Marine cargo insurance conventionally insures 110% of the CIF value — the goods, the freight to get them there, and an extra 10% standing in for the profit the buyer expected to make on arrival. That is not generosity; it is what Incoterms CIF and CIP require the seller to arrange as a minimum, and it is why the insured value on a certificate is bigger than any invoice the shipment carries.
The premium is small because the probability is small — a few tenths of a percent for general cargo under ICC(A) all-risks. What makes the sale easy is the neighbouring page: the carrier's liability cap. Once a customer has seen that a total loss recovers a fraction of value from the carrier, a fraction of a percent to cover the whole value stops needing a pitch.
For the forwarder it is one of the few revenue lines with no cost of goods: the commission on an open-cover declaration is paid for filling in a form you already have the data for. A desk that quotes insurance on every eligible file, automatically, adds points of pure margin — and hands the customer certificates their bank's letter of credit probably demands anyway.
The extra 10% approximates what the buyer loses beyond the goods themselves: the profit on the resale, plus the incidental costs of a loss — re-ordering, delay, bank charges. Incoterms CIF and CIP write 110% in as the seller's minimum obligation, so the convention is contractual, not decorative. Higher uplifts (120%, 130%) are negotiable for cargo with documented higher downstream value.
The Institute Cargo Clauses are three widths of cover. (A) is all-risks: everything except the listed exclusions. (B) and (C) are named-perils: only the listed events are covered, with (C) the narrowest — roughly fire, sinking, collision and jettison. General containerised cargo is normally sold (A); bulk and some commodities trade on (B)/(C) with correspondingly lower rates. The letters matter more than the rate: a cheap (C) policy that does not cover theft is not a bargain for electronics.
Because the liability is capped and conditional, and the insurance is neither. The cap recovers a fraction of value (run the liability tool on any real shipment); the claim requires proving the carrier's fault, survives its defences, and pays in months or years. Cargo insurance pays on proof of loss, at insured value, usually in weeks, and the insurer then chases the carrier by subrogation — with their lawyers, not the customer's.
Yes, and it is standard practice: a forwarder holds an open cover with an insurer and declares shipments against it, earning a commission on each. Two disciplines keep it clean. Arrange cover as agent for the cargo owner, so the insurable interest is theirs; and check what your licence regime requires for insurance distribution where you operate — in Hong Kong, forwarders commonly work with a licensed broker or as referrer to stay inside the Insurance Ordinance's lines.
Cargo-Stack reads the enquiry, prices it against your own rates, and drafts the quote — with this arithmetic underneath it. Same maths, no retyping.
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