What is a transport insurance?

You can arrange a transport insurance to cover the costs in cases of damage or theft, for example. A transport insurance is certainly something to think about when you want to set up a transport (or have one set up). After all, nobody wants to face unexpected surprises, and therefore high costs. In this article we explain in detail what a transport insurance means, when it can be beneficial for you and what the risks of a transport are.

Why have a transport insured?

In advance it is always important to check the delivery conditions and the agreements made with your transporter, carrier or forwarder. They often apply the same conditions and in case of damage or theft they will refer to them.

By insuring a transport you cover (part of) the costs in case of damage, loss or theft of the transport. It is therefore strongly recommended to have a transport insured when you want to transport goods with a high value.

However, it is not always wise to insure a transport. For example, if you pay almost as much for your insurance as the value of the product to be transported. Also when a low value product is transported, a transport insurance is not always necessary.


As indicated earlier, the agreements made before a transport is booked is important. This is where the shift of risk lies, and which party bears certain costs.  On the website of this forwarder all incoterms are explained in a clear overview.

Incoterms are conditions that have been agreed in advance. Among other things, obligations of both parties are laid down in them. But also to where a transport takes place and who is responsible for unexpected costs are decided in it. Important in this is the so-called Critical Point; the point where the risks and costs shift from the seller to the buyer. This can be halfway through the transport, at a port or when the transport comes to an end; all depending on which Incoterm is used.

Which Incoterms should I know?

– Ex Works

– FCA, Free Carrier

– CPT, Carriage Paid To

– CIP, Carriage and Insurance Paid To

– DAT, Delivered At Terminal

– DAP, Delivered at Place

– DDP, Delivered Duty Paid

The above Incoterms can be applied to any form of transport. However, there are also specific Incoterms associated with sea freight. These are listed below.

FAS, Free Alongside Ship

– FOB, Free On Board

– CFR, Cost and Freight

– CIF, Cost Insurance and Freight

Carrier or forwarder responsible?

As you may have noticed, we have talked about a forwarder before. This is something else than a carrier, a forwarder sets up the transport and the carrier ‘transports’ on behalf of the forwarder. Since a forwarder is only involved in part of the transport, it is only partly liable in the event of damage or loss. Moreover, there are different standards regarding the costs to be recovered when it comes to carriers or forwarders. There is also a difference when it comes to air freight, sea freight or road transport. For example, in road transport the conditions of a CMR (waybill) are applied, while air freight makes use of the Montreal Convention and sea freight applies the Hague-Visby rules. And for road transport within the borders the GST conditions are the norm.

Type of transport insurance with forwarder or carrier

If you have a transport regularly, an insurance contract is the right choice for you. However, if you occasionally have a transport, it is more convenient to insure each transport separately. Where the turning point lies in this varies per type of transport, the goods and the type of insurance, so it is always advisable to consult with all parties involved.

Difference in currency with a transport insurance

Because in international trade there can be a difference of value in currency, SDR is used as currency. This is a virtual currency that is maintained by an agency that weighs the values of currencies like the Euro and the US Dollar. This is how the ratios are always the same when it comes to costs, so that nobody is disadvantaged or can benefit from it. And when a transport is carried out within the same country, the local currency is (simply) retained.

Agreements have been made with the SDR about a maximum amount to be compensated in case of damage, loss or theft as shown in the figure below.

Avery grosse

Of course, it is always possible that damage to a ship occurs when a sea freight is carried out. It is possible that actions are taken on the ship to prevent larger damage. For example, throwing part of the cargo overboard to fight fire or getting a stranded ship loose. This also includes payment in the event of piracy. The costs, damage or sacrifices that are made are not always for the transporter and are in certain situations divided over all parties involved who have something of value on that ship at that moment, including you when your goods are in a container on that ship. The costs are then divided proportionally, so you do not pay the same amount with a transport worth €500 as someone with a transport worth €1500.