DiFFreight Blog Cargo Insurance from China: Key Aspects of Minimizing Risks During Transportation

Cargo Insurance from China: Key Aspects of Minimizing Risks During Transportation

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Shipping products from China is a complicated process with numerous steps and potential risks. These risks can vary from delivery delays and cargo damage to customs issues and other unforeseen circumstances. All of these risks can harm your company's finances and reputation. The article discusses the critical aspects of cargo insurance during transportation from China.

Types of insurance policies available for cargo transportation

Insuring sea and air freight cargo from China is essential for protecting your business from potential risks. Let's look at the types of insurance policies you can use to protect your interests.

All-risk insurance. This type offers the most comprehensive risk coverage for shipping goods. It covers any cargo loss or damage due to unexpected events such as fire, flood, theft, and other related incidents. It is the most in-demand insurance while shipping goods from China.

Partial loss insurance. This type of insurance covers losses resulting from partial cargo damage. Compensation is based on the percentage of damage to the cargo's total value.

Insurance against cargo destruction. Compensation is provided in case of complete cargo destruction or loss. The compensation amount depends on cargo value and policy terms.

When selecting an insurance policy, it is crucial to consider your business's specifics, cargo characteristics, transportation route, and many other factors.

Getting advice from insurance experts can help you find the best insurance policy for your needs.

Why Cargo Insurance from China Is a Must

Shipping goods from China is a process involving many stages and participants. Along the way, cargo is exposed to various risks. That's why cargo insurance from China has become a necessity:

Long sea shipments through multiple climate zones, air travel, and road transport within the country are subject to natural disasters, accidents, mechanical damage during loading and unloading, as well as theft or loss.
Distance and complex logistics — there is a significant span between China and other countries.
Differences in standards and packaging. Cargo handling standards vary between countries, often leading to damage.
Financial protection for businesses against unforeseen circumstances. Insurance shifts these risks to the insurance company.

Even if you trust the human factor, it’s always best to insure your cargo — at the very least, to protect against unpredictable weather.

Advantages and Disadvantages of Cargo Insurance Services via Intermediaries

There are many offers on the market, but which insurer should you trust? This is where insurance intermediaries come in. Let’s take a closer look at the pros and cons of arranging a policy through an agent:

Advantages of working with intermediaries	Disadvantages
Access to a wide range of companies and policies. This makes it possible to choose the most suitable option depending on the specifics of the cargo, route, and budget.	Limited choice of insurers, since intermediaries work only with partner companies. While reliable, they may not fully meet the client’s needs.
Tailor-made policy selection, taking into account current risks.	Sometimes intermediaries only offer standard policies that don’t consider the specifics of the cargo or route.
Expert support and consultations.	A forwarder or carrier may offer insurance but lack expertise in insurance itself, leading to mistakes or poor advice.
Saving time and effort. Searching, comparing, and arranging a policy can be time-consuming — professionals can handle it instead.	The intermediary may add a high commission to the cost, making the policy more expensive than a direct purchase.
Assistance in the event of a claim: collecting documents, filing a claim, and handling communication on behalf of the client.	Communication through an agent may delay submission of documents, case review, and compensation payment.
More favorable terms: insurance cost may be cheaper than direct purchase.	Conflict of interest, e.g. if cargo damage occurs due to the carrier’s fault.

It’s clear that you need to choose a reliable intermediary who ensures proper cargo insurance — otherwise, there are serious risks of not receiving compensation.

What does the cost of cargo insurance depend on?

The cost of insurance varies depending on various factors. Here are a few for your consideration.

Cargo value. The more expensive the cargo, the higher the insurance cost will be. The standard fee for sea freight shipping is usually 2% of the invoice value.
Cargo delivery route. Cargo delivery routes can be risky due to weather, politics, or theft, leading to higher insurance fees.
Type of cargo. Valuable or non-standard items, e.g., electronics, medicines, or chemicals, may require higher insurance fees due to increased risk of damage or loss.
Type of transport. For example, ocean freight and air freight from China may have different insurance fees.
Insurance company and selected conditions. Different insurance companies may offer varying fees and terms. A thorough analysis of insurance policies and their terms and conditions can help you to find the most suitable option.

Cargo insurance terms and conditions include compensation procedures in case of cargo loss or damage and detailed instructions for loss assessment.

Understanding your insurance policy terms is crucial to ensure proper protection for your cargo and business.

Problems Covered by Cargo Insurance from China

Cargo insurance from China covers risks directly related to transportation. Here are the most common insurance cases:
Cargo Damage (≈40-50% of cases)

Improper loading/unloading
Vibrations and impacts during transportation
Wetting (especially during sea transportation)
Packaging decompression

Loss or Theft (≈20-30%)

Theft at port, warehouse, or during transshipment
Complete loss of container (e.g., due to falling overboard in a storm)
Cargo theft during transit (especially relevant for road and rail transportation)

Accidents and Force Majeure (≈10-15%)

Road accidents during road transport
Shipwreck, plane crash (rare, but with significant losses)
Natural disasters: storm, earthquake, flood
Fires, explosions at warehouse or ship

Documentation Errors and Delays (≈10%)

Errors in waybills
Customs delays
Certification issues (leading to fines and delays)

Third-party Actions (≈5%)

Fraud by carriers
Port worker strikes
Piracy (rare, but happens in Southeast Asia)

Usually, insurance does not cover manufacturing defects, defects, or non-compliance of the product with the stated specifications. How can you secure your business if you're buying goods from China?
There are two options:

Warehouse services in China with inspection of goods upon arrival from the supplier. The batch is checked for manufacturing defects and non-compliance. Inspectors create a report. While the cargo has not yet been shipped, you can return the defect or get compensation from the seller.
Extended insurance can cover manufacturing defects if they are detected upon receipt. This policy is issued as a separate service and requires proof of defects (inspection reports, photos, expert opinions). Relevant for expensive goods or very large wholesale orders.

The best option is to search for supplier in China who will reliably deliver quality products. To calculate the cost of inspection from DiFFreight, schedule a consultation.

Quick and Trouble-Free Cargo Insurance from China

DiFFreight provides services for organizing and supporting container shipments from China. Our specialists will help you choose not only the most convenient mode of transport but also the optimal insurance policy. During the consultation, we assess potential risks, consider the type of cargo and route specifics, and find a trusted insurance company. We also represent our clients in the event of a claim to ensure fair compensation.

Cargo insurance from China is included in our list of services when you order delivery. Don’t risk your peace of mind — contact DiFFreight to ensure the safety of your goods. We work to keep your business moving forward, no matter the circumstances!