From the Daines Kapp Spring 2026 Covernotes Newsletter

Picture this: a refrigerated container of bananas leaves Central America bound for the UK. The journey takes three weeks. Somewhere in the mid-Atlantic, the vessel hits severe weather. Containers shift in the hold. Refrigeration on one unit fails overnight. By the time the shipment docks at Tilbury, the cargo is spoiled — tens of thousands of pounds of goods, unfit for sale. The crucial question, when the dust settles, is: who pays?

The answer depends entirely on whether the importer has the right cargo insurance in place. If they do, the loss is recoverable. If they are relying on the carrier’s liability, or assuming their general business insurance responds, they may find themselves significantly exposed. It is a scenario that plays out across British trade every week — not just with perishable food, but with electronics, machinery, pharmaceuticals, textiles, and every other category of goods that UK businesses import and export in the course of ordinary commerce.

According to the Office for National Statistics, the UK imports hundreds of billions of pounds of goods annually. Every one of those shipments represents a potential financial risk — and marine cargo insurance is the mechanism that manages it.

What marine cargo insurance actually covers

Marine cargo insurance exists to protect the financial value of goods from the moment they leave the seller until they reach the buyer. That sounds simple, but the scope of what counts as a covered loss, and the breadth of protection available, varies significantly depending on which policy structure the insured has chosen.

The broadest form of protection is all-risks cover, which safeguards against physical loss or damage from any cause that is not specifically excluded. All-risks cover is not literally unlimited — there will be standard exclusions for inherent vice (the natural deterioration of goods), delay, and deliberate damage by the insured — but it provides the widest possible safety net for the unexpected causes of loss that characterise international transit.

Policies are typically structured using the Institute Cargo Clauses, which are the internationally recognised standard terms governing marine cargo insurance. There are three main variants, each offering a different level of protection.

Understanding the Institute Cargo Clauses

Clause A provides the widest all-risks cover. It insures against all risks of physical loss or damage to goods from any external cause, subject to the standard exclusions. For most importers and exporters moving goods of significant value, Clause A is the appropriate starting point. It is the closest the marine cargo market gets to a comprehensive policy.

Clause B offers a more limited set of named perils. Rather than covering all risks subject to exclusions, it covers specific causes of loss that are explicitly listed in the policy: fire, explosion, vessel stranding, grounding, sinking, capsizing, collision, overturning of land conveyance, discharge of cargo at a port of distress, earthquake, volcanic eruption, lightning, loss overboard, and water ingress from sea, lake, or river. It is a considerably narrower set of protections than Clause A — any cause of loss not on the list is not covered.

Clause C provides the most restricted cover, applying only to major incidents: collision or overturning of land conveyance, vessel stranding, sinking or capsizing, fire, explosion, and discharge at a port of distress. Clause C is sometimes used for lower-value shipments or where the risk profile of the cargo and route warrants minimal cover, but for most commercial importers it provides insufficient protection.

Extensions worth considering

Even with Clause A all-risks cover in place, there are additional extensions that businesses moving goods internationally should consider — particularly in the current geopolitical environment.

War and strikes cover is among the most important. Standard Institute Cargo Clauses exclude losses arising from war, civil war, revolution, hostile acts, or strikes and civil commotion. For businesses moving goods through major shipping lanes — the Red Sea, the Strait of Hormuz, or anywhere affected by regional conflict — this exclusion can represent a significant uninsured exposure. A separate war and strikes extension fills this gap, and in the current environment it is worth reviewing carefully whether your existing policy includes it.

Delay cover addresses losses arising from unforeseen disruptions in transit. Port congestion, customs delays, or transport strikes can leave goods stranded for weeks, with consequential losses that run well beyond the value of the goods themselves. Standard cargo policies do not cover delay losses — this requires a specific extension or a separate policy.

Temperature and condition cover is essential for any business moving temperature-sensitive goods: food, pharmaceuticals, certain chemicals, or live plants and animals. Standard all-risks cover does not automatically include losses arising from refrigeration failure unless the cause is itself an insured peril. Businesses in these sectors need to ensure their policy specifically addresses temperature excursion losses.

Solutions designed for UK SMEs

The marine cargo market has evolved considerably in recent years to better serve smaller and mid-sized businesses that import or export regularly but do not have the volumes that historically made bespoke cargo programmes cost-effective.

One of the most useful products for UK SMEs is the Stock Throughput Policy. Rather than insuring individual shipments as separate transactions, a Stock Throughput Policy provides a single, seamless policy that covers goods throughout their entire commercial journey — from raw material stage, through processing and storage, to final transit and delivery to the buyer. For businesses that regularly hold imported goods in a warehouse before processing or onward sale, this eliminates the gaps that can appear between a cargo policy (which typically ends on delivery to the warehouse) and a property policy (which may not cover goods in transit). A single policy covering the full journey simplifies administration and removes the risk of discovering, after a loss, that responsibility fell in a gap between two policies that were each drafted without full knowledge of the other.

The most common gaps — and how to avoid them

When businesses discover they are underinsured on a cargo loss, it is rarely because they had no insurance at all. The most common gaps arise from specific assumptions that turn out to be wrong.

The first is assuming the carrier’s liability covers the loss adequately. Carriers do carry liability insurance, but it is subject to strict limits under international conventions — typically far below the market value of a damaged shipment. The carrier’s insurance is designed to protect the carrier, not the cargo owner. It should not be treated as a substitute for your own cargo policy.

The second is assuming a general commercial policy covers goods in transit. Most property policies cover goods at a named location — your warehouse, your premises — and may have very limited or no cover for goods in international transit. Reading the transit clauses of your property policy carefully, and discussing any gaps with your broker, is a basic step that many businesses skip.

The third is undervaluing the goods being insured. Marine cargo insurance should be placed on the CIF value of the goods — cost, insurance, and freight — plus a margin (typically 10%) to allow for incidental charges, duties, and the cost of replacing the goods in circumstances where market prices have moved. Insuring at invoice value alone frequently leaves a gap.