Cargo Insured Value: CIF Plus 10% and the Sum Insured

Cargo insured value is the amount a marine cargo policy pays on a total loss of the goods, conventionally the CIF value plus 10%. Incoterms 2020 sets 110% of the contract price as the minimum for a CIF or CIP seller, and under a valued policy the Marine Insurance Act 1906 s.27(3) makes the agreed figure conclusive between insurer and assured, absent fraud. On a USD 209,500 cost-and-freight shipment rated at an assumed 0.18%, the premium-inclusive insured value is USD 230,907.20. The same figure then drives every partial-loss settlement, every underinsurance reduction, and the insurer’s share of a general-average contribution.

Which perils the policy answers for is a separate question: the Institute Cargo Clauses (A), (B) and (C) decide it. The value decides how much each covered loss is worth. The two are negotiated together and tested together at a claim, and a mistake in the second is harder to see because the clauses themselves say nothing about it.

What the cargo insured value is

The insured value is the agreed worth of the goods written into the policy, the certificate or the open cover declaration. It is set by contract, not by the market: the Marine Insurance Act 1906 s.1 describes marine insurance as indemnity “in manner and to the extent thereby agreed”, and the agreement on value is the core of that bargain. A cargo underwriter does not revalue the goods after a casualty unless the policy leaves the value open.

Sum insured, agreed value and insurable value

Three terms get used interchangeably and mean different things.

On most cargo placements the agreed value and the sum insured are one number. They separate when the assured buys less cover than the stated value, and then MIA s.81 applies. Insurable value only matters where the policy is unvalued, or where a declaration under an open cover or floating policy is made too late to fix a value.

The 110% minimum in Incoterms 2020 and UCP 600

Two sets of International Chamber of Commerce rules put the 110% figure into commercial contracts. Neither is law: each binds only because a sale contract or a documentary credit incorporates it.

CIF and CIP article A5

Under Incoterms 2020 , a seller on CIF or CIP terms must obtain cargo insurance for at least 110% of the price provided in the contract, in the currency of the contract. The cover runs from the delivery point at A2 to at least the named destination, must be with an insurer of good repute, and must give the buyer a direct right of claim. CIF requires cover at least equal to Institute Cargo Clauses (C). CIP requires Institute Cargo Clauses (A), the change the 2020 edition made; in Incoterms 2010 both rules required only (C).

The A5 base is the contract price in the sale contract, often a CISG contract for the international sale of goods , not the commercial invoice total after discounts and not a figure the seller builds from components. A CIF seller who sells at USD 209,915.63 insures at least USD 230,907.19. The premium-inclusive formula later in this article matters to a buyer or a trader building the value from an FOB or CFR price, not to a CIF seller whose contract price already contains the premium.

On FOB, FCA, CFR and CPT terms nobody is obliged to insure. FOB article B5 imposes no insurance duty on the buyer. The freight forwarding and Incoterms article covers where each rule places the risk transfer that makes insurance matter.

UCP 600 Article 28 and the documentary credit

A bank checking an insurance document under a letter of credit governed by UCP 600 applies Article 28(f)(ii): where the credit is silent on the amount, the cover must be at least 110% of the CIF or CIP value. Article 28(e) adds that the insurance document must not be dated later than the date of shipment unless it shows cover effective from a date no later than shipment. UCP 600, ICC Publication No. 600, has been in force since 1 July 2007.

The two 110% rules differ. Incoterms measures against the contract price; UCP 600 measures against the CIF or CIP value appearing in the documents. They usually coincide. Where a sale contract grants a discount or the invoice differs from the contract price, the document checker and the sale contract can point at different numbers. A credit that states its own insurance amount removes the ambiguity, and it is the credit’s figure the bank applies.

The International Standard Banking Practice guidance, ISBP 821 , carries the banks’ document-examination practice for insurance documents. The cargo insurance certificate is the document most shipments actually present.

What the 10% does and does not represent

The 10% uplift is a commercial convention with contractual force only through A5 and Article 28. It is commonly explained as covering the buyer’s expected profit and the costs that a total loss strands, but no LMA, IUA or IUMI document states that purpose, and the Marine Insurance Act default in s.16(3) contains no profit element at all.

Profit is insurable in its own right. MIA s.3(2)(b) lists profit as a subject of marine insurance, and the German DTV-Gueter 2000/2011 conditions insure imaginary profit at 10% of the insured value, but only by special agreement and only where it is included in the sum insured (Ziffer 10.3). The London market reaches the same place by agreeing a value that already carries the uplift.

Calculating the insured value and the premium

The insured value is the cost of the goods plus freight plus the premium, all raised by the agreed uplift. Because the premium is itself a percentage of the insured value, the premium sits inside the figure it is charged on, and the exact result needs a closed form.

