Carriers only pay a small fixed amount per kilo when goods are lost or damaged. This guide explains cargo insurance for UK importers buying from China: cover types, Incoterms, general average and how to claim.
Quick answer: Carriers and forwarders are only liable for a small, fixed amount per kilo or per package when goods are lost or damaged in transit, and often nothing at all for events outside their control. Cargo insurance covers the value of your goods instead. For most UK importers buying from China, an "all risks" policy on Institute Cargo Clauses (A), covering the full journey from factory to UK warehouse at 110% of the invoice value, is the safest default.
Many small businesses assume the shipping line, airline or forwarder will pay if a container is dropped, a pallet is crushed or a shipment goes missing. In most cases they will pay only a fraction of the value, if anything. This guide explains what carriers are liable for, what cargo insurance covers, how Incoterms affect who insures, and how to make a claim.
International transport conventions cap what a carrier must pay. The limits are set in Special Drawing Rights (SDR), an international unit of account whose value changes daily.
For light, high value goods such as electronics, cosmetics or fashion, a per kilo limit can be a tiny share of what you paid. Carriers can also avoid liability altogether for events such as bad weather, fire on board or errors in navigation. Before you book, read our guide on how to find and work with a UK freight forwarder and ask them to explain their standard terms.
General average is a long established rule of sea freight. If the ship's master sacrifices some cargo or pays extraordinary costs to save the vessel and the rest of the cargo, for example after a fire or grounding, every cargo owner on board shares the cost in proportion to the value of their goods.
Your container could arrive undamaged and you could still be asked to pay a contribution, or provide a guarantee, before the goods are released. If you are insured, your insurer normally provides that guarantee. If you are not, you may need to put up cash and wait months for the final figures. That alone is a strong reason to insure every sea shipment.
Marine cargo policies in the UK are usually written on the Institute Cargo Clauses:
Common exclusions on every level include poor or unsuitable packing, inherent vice (the nature of the goods, such as natural spoilage), ordinary wear, delay and deliberate misconduct. War and strikes cover is often added separately.
The Incoterms on your purchase order decide who carries the risk at each stage, and whether anyone is obliged to insure.
Many UK importers buy FOB and insure the goods themselves so they control the cover and the claim. Our Incoterms guide for UK importers explains each term in more detail.
If you import once or twice a year, single shipment cover booked through your forwarder may be simplest. If you import regularly, an annual open cover policy through a broker covers every shipment automatically and is usually better value.
Ask for warehouse to warehouse cover, from the factory in China to your UK warehouse or 3PL warehouse, including any time in a consolidation warehouse. Gaps often appear at the start of the journey on FOB terms.
The usual basis is the CIF value, meaning goods plus freight and insurance, plus 10% to cover extra costs. Make sure duty is included if your policy allows it.
Insurers will reject claims caused by weak cartons, poor palletising or missing moisture protection. Agree packing standards with your supplier in writing. Our packaging sourcing guide covers export cartons and labels.
A pre-shipment inspection records the condition, count and packing of your goods before loading. That evidence helps prove damage happened in transit, not at the factory. Our quality control and factory audits team can carry this out.
If an order arrives damaged or short, our guide on what to do when an order arrives damaged or incomplete covers next steps with the supplier.
Lower freight rates do not reduce the value of your goods. With more ships returning to the Suez route in 2027, as covered in our post on what the Suez return means for UK importers, the cargo risk is still yours to manage, so keep insurance in your landed cost plan.
No. There is no legal requirement, but without it you rely on carrier liability limits, which are often a small share of the value of your goods.
Not usually. A forwarder's liability insurance protects the forwarder against claims within its own limited liability. It is not cover for the full value of your goods unless you buy cargo insurance through them.
All risks cover, Institute Cargo Clauses (A), covers any loss or damage except listed exclusions. Named perils cover, Clauses (B) or (C), only pays for the specific events listed in the policy.
Only partly. Under Incoterms 2020 the seller only has to buy Clauses (C) cover, which excludes theft and handling damage. Many importers buy their own top-up or switch to FOB.
Air freight has fewer handling stages and no general average, but goods can still be lost or damaged. Carrier liability is limited per kilo, so insurance is still worth having for valuable goods.
Premiums are usually a small percentage of the insured value and depend on the product, packing, route and claims history. Ask your forwarder or a marine insurance broker for a quote before you confirm the order.
Yes. Through our freight forwarding service we arrange shipping from China to the UK and can include cargo insurance on request.
Epic Sourcing UK helps small businesses source from China with vetted suppliers, inspections before shipment and freight that is insured from factory to door. Book a free chat to plan your next order.
This article is general guidance, not insurance or legal advice. Policy terms vary, so check the wording with your broker or insurer.
