Cargo and liability insurance
Cargo insurance for steel products covers property risk: damage, loss or shortage of metal in transit. The carrier's liability is a separate contract, and it covers not your cargo as such but the carrier's obligations towards you.
What exactly is insured and who arranges the policy depends on the delivery basis: under EXW, FCA and FOB the buyer arranges the insurance, under CIF and CIP the seller does.
Cargo insurance for steel products: what is insured
A cargo insurance policy works with physical damage to the cargo. For steel products the typical events are a road traffic accident and overturning, a bundle falling during loading or transhipment, theft, fire, wetting, damage to packaging and corrosion due to a breach of protection, and natural events on the route.
| What is insured | What it means for the metal | What is needed as proof |
|---|---|---|
| Damage in an accident | Deformation, kinks, distortion of geometry | Report, photos, carrier's marks |
| Cargo falling and shifting | Dents, chipped edges, damaged finish | Loading plan, inspection report |
| Theft and shortage | Shortage of packages or part of the batch | Recount, report, statement |
| Fire and wetting | Scale, corrosion, loss of grade | Expert opinion, photos, storage conditions |
| Corrosion in transit | Spots and points on the surface | Condition of packaging, humidity regime |
Separately, distinguish three things: cargo insurance (property), carrier's or freight forwarder's liability insurance (obligations) and seller's liability insurance. These are different policies with different beneficiaries. If you do not have your own policy and the carrier refers to theirs, clarify who the beneficiary is in it and what counts as an insured event.
What insurance does not do also matters. It does not confirm the grade of the metal, does not replace the quality certificate and the batch passport and does not cover the risk of grade substitution. The exchange does not handle delivery or insurance: settlement and delivery go on between the parties outside the platform, so the policy is arranged by the parties to the trade or their carriers.
When insurance is needed
The obligation to insure follows from the delivery basis, not from a wish. Under Incoterms the buyer insures under EXW, FCA and FOB, and also under CPT, CFR and DAP, where the seller delivers but is not obliged to arrange insurance. Under CIF the seller arranges a policy with minimum cover, under CIP with wider cover.
| Basis | Who is obliged to arrange the policy | Where the risk passes | What the buyer should check |
|---|---|---|---|
| EXW | Buyer | From the seller's warehouse | Who loads and from what moment the policy applies |
| FCA | Buyer | After handover to the carrier | Whether the route in the policy and in the carriage match |
| FOB | Buyer | From the moment of loading on board the vessel | Cover for port operations |
| CFR, CPT | Seller is not obliged to insure | At the moment of shipment | Whether the seller has a policy and in whose name it is issued |
| CIF | Seller, minimum cover | At the moment of loading | The set of risks and the limit under the seller's policy |
| CIP | Seller, wide cover | After handover to the carrier | Whether the cover is sufficient for your cargo |
| DAP, DDP | Seller is not obliged to insure | Up to the place of destination | Who bears the loss until unloading |
Even when insurance is not obligatory, it makes sense in three cases: a long route with transhipments, an expensive batch with a finish for a visible surface, and delivery to installation or commissioning deadlines. Metal is hard to damage unnoticed, but expensive to put right: kinks in sheet and dents in pipe often mean rework rather than a discount. If the carrier refers to their own policy, check who the beneficiary is in it.
What the cost of insurance consists of
The cost of a policy is not taken from a price list and is not calculated by a single formula: the insurer assesses the risk. The price is affected by the declared value of the cargo, the route and its length, the mode of transport, the number of transhipments, the nature of the cargo and packaging, the set of risks covered, the presence of a deductible and the claims history on the route.
| Factor | How it affects the cost |
|---|---|
| Declared value of the cargo | Determines the insurer's limit of liability |
| Route and leg | A longer route and more transhipments mean a higher risk |
| Mode of transport | Sea, rail, road and container are assessed differently |
| Packaging and securing | Reliable protection reduces the probability of loss |
| Set of risks | Wide cover is more expensive than minimum |
| Deductible | Your own participation in the loss reduces the premium |
| Route and history | Losses on the route affect the terms |
The specific premium is quoted by the insurer after the application form is completed. Do not compare policies by a single figure: look at which risks are included, which are excluded, whether there is a deductible and how the loss is calculated — by the value of the metal or by the cost of replacement. It is useful to agree in advance who notifies the insurer of an event and within what period.
How to obtain a pay-out
The procedure is simple but depends on document discipline. First you record the event on the spot: call a carrier's representative, draw up a report, take photos and video, keep the packaging and the securing. Then you notify the insurer according to the rules of the policy: the notification period is stated in the contract, and breaching it is the most common reason for refusal.
| Step | What to do | What confirms it |
|---|---|---|
| 1. Record the event | Stop movement, inspect the cargo | Report, photos, video |
| 2. Notify | Inform the insurer and the carrier | A mark of receipt of the notification |
| 3. Collect documents | Transport, commercial and warehouse documents | A set according to the insurer's list |
| 4. Confirm the damage | Assessment, and in a dispute an expert examination | Assessment report or record |
| 5. Obtain a decision | Agreement of the amount and payment | The insurer's decision, payment documents |
Two mistakes occur most often. The first is that the cargo was unloaded and put into production before inspection, and the moment of damage can no longer be proved. The second is that the report says "packaging damaged" without stating what exactly happened to the metal. Word it specifically: how many packages, which position, what nature of damage, under what circumstances.
Frequently asked questions
What does cargo insurance for steel products include
Damage, loss and shortage of metal in transit, including accidents, falling during transhipment, theft, fire, wetting and corrosion due to damaged packaging.
Is it necessary to insure cargo under FCA and FOB
Under these bases insurance is not obligatory for the seller; the risk and the arrangement of the policy lie with the buyer. It is worth insuring if the route is long, there are transhipments or the batch is expensive.
Who insures the cargo under CIF
The seller arranges a policy in favour of the buyer, but with minimum cover. It is useful for the buyer to check the set of risks and the limit: if they are small, arrange additional cover at their own expense.
Does insurance cover corrosion of metal
Corrosion is covered if it arose from an insured event in transit, for example wetting or damaged packaging. Corrosion due to incorrect storage at the buyer's warehouse will not be an insured event.
How does cargo insurance differ from carrier's liability
Cargo insurance protects the owner's property, carrier's liability protects the carrier's obligations towards the cargo owner. The beneficiaries and the payment procedure in these policies are different.
How to obtain a pay-out for damaged cargo
Record the event with the carrier's participation, notify the insurer within the period under the policy, collect the transport and commercial documents, confirm the amount of damage. The insurer then takes a decision and pays the indemnity.
Is it obligatory to insure cargo on the exchange
The exchange does not handle delivery or insurance: settlement and delivery go on between the parties. The obligation to insure is determined by the delivery basis, and a voluntary decision is your own assessment of the risk.
What to look at next
- Logistics of steel products — delivery methods, securing and packaging.
- Export and import of stainless steel — documents and currency control.
- Safety on the exchange — what the platform guarantees and what it does not.
- How the exchange works — the rules of the order, the trade and the deposit.
Place an order with the required basis and mode of transport — the platform will fix them in the trade, and you arrange the cargo insurance for your route and batch.