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".
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:
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.
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:
| Characteristic | Carrier's Liability Insurance (LOTT/CMR) | All-Risk Cargo Insurance |
|---|---|---|
| Who contracts it? | The Carrier | The Cargo Owner |
| What does it protect? | The carrier's legal liability | The commercial value of the cargo |
| Indemnity Limit | Limited by weight (€6/kg or 8.33 SDR/kg) | Covers the total declared value |
| Coverage | Limited to what is established by law | Almost all risks |
| Function | Legal and carrier protection | Financial and owner protection |