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All-Risk Insurance

What Does "All-Risk" Mean in Transport?

An all-risk cargo insurance policy provides the maximum coverage obtainable in transport to cover the full value of the goods. Its principle is simple: it covers all risks of physical loss or damage to the goods during transit, unless a risk is specifically excluded in the policy.
Unlike policies that only cover named perils (such as fire or theft), this policy inverts the logic: everything is covered, except what is explicitly excluded. The international standard for this coverage is the Institute Cargo Clauses (I.C.C.) "A".

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Who contracts this insurance and why

This insurance is contracted by the owner of the goods, whether the exporter (seller) or the importer (buyer), depending on the Incoterms agreed upon.

Why is it indispensable? Because it is the only way to guarantee that, in the event of a claim, you will receive compensation for the total commercial value of your cargo, a value that is generally much higher than the carrier's liability limit (LOTT or CMR), depending on the type of transport contracted (national or international).

Main Coverages and Exclusions

As expected, this type of insurance has a series of clauses that cover and exclude certain eventualities. Let's detail the most important ones for each category:

How the Insured Value is Calculated

The value of the cargo is determined based on the real value of the goods at destination. For this, the following formula is commonly used:

Cargo Value = Commercial Invoice Value + Freight Cost + 10% (for expected profit)

For example, a cargo with a commercial invoice value of €50,000 could be insured for €55,000 or more, ensuring that the insurance will cover the value of the investment and the expected profit.

The Indispensable Complement for Your Logistics

At a glance, here is the key difference between mandatory coverages and all-risk cargo insurance:
CharacteristicCarrier's Liability Insurance (LOTT/CMR)All-Risk Cargo Insurance
Who contracts it?The CarrierThe Cargo Owner
What does it protect?The carrier's legal liabilityThe commercial value of the cargo
Indemnity LimitLimited by weight (€6.67/kg under Spain's LOTT, or 8.33 SDR/kg under CMR)Covers the total declared value
CoverageLimited to what is established by lawAlmost all risks
FunctionLegal and carrier protectionFinancial and owner protection

Frequently Asked Questions

01.What risks does all-risk cargo insurance cover?

Institute Cargo Clause A cover is very broad: vehicle accident (collision, overturning, derailment), fire or explosion, theft and pilferage, damage during loading and unloading, total loss of packages, water damage, and damage from breakage or mishandling in transit.

02.Does it cover goods broken during transport?

Yes: breakage and mishandling in transit fall under Clause A. With one detail that decides many claims: if the breakage is caused by inadequate packing or preparation by the shipper, it is excluded.

03.Does it cover delays in delivery?

Not by default. Loss of business and consequential damage arising from a delay are among the usual exclusions. Some policies allow additional clauses that do cover them, but they must be taken out expressly.

04.What does an all-risk policy not cover?

The usual exclusions are inherent vice (the goods deteriorate by their own nature), deficient packing by the shipper, delay, and wilful misconduct by the insured. War, strikes and riot risks require an additional clause.

05.For how much should I insure the cargo?

For its actual value at destination, not just the invoice value. The usual formula is: commercial invoice value + freight cost + 10% for expected profit.

06.How does it differ from the carrier's CMR liability?

In who takes it out and what it protects. The CMR Convention covers the carrier's legal liability in international road transport, with a limit set by the convention. All-risk insurance is taken out by the owner of the goods and covers their full commercial value.

07.What is Clause A or «all risk» cover?

It is the broadest of the Institute Cargo Clauses: it covers all risks except those the policy expressly excludes. Hence the name «all risk».

Covered Risks (Clause "A" Coverage)

All-risk coverage is extremely broad and includes:

Vehicle accident: Collision, overturning, derailment.

Fire or Explosion.

Theft and Burglary.

Damage during loading and unloading.

Total disappearance of packages.

Water damage (flooding, water ingress into the container).

Damage from breakage or improper handling during transit.

Common Exclusions (Risks NOT Covered)

Even an all-risk policy has limitations. The most common exclusions include:

Inherent Vice

Damage is due to the inherent nature of the goods themselves (e.g., fruit spoiling on its own).

Inadequate Packaging

Damage caused by deficient packaging or improper conditioning by the shipper.

Delays

Loss of business or consequential damages arising from a delay in delivery.

War, Strikes, or Riots Risks

These risks are generally covered by additional clauses, if requested.

Wilful Misconduct

Losses caused by the intentional action of the insured.

Other types of transport insurance

L.O.T.T. Insurance (Spain)

Covers the carrier's liability for damage or loss during national freight transport.

More information

CMR Insurance (Europe)

Covers the carrier's liability in international road shipments according to the CMR convention.

More information