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How Much Does Cargo Insurance Cost? 3 Factors Driving Your Cargo Insurance Premium

The global economy is flourishing. Economy experts on trade policy confirmed United States trade with foreign countries amounted to $5.6 trillion in 2018, making it the third largest exporter and second largest importer in the world. This growth is encouraging and opportunity continues to feed the competitive nature of today’s markets. But with growth, comes risk. According to the World Trade Organization, risk lies at the very core of increasing trade and could potentially threaten economic growth and confidence.

Consequently, businesses are prioritizing protection for the transportation of their goods with services like cargo insurance. So, how much does cargo insurance cost?

There is no one cargo insurance rate that fits all. This is the beauty of your coverage, as it’s tailored to meet the unique needs of your business. While things like limits of liability, location, and business age may influence the cost of insurance coverage, there are three dominant factors driving your cargo insurance premium.

1. Commodities: What goods are you shipping?
Think of it this way: the more expensive the goods, the more complex the cargo insurance. High-risk commodities are more vulnerable to theft and susceptible to breakage or perishability during transportation. Low-risk commodities typically include more durable goods that are less prone to loss. Your cargo insurance premium is heavily dependent on the level of risk associated with the transportation of your goods.

2. Deductibles: How much are you paying out of pocket?
Consider this the partnership aspect of insurance, where you and your insurance provider agree to share the financial risks associated with shipping your goods. You are still responsible for a portion of loss. However, your insurance provider steps in to cover the remaining cost and essentially makes you whole again. Keep in mind, a higher deductible means a lower insurance rate. How much you pay out of pocket to cover your risk is another key component driving your cargo insurance rate.

3. Additional Coverage: What unique coverage does your business need?
Additional coverage is the custom tailored part of insurance. Like a fine suit, a cargo insurance policy may be tailored to fit a customer’s specific needs. Are you shipping perishable and time-sensitive goods, like food or pharmaceuticals? What about additional coverage for storage while your goods are in transit? Your cargo insurance is tailored based on your unique coverage needs, making it another driving factor of your cargo insurance premium.

Risk exists in the supply chain whether we want it to or not. Although a cargo insurance premium may seem cost prohibitive, it’s an excellent way to protect yourself against unavoidable risks in the supply chain. Unlike a detrimental loss a business may be unprepared for, cargo insurance can be incorporated into a business plan. Whether it’s the type of commodity you are shipping, the deductible, or additional coverage, your premium is built to protect the growth and profit of your business. Drive your cargo insurance with the coverage you need and manage your risk in the global supply chain with confidence.

What’s the best cargo insurance coverage for your business? Connect with UPS Capital and learn how you can mitigate risk in your supply chain.

Insurance is underwritten by an authorized insurance company and issued through licensed insurance producers affiliated with UPS Capital Insurance Agency, Inc. and other affiliated insurance agencies. UPS Capital Insurance Agency, Inc. and its licensed affiliates are wholly owned subsidiaries of UPS Capital Corporation. The insurance company, UPS Capital Insurance Agency, Inc. and its licensed affiliates reserve the right to change or cancel the insurance coverage at any time. The insurance is governed by the terms, conditions, limitations and exclusions set forth in the applicable insurance policy and no warranty, guarantee, or representation, either express or implied, is made as to the correctness or sufficiency of any information contained herein. Insurance coverage is not available in all jurisdictions.


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