Air Cargo Insurance

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Definition: Air Cargo Insurance

Air cargo insurance is a type of cargo insurance policy that protects the buyer or seller of goods that are being transported through air. It covers the damages that are caused to the goods while they are transported from exporter or the seller to the buyer or importer of goods. It is very helpful for sellers whose business involves international trade and for those who need to transport a large quantity of good at a particular time. Specific term and benefits of cargo insurance vary across various countries around the world as well as across various companies. Many times, these insurance policies are tweaked according to various requirements of specific shipments but there are certain rules as well that apply to the whole industry. Different types of cargo insurance policies exist. But the primary benefit is to protect the value of goods.

One can ship goods without insurance but in that case the seller will have to borne the entire cost of the goods being damaged. Although, there are legal provisions available but they are very lengthy and international law limits the liability of the carrier of the goods. All risk coverage is the most beneficial type of cargo insurance. It will also cover the loss of goods due to theft.

Other types of risks that are included are:

• Damages caused due to bad weather

• Improper handling by the carrier

• Damage due to mud and grease

• Fumigation Services are also included

Cargo insurance exclusions include those goods which are not packaged properly or those which are rejected by the customs officials. Other exclusions include:

• Abandoned cargo

• Buyer fails to pay for the cargo

• Loss due to delay in shipping

• Damage or spoilage due to the nature of the product

• Dishonesty on part of employees

For air cargo insurance a premium is generally calculated based on the value of the goods, whether they are hazardous and also depending upon the route which the cargo is going to take to reach destination.

For example: DHL cargo insurance provides insurance based upon the commercial value of the goods in transit and also try to settle the claim in the local currency of the seller such as dollars, euros, yen etc. However, according to international conventions if goods in transit are lost without insurance then compensation is accessed according to the weight of the goods and not by its commercial value. Moreover, one has to prove negligence on part of the carrier.


Hence, this concludes the definition of Air Cargo Insurance along with its overview.

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