Emerging Business Insights
Cargo in Transit Risk: What Every Business Owner Should Know
DECEMBER 2, 2025
If your business uses third-party transportation companies to ship its products, or you use your own vehicles to make deliveries, your exposure to cargo risks can be significant. It’s easy to overlook the numerous risks and coverages available. Make sure you understand the common pitfalls and exposures of cargo insurance to help ensure your business is properly protected.
What’s the Risk?
Cargo risk includes loss or damage to your goods while they’re in the process of being transported from one location to another — including anytime they are stored or idle in between actual transport. This can include theft, collision, overturn, fire, and weather events.
How Cargo Risks Can Impact Your Business
- Damaged or lost cargo can mean lost revenue and additional costs to replace the affected goods.
- If the purchase order states “FOB Destination,” the seller is financially responsible for the goods until they reach the specified delivery destination.
- Motor carriers may only be responsible for losses for which they are legally liable, not “acts of God” such as weather-related losses. Even when the motor carrier's liability is clear, losses often settle for amounts well below the replacement cost of the cargo.
Key Coverages to Consider
| Policy Coverage | Who Needs It | What It Covers |
| Annual Transit | Companies that ship goods via carrier for hire, on their own vehicles, or both | Loss of or damage to the insured’s property in transit, by carrier for hire or on the insured’s vehicles, during a one-year policy period |
| Trip Transit | Companies making one-time or very occasional shipments, usually via carrier for hire | Loss of or damage to the insured’s property in transit, usually by carrier for hire, for specifically described individual shipments |
| Owners Cargo | Companies that ship their own goods on their own vehicles | Loss of or damage to the insured’s property (and, on some forms, property of others sold by the insured) in transit on the insured’s own vehicles |
| Ocean Cargo | Companies that ship goods by sea or by air over large bodies of water | Loss of or damage to the insured’s property in transit by a carrier for hire |
Source: IRMI - Reference Connect
Typical Coverage Gaps and Pitfalls
- Improper valuation: Policies may pay based on actual cash value, not replacement cost.
- Exclusions: Common exclusions include theft by employees, theft from unattended vehicles, and certain types of goods (e.g., electronics, jewelry).
- Territorial limits: Some policies only cover transit within certain geographic areas.
- Improper packing/loading: Losses due to poor packing or loading are typically excluded.
- Transportation over water: Conveyances over water could be excluded, and would require an ocean marine cargo policy.
Best Practices for Managing Cargo in Transit Risks
- Ensure contracts with shippers, brokers, and customers align with your insurance coverage.
- Have a clear process for reporting and documenting losses.
- Conduct a regular policy review and update your insurance program in-line with changes to your business.
How USI Can Help
Cargo in transit risks are complex. USI Insurance Services’ proactive approach and expert knowledge can help protect your business from costly losses. Our understanding of your business, industry, and the coverages that reduce exposure to risk, can ensure your coverage keeps pace with your business.
We help our clients navigate cargo in transit risks by:
- Providing a risk assessment specific to their operations and cargo types.
- Advocating on their behalf in the event of a claim.
- Advising on the best type of coverage for their business.
In addition to the solutions discussed in this article, USI’s analysis of property coverage can identify other opportunities to reduce uninsured exposures and create premium savings. To learn more about the risk management services available through USI, email select.business@usi.com.
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