Cargo insurance is the one line on a furniture import budget that most buyers treat as optional, until a container arrives with water in the box or a corner crushed in transit. Whether you need it is not a yes-or-no about the goods; it is a question of who carries the risk, what the goods are worth when they are on the water, and what you can absorb if they do not arrive whole. This guide explains what cargo insurance covers, when it is worth the premium, and how to read the cover so you are not paying for more than you need.

What Cargo Insurance Actually Covers

Marine cargo insurance is written against a set of standard clauses rather than a single blanket policy. The Institute Cargo Clauses A, B and C define the coverage tiers. Clause A is the broadest and is usually described as all risks, covering the cargo, its container and the vessel for most risks at sea, with any exclusions stated in the wording. Clause B covers a defined set of named perils such as fire, explosion and collision. Clause C is the narrowest, covering the biggest events but little else.

For a container of sofas, cabinets or desks the practical question is which set of risks you face. Because furniture sits inside a sealed box for weeks, the real exposures are often moisture and condensation that cause mildew, and the impact of movement that shifts and crushes corners, rather than the headline event of a sinking. A Clause A policy is the cover that gets closest to catching those everyday losses.

Who Should Arrange the Insurance

The person who insures the goods is decided by the Incoterm on your purchase order, and this is the first thing to check before you ask whether you need your own policy. Under a CIF price the seller arranges and pays for the insurance and hands you the certificate with the shipping documents. Under FOB or EXW you are the one who arranges cover, because the risk and the insurance responsibility sit with the buyer once the goods leave the factory.

The practical consequence is that a buyer on an FOB or EXW trade who never buys cargo insurance simply has no cover between the origin and the destination. Our FOB, CIF and EXW Incoterms article explains exactly where that responsibility lands on each term.

The 110 Percent Rule and How Much to Insure For

On a CIF sale, insurance is normally written for 110 percent of the invoice value. The extra ten percent is not a markup for the seller; it is a standard margin that covers the freight you already paid and a small buffer for the overhead and profit tied up in the shipment. It is a convention so that if the worst happens you get back enough to reorder, not just the raw cost of the goods.

When you are arranging your own policy, the same logic applies: insure to replacement cost plus the freight you paid, not just the factory cost. Insuring at a bare goods value leaves you out of pocket for the shipping you will have to pay again. Our true cost of importing furniture article shows all the layers that replacement value has to account for.

Warehouse to Warehouse and the Cover Window

Marine cargo clauses usually carry a warehouse-to-warehouse condition, which means cover starts when the goods leave the warehouse at the point of shipment and ends when they arrive at the warehouse at the destination. That is a valuable feature, because it means the container is protected across the road leg, the port and the sea voyage, not just on the water.

The catch is that the cover only runs while the goods are in the ordinary course of transit. If a container sits in a port for months, or is diverted outside the agreed route, the cover can lapse. Knowing where your cover starts and ends is as important as knowing what it covers, and a certificate that names the origin and destination warehouses is the one to hold onto.

Is Clause A or Clause B the Right Level for Furniture?

Choosing between Clause A and Clause B is a judgement about the value and the risk of the goods you are shipping. For a high-value container of upholstered furniture, where water and moisture damage are the biggest worry and a single ruined order is a serious loss, Clause A cover is usually worth the higher premium. For a low-value, indestructible load on a routine route, the named-perils cover of Clause B may be enough.

The Institute Cargo Clauses A, B and C differences are worth reading before you decide, and a broker’s summary is a reliable reference. The James Hallam guide to the Institute Cargo Clauses A, B and C lays out the difference in plain language, so you can match the cover to the cargo rather than overpaying for a level you do not need.

What Cargo Insurance Does Not Cover

Even an all risks policy has limits, and it is worth knowing what sits outside the cover. Exclusions typically include inherent vice, which covers goods that spoil on their own through a fault in the goods themselves; packaging that is not suitable for the journey; and delay, along with the effect of a delay on the goods. If furniture is packed badly and the box fails, that damage is often on you, not the insurer.

This is why good packaging and cargo insurance are partners rather than alternatives. A policy protects against the risk of transit, but it is not a substitute for a box that can actually survive the trip. If the packing is the weak point, the answer is better packing first and insurance second.

Cargo insurance is a small, predictable line in the budget that protects a large, unpredictable exposure. The importer who knows their Incoterm, insures to replacement value on the right clause, and chooses a level that matches the risk is the one whose business is still standing when a shipment goes wrong. If you want a sourcing partner that quotes fully landed cost including freight and insurance, our services and pricing page explains how a complete import is costed and protected.

Frequently Asked Questions

Do I need cargo insurance when importing furniture?

If your price term is FOB or EXW you should arrange your own cover, because the buyer carries the risk once the goods leave the factory. On a CIF price the seller arranges it for you.

What is the difference between cargo clauses A, B and C?

Clause A is the broadest all risks cover, Clause B covers a defined set of named perils, and Clause C is the narrowest, covering the big events but little else.

How much insurance should I buy for a furniture shipment?

Insure to replacement value plus the freight you paid, which is why a CIF sale is normally written for 110 percent of the invoice value. Insuring to a bare goods cost leaves you short if you have to reorder.

Does cargo insurance cover water or moisture damage?

Under a Clause A all risks policy, moisture and condensation damage that is not excluded in the wording is generally covered, which is why Clause A is often the right choice for upholstered furniture shipped in a sealed container.

For more detail, see our Customs Clearance Documents for Furniture.