Cargo insurance can be categorised based on the method of transportation, including the following three types:

• Road or surface transportation insurance
•  Air transport insurance
• Marine cargo insurance

It’s important to note that cargo insurance coverage is inclusive of multiple methods of transportation used by a single transportation provider. While the cost of insurance is dependent on several factors, including cargo value, origin, destination, and mode of transport, policy holders are typically insured for the entire journey.

Cargo insurance is typically categorised according to coverage details. There are three types of cargo insurance according to the Institute Cargo Clauses (ICC):

• Type A, or all-risk insurance
• Type B, or average insurance
• Type C, or free of particular average insurance

Each type provides a different level of coverage during transportation, loading, and unloading, including bad weather, piracy, and many other relevant risk factors.

Type A - ‘All-risks’

This type of insurance is intended for approved or general goods, and it offers coverage for most common perils. To take out an all-risk policy, your merchandise needs to be new, export packed, and not unusually susceptible to losses. It’s also important to note that at MSC the cost our customer pays to insure their goods (the premium) is generally a fraction (based on a rate or flat fee) of the actual value of the good.

The following exclusions for all-risk cargo insurance policies include:

• Cargo abandonment or disposition
• Improper non-export packaging
• Rejection of goods by customers
• Rejection of goods by Customs or other Government agencies
• Failure to make payments or collect accounts
• Loss due to nature of cargo — spoilage, infestation, failure
• The change, transfer, or dishonesty of employees
• Loss caused by delay — deadline coverage can be arranged separately
• Loss of use and/or market — deadline coverage can be arranged separately
• Used goods
• Barge shipments
• Losses that exceed coverage limits
• Losses at port city more than 15 days after discharge — can be modified ahead of time
• Losses inland more than 30 days after discharge — can be modified ahead of time
• Losses in South America after 60 days — can be modified ahead of time
• Oceangoing barge movements — unless specifically endorsed
• Goods subject to on-deck billing
• Loss caused by fluctuating air temperature — air freight only
• Failure to notify air carrier of initial losses on time — 7 days for damage, 14 days for hidden damage, and 120 days for non-delivery

Type B - ‘With Average’

With Average (WA) is a cargo insurance policy provision that covers total loss events along with the partial loss of below deck cargo. With WA coverage, the partial loss of below deck cargo is treated as a total loss scenario, regardless of how much is damaged or lost. WA coverage is often taken out to extend Type C policies, as it provides additional protection from extreme weather events. WA coverage can also be extended to include theft, pilferage, and non-delivery.

Type C - ‘Free of particular average’

Also known as a named perils policy, Free of particular average (FPA) is a specialized cargo insurance policy provision that does not cover partial loss events. This is a type of ‘free from partial loss’ coverage. FPA coverage is often called ‘total loss only’ because the insurance holder is only protected in the case of total loss events.

FPA covers perils of the sea, including sinking, stranding, fire, or collision. These policies also cover land perils that are beyond human control, including earthquakes and bad weather events. FPA policies are often taken out for used merchandise, waste materials, and bulk cargo.