By the Waymore Shipping Operations Team | Last updated: October 2026 | 5 min read

How to Insure Your Shipment: How Is Coverage Calculated?

Cargo coverage is calculated as 110% of the CIF value of your goods, multiplied by an agreed premium rate — usually 0.1%–0.3% for general cargo from China. A USD 20,000 shipment therefore costs about USD 22–66 to fully insure.

The Formula, Step by Step

The 110% convention comes from the international marine insurance market and is reflected in the clauses published through Lloyd's and the Institute Cargo Clauses. Here is the calculation on a real-world example:

1. Goods value: USD 18,000 (your invoice to the buyer, or your purchase price)
2. Freight + insurance base: add freight, say USD 2,000 → CIF = USD 20,000
3. Insured value: 110% × 20,000 = USD 22,000
4. Premium at 0.2%: 22,000 × 0.002 = USD 44

Sample Premium Costs by Shipment Value

Rates climb above 0.3% for fragile cargo (ceramics, glass), used machinery, battery products, and routes with long inland trucking or higher-theft destinations.

Choosing the Right Clause Level

• ICC (A) — all risks. Covers everything except named exclusions (inherent vice, delay, willful misconduct, ordinary leakage). The default for finished goods.
• ICC (B) — named perils. Fire, explosion, stranding, water ingress, jettison. Cheaper, narrower.
• ICC (C) — major casualties only. Vessel collision, grounding, fire. Rarely right for containerized cargo.

General average deserves special mention: when a vessel declares GA, every cargo owner shares the salvage costs proportionally, insured or not. ICC (A) policies include GA contributions — uninsured shippers must pay from their own pocket. For context on cover types, our fuller guide to cargo insurance coverage explains what policies exclude.

Who Buys the Insurance Under Each Incoterm?

• CIF / CIP: seller must arrange — but often at the minimum legal level, so buyers may top up.
• FOB / EXW: buyer arranges. Bind cover before the container leaves the factory, since inland trucking to the port is part of the risk window.
• DDP: seller arranges for the whole door-to-door journey.

Waymore binds cargo policies for customers daily, typically within one working hour of receiving the packing list — a single certificate per shipment, no annual commitment needed. If you are still deciding between modes, our air vs sea freight comparison notes how insurance applies to each.

A Real Case: The Claim That Hinged on One Line Item

A German retailer insured a 40HC of LED lighting at invoice value only — 100% of CIF instead of the standard 110%. During transshipment in Singapore, part of the cargo was water-damaged, and the claim itself went smoothly: ICC (A) cover, clean survey report, payment in five weeks. But the settlement was capped at insured value, so the retailer absorbed its own lost margin, the destination duties paid on goods it could not sell, and the disposal costs of the ruined units — roughly 12% of the shipment's real economic value that the policy never touched.

Had the policy been written at 110% CIF, those extras would have been covered. This is the entire point of the convention: the extra 10% is not padding for the insurer's benefit, it is your own margin and incidental cost buffer. Underinsuring to save a few dollars of premium — on this shipment, the difference was under USD 15 — is the most common and most avoidable insurance mistake we see.

Two more habits worth copying: photograph the loading of every first-order container as survey evidence, and file claims within the policy's notification window — usually 30 days from arrival — even if full documents come later. Late notification, not weak evidence, is the second-most-common reason claims fail.

Frequently Asked Questions

How is cargo insurance coverage calculated?

The industry standard is insured value = 110% of the CIF value of the goods. You then multiply that insured amount by the agreed premium rate — commonly 0.1%–0.3% for general cargo on standard lanes, more for high-risk routes or hazardous goods. The extra 10% covers anticipated profit and claim expenses.

What do ICC (A), (B) and (C) cover?

Institute Cargo Clauses (A) is all-risks cover excluding named exclusions such as willful misconduct, inherent vice, and delay. (B) covers listed perils like fire, stranding, and water damage. (C) is the narrowest, covering major casualties only — fire, explosion, vessel collision, grounding. Most buyers of finished goods should use ICC (A).

How much does cargo insurance cost from China?

For typical consumer goods from China to the US or Europe, expect a premium of roughly 0.1%–0.3% of insured value — about USD 22–66 to insure a USD 20,000 shipment at 110% CIF. Rates rise for fragile goods, used equipment, long inland legs, and higher-risk destinations.

Who can buy the insurance — buyer or seller?

Either party with an insurable interest in the goods can insure. Under CIF and CIP Incoterms the seller must arrange insurance; under FOB and EXW the buyer is responsible and should bind cover before the goods leave the supplier — many buyers ask their forwarder to arrange it same-day.