Many traders make the mistake of not taking out this type of insurance, viewing it as an unnecessary expense and effort, leaving suppliers or customers to control this vital area. This loss of control not only jeopardises an effective trade risk management strategy, but can also have negative effects on profitability.

Cargo insurance is usually provided by the means of one of three Institute Cargo Clauses, a set of standards voluntarily adopted by many international marine insurance organizations. They consist of Clauses A, B or C, plus War Clauses and Strike Clauses. Cargo Clause A provides the widest coverage and C gives the least, which is reflected in reduced premiums. There is an Institute Cargo Clauses (Air) for movement by air, which is equivalent to the A Clause.

Open Cover
This involves the cover of a number of consignments, either to a specific value or on an open policy for a fixed period.

Specific (Voyage) Policy
This policy is provides a one-off insurance cover for a particular shipment only.