An increasing number of shippers are taking out cargo insurance as awareness of growing supply chain risk continues to rise.

“In the case of ocean cargo, more shippers buy cargo insurance than most people assume,” explained Tom O’Malley, president and founder of Florida-based TJO Cargo Insurance.

“The most recent number I’ve heard is only 30% of ocean shippers go uninsured,” he added.

The recent spate of containership fires, as well as rising incidents of cargo theft, cyber-crime and extreme weather events, have all highlighted how vulnerable shippers’ cargo can be during transportation.

In response to the growing hazard of container fires, a number of carriers have recently implemented fines on shippers who misdeclare hazardous cargo. Evergreen, OOCL and Hapag-Lloyd have all announced a range of fines to be implemented immediately.

Hapag-Lloyd is implementing a fine of $15,000 per container for misdeclared hazardous cargoes, plus any costs required to mitigate the violation. 

“Failure to properly offer and declare hazardous cargoes prior to shipment is a violation of the Hazardous Material Regulations. Such violations may be subject to monetary fines and/or criminal prosecution under applicable law,” Hapag-Lloyd announced.


“The marine cargo insurance industry, freight forwarders, and major ocean carriers have done a much better job at getting the message delivered to shippers that they do indeed need cargo insurance,” said O’Malley.

He added that there are still various reasons why some shippers don’t purchase insurance.

“Select larger shippers choose to self-insure, as they can accept the financial risk of paying for losses as they are incurred.

“There are also shippers who believe they are a ‘needle in a haystack’ and gamble that the risk of a major cargo loss is too remote to justify the cost of insurance. Others mistakenly suppose the ocean carriers have comprehensive cargo liability while the cargo is on the vessel,” noted O’Malley.

He said the most common form of cargo insurance used is the International Chamber of Commerce (ICC) Clause A.

“This is commonly known as ‘all risks.’ In short, ICC Clause A covers everything other than what the coverage excludes,” O’Malley said.  

“While there are standard and situational ICC Clause A exclusions, the principle exclusions include the inherent nature of the goods, insufficient or inadequate packing, ordinary wear and tear, and consequential loss or loss of market.”

According to O’Malley, while the type of cargo insurance coverage rarely changes, one significant change in recent years has been the proliferation of insurance providers in the market. Hence, shippers must ensure they perform adequate due diligence before taking out a policy.

“For many years, the primary outlets for cargo insurance have been insurance brokers and freight forwarders. Today, cargo insurance can also be purchased from many intermediary re-sellers and the carriers themselves.

“Due diligence should include the actual insurer, ensuring they are rated ‘A’ by an organisation such as A.M. Best, which measures and reports the financial stability of insurers.”