The premium circularity

Write C for the cost of the goods, F for freight to destination, m for the uplift and r for the premium rate. The premium is P = rV, and the value is V = (C + F + P)(1 + m). Substituting and solving:

The algebra is exact, and it follows MIA s.16(3), which includes “the charges of insurance upon the whole” in the insurable value of goods. The shortcut (C + F) x 1.1 omits the premium and understates the value by about 1.1 times the premium. The gap scales with the premium, so it is a rounding difference on a low-rated container of general cargo and a real sum on a high-value cargo carrying an additional war premium.

Worked example

A buyer imports machinery on CFR terms. The goods cost USD 200,000 and ocean and inland freight to destination is USD 9,500. The buyer’s open cover declares CIF plus 10%, and for this example the premium rate is an assumed 0.18% on ICC (A), not a market quotation.

The naive method understates by USD 457.20, which is 1.1 times the premium, to the cent after rounding. The check line proves the exact value is internally consistent: the premium on the declared value, added back into the CIF base and uplifted, returns the same value.

Building a CIF plus 10% value from FOB or CFR terms

An FOB buyer adds the ocean freight it pays to the FOB price to reach C + F, then applies the formula. A CFR buyer starts from the CFR price, which already contains freight. The ocean freight and surcharges that belong in F are the ones the cargo owner bears to the named destination; a currency adjustment factor or a bunker surcharge billed to the buyer counts, and a charge the carrier absorbs does not. Freight on an LCL or air shipment billed on chargeable weight goes in at the billed figure.

Prepaid freight that is earned on shipment and not returnable is a sunk cost of the cargo owner, which is why it sits in the insured value and why it also sits in the cargo’s general average contributory value. The voyage charter freight article covers when freight is earned and whose risk it is.

The valued policy under the Marine Insurance Act 1906

A cargo policy that states an agreed value is a valued policy, and the Marine Insurance Act 1906, which received Royal Assent on 21 December 1906 and came into force on 1 January 1907, supplies the rules that make the agreed value work. Institute Cargo Clauses clause 19 applies “English law and practice”, so the Act governs a cargo policy wherever the parties are based unless the policy chooses otherwise.

Section 16: the default measure for an unvalued policy

Section 16(3) sets the insurable value of goods as “the prime cost of the property insured, plus the expenses of and incidental to shipping and the charges of insurance upon the whole”. The section opens with the words “Subject to any express provision or valuation in the policy”, so it is the default measure that applies only where the parties have not agreed a value. It is not a floor under the agreed value, and it contains no profit uplift.

Section 28 completes the picture: an unvalued policy leaves the insurable value “to be subsequently ascertained”, subject to the limit of the sum insured. A policy issued without a stated value therefore pays prime cost plus shipping plus premium, and nothing for the buyer’s margin.

Section 27: the agreed value is conclusive, with one exception

Section 27(3) provides that “in the absence of fraud, the value fixed by the policy is, as between the insurer and assured, conclusive of the insurable value of the subject intended to be insured, whether the loss be total or partial.” The insurer cannot reopen the value because the market has fallen or because the goods were bought cheaply, and the assured cannot claim more because they rose.

The exception is s.27(4). Unless the policy otherwise provides, the agreed value is not conclusive for deciding whether there has been a constructive total loss . Section 60(2)(iii) asks whether the cost of repairing the damage and forwarding the goods would exceed “their value on arrival”, and Institute Cargo Clauses clause 13 uses the same comparator. A high agreed value therefore does not make a constructive total loss easier to establish.

Two limits survive the conclusiveness rule. Section 75(2) still lets the insurer disprove insurable interest wholly or in part. The agreed value also binds only the parties to the policy: it does not bind the carrier, the general average adjuster or a customs authority.

The valued and unvalued policies article carries the full comparison, including the hull practice described in hull and machinery insurance and the mortgagee’s interest insurance placed alongside it.

Overvaluation as a material circumstance

An agreed value can be too high to stand. In Eagle Star Insurance Co Ltd v Games Video Co (GVC) SA, The Game Boy [2004] EWHC 15 (Comm), Simon J accepted evidence that an overvaluation is material where it is in multiples. He found the vessel was worth, and known to be worth, in the order of USD 100,000 to 150,000, and held the insurer entitled to avoid (paras 122 and 124). The judgment quotes Ionides v Pender (1874) LR 9 QB 531 for the reason: an excessive valuation “has a direct tendency to make the assured less careful”.

The Game Boy was a hull case decided under the old disclosure rules. The same facts on an English-law contract made after 12 August 2016 run through the Insurance Act 2015 duty of fair presentation, with the graded remedies described below rather than automatic avoidance. A cargo agreed at 110% or 120% of a documented price is nowhere near that line; a cargo insured at several times its invoice is.

Insurable interest and the buyer’s claim

To recover, the assured must have an insurable interest in the goods at the time of loss, though not when the insurance was effected: MIA s.6(1) and Institute Cargo Clauses clause 11.1. Section 5(2) defines the interest as a legal