Cargo insurance for machinery: what it costs to go without

The gap: what the carrier actually owes you

Ocean carriers’ liability is capped by international convention — per package or per kilogram, whichever is higher, in special drawing rights (the IMF’s unit of account). For a heavy, crated machine the per-kilogram figure usually wins, and it yields a number that is a rounding error against the machine’s value; in the United States the domestic cap is an even blunter $500 per package. The carrier’s duty of care is real, but proving fault, and recovering beyond the cap, is a lawyer’s full-time job. Cargo insurance replaces that arithmetic with the machine’s actual insured value.

The invoice you never planned for: general average

Maritime law has a shared-fate institution called general average: when a sacrifice is deliberately made for the common safety of a voyage — cargo jettisoned, a vessel salvaged after grounding — every cargo interest contributes in proportion to the value saved. When the container ship that blocked the Suez Canal in 2021 declared general average, cargo owners — including those whose containers were undamaged — had to post cash deposits or insurance securities before their cargo was released. With cargo insurance, your insurer posts the security and manages the adjustment. Without it, you post the deposit yourself and wait for the adjustment to conclude. That is the cleanest argument for insuring a machine: it is not only about the sinking.

What the cover tiers mean

Cargo policies are built on the Institute Cargo Clauses — three tiers:

• ICC (A) — all risks of loss or damage, except the listed exclusions. The right tier for machinery.
• ICC (B) — a middle list of named perils: fire, explosion, vessel casualty, heavy weather and the like.
• ICC (C) — the basic list only: fire, explosion, stranding, collision. No theft, no heavy-water damage, no rough handling.

The trade terms tie into this: under CIF the seller’s obligation is the (C) tier at minimum; under CIP the 2020 rules upgraded the requirement to all-risks (A) cover. Either way, the convention is to insure at the contract price plus 10% — the uplift anticipating the buyer’s costs and margin — and to keep the currency the same as the sale. A buyer receiving CIF machinery who wants (A)-level cover buys the upgrade separately; our Incoterms guide has the context.

Machinery has its own fine print

• Packing is part of the cover. Policies exclude loss caused by insufficient or unsuitable packing — and loss-prevention studies attribute the clear majority of container cargo damage to poor packing and securing. The crate is not a detail; it is a condition of the policy. See our packing guide.
• Heavy lifts may carry warranties. For very heavy or high-value pieces, underwriters can require a pre-shipment survey of loading and lashing as a condition of cover — thresholds are set per policy, not by any universal rule.
• War and strikes are separate. All three tiers exclude them; restoring them costs add-on clauses where the route warrants.
• Repair, not write-off. Machinery claims are normally settled on repair or replacement of the damaged parts, without deducting depreciation for the machine as a whole — worth knowing when a used machine is insured.

How to arrange it

Ask for it in the quotation: we arrange per-shipment cargo cover on the value you nominate, with the certificate issued before departure — the document you would need the moment anything happens. Adding insurance after the cargo is loaded is a different conversation, which is why the insured value belongs in the first email.