Air Cargo Insurance

What Does Air Cargo Insurance Mean?

Air cargo insurance is a contract in which the insurer agrees to compensate the buyer of goods transported by air in the event of physical loss or damage to the items due to covered perils. Depending on the terms of the agreement, either the buyer or the seller is required to purchase air cargo insurance to protect their interest in the cargo.

Air cargo insurance is also referred to as air freight insurance. Shippers moving goods by other methods can look at related coverages like freight insurance for road and rail shipments, or commercial marine insurance for ocean cargo.

Insuranceopedia Explains Air Cargo Insurance

Because international treaties and state laws offer limited protection for cargo in the event of loss or damage, air cargo insurance provides additional security. Premiums are typically based on the value of the items being shipped, with other factors influencing the price, such as the risks involved, the chosen route, and the nature of the items being transported. Nowadays, in addition to insurance companies, some trade service providers and freight forwarders also offer this type of protection. Forwarders sometimes bundle the coverage into their service, though the rates and limits can differ from a dedicated insurer, which is why businesses that ship regularly often compare those quotes against options like a freight broker policy.