arrive damaged, Amazon may reject them or mark them as unsellable. Whether you can recover the value depends on evidence.

• Proof of condition matters. Photos at packing, pallet build records, and signed delivery notes can make or break a claim.

• Labelling and prep errors can look like “damage.” If cartons split due to overpacking or poor pallet wrap, insurers may treat it as packaging failure.

If you ship directly to Amazon, make sure your policy covers the journey to the fulfilment centre and that your chosen Incoterms and contracts don’t leave you exposed.

eBay sellers: parcels, couriers and chargebacks

For many eBay sellers, the biggest risk is parcel loss or damage on domestic deliveries.

You may already buy courier “enhanced compensation,” but that is not always the same as insurance and may come with strict exclusions.

Freight or goods-in-transit cover can help if:

• You ship high volumes and want a consistent framework

• You ship higher-value items where standard compensation is inadequate

• You dispatch from a small warehouse or unit and want cover for collections and handovers

If you sell internationally via eBay, you also need to consider customs holds, returns, and multi-carrier handoffs.

Incoterms: who is responsible during shipping?

Incoterms (international commercial terms) define where responsibility and risk transfer between buyer and seller.

Examples:

• EXW (Ex Works): buyer takes risk very early (often at the supplier’s premises).

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

• CIF (Cost, Insurance and Freight): seller arranges insurance and freight to the destination port (but check the quality and limits of that insurance).

• DAP/DDP: seller delivers to a named place (DDP includes duties paid).

For UK marketplace sellers importing stock, the wrong Incoterm can create a gap where you assume you’re covered but you’re not.

A practical rule: if you’re relying on a supplier’s “included insurance,” ask for the certificate and check the insured value, exclusions, and claims process.

Claims: what you’ll need (and how to avoid delays)

When something goes wrong, speed and documentation matter.

Typical claim requirements include:

• Commercial invoice and packing list

• Proof of shipment (bill of lading, airway bill, courier tracking)

• Proof of value (supplier invoice, payment evidence)

• Photos of damage and packaging

• Delivery notes with damage noted (or a written notice within the required timeframe)

• Survey report (sometimes required for larger losses)

• Police report (for theft)

Best practice for sellers:

• Photograph pallets and cartons before dispatch

• Use tamper-evident seals for containers where possible

• Record weights and carton counts

• Train staff to sign delivery notes correctly (never sign “received in good condition” if there’s visible damage)

• Notify insurers immediately when you suspect a loss

How much does freight insurance cost?

Pricing depends on:

• Type of goods (and theft attractiveness)

• Packaging and shipping method

• Routes (UK only vs international; higher-risk regions)

• Claim history

• Annual turnover and shipment frequency

• Security measures (tracked services, secure yards, alarmed vehicles)

Freight insurance is often priced as a rate per £100 of insured value for open cover, or as a premium for a single shipment.

The cheapest option is rarely the best if it leaves you with exclusions that match your biggest risks.

Choosing the right policy: a checklist for marketplace sellers

Before you buy, make sure you can answer these questions:

• What journeys do I need covered (supplier to UK, UK to FBA, customer deliveries, returns)?

• What’s my maximum single shipment value?

• Do I ship parcels, pallets, or containers?

• Are any of my products restricted (batteries, liquids, cosmetics, branded goods)?

• What Incoterms do I use with suppliers?

• Do I need cover for temporary storage during transit?

• What excess can I realistically absorb?

• What security and packaging standards do I follow?

A good broker will translate your fulfilment model into the right cover structure so you don’t pay for gaps you can’t use—or worse, discover gaps after a loss.

Practical examples (real-world scenarios)

Scenario 1: lost pallet inbound to Amazon

You ship two pallets to an Amazon fulfilment centre. One pallet is scanned, the other disappears between the pallet network depot and Amazon intake.

With the right freight/goods-in-transit cover, you may be able to claim for the insured value of the missing pallet, subject to evidence of dispatch and the policy’s conditions.

Scenario 2: water damage on imported cartons

A container arrives with water ingress and several cartons are unsellable.

A suitable cargo policy can respond, but you’ll need photos, survey evidence, and proof the packaging was adequate.

Scenario 3: theft from an unattended van

A courier collection is missed, so you decide to drop parcels at a depot. The van is left unattended and items are stolen.

Many policies have strict unattended vehicle conditions. If those conditions aren’t met, the claim may be declined—so your processes matter.

Freight insurance and wider business protection

Freight insurance is one part of the risk puzzle. Marketplace sellers often also need:

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

• Employers’ liability (if you have staff)

• Public and products liability (especially for own-brand goods)

• Professional indemnity (for certain services or advice-based businesses)

• Cyber insurance (if you handle customer data or rely heavily on online operations)

The right structure reduces disputes between policies and creates clearer claims outcomes.

FAQs: Freight insurance for Amazon and eBay sellers

Is freight insurance the same as courier compensation?

Not always. Courier compensation can be limited and can exclude certain goods or packaging issues. Freight insurance is a separate insurance contract designed to cover insured events, often with broader scope.

Do I need freight insurance if I use Amazon FBA?

FBA helps with fulfilment after stock is received, but it doesn’t automatically protect your goods while they’re travelling to Amazon. Inbound shipments can still be lost or damaged.

Can I insure goods shipped from China to the UK?

Yes, cargo insurance can cover international imports, but you’ll need to disclose the route, shipping method, and goods type. Check for any restricted commodities.

What value should I insure: cost or selling price?

Most sellers insure cost plus freight and import costs. Some policies allow an uplift. The right approach depends on your cashflow risk and what the insurer will accept.

What if the carrier is at fault?

You may still pursue the carrier, but freight insurance can pay your claim (subject to terms) and may then recover from the carrier where appropriate.

Does freight insurance cover returns?

Some policies can include returns and reverse logistics, but you need to confirm this explicitly.

Conclusion: protect the stock that drives your seller account

Whether you’re sending parcels to eBay customers or moving pallets into Amazon FBA, your stock is your business. Freight insurance is a practical way to protect against the everyday risks of transport—loss, theft, damage and the disputes that follow.

If you want help structuring freight insurance around your marketplace model—parcels, pallets, imports, or a mix—Insure24 can talk you through the options and help you put cover in place that matches how you actually ship.

Call 0330 127 2333 or visit insure24.co.uk to discuss freight insurance for your Amazon or eBay business.