Cargo insurance (also referred to as shipping or freight insurance) is an important type of insurance for businesses and individuals who must transport goods often. The insurance provides coverage for cargo damaged during transportation, and this can be due to the fault of the policyholder’s own employees or an outside shipping provider. As with any insurance policy, these vary greatly and can be limited to a specific amount of coverage, or the policy can be extensive, covering even third-party damages like environmental damages caused by cargo spills. Cargo insurance can be extremely important because even if someone else can be proved legally liable for the damage, often their legal liability will be much less than the costs of the cargo. Cargo insurance can be bought for a variety of transportation methods including marine cargo, air freight, and simple ground transportation.
[Last updated in November of 2021 by the Wex Definitions Team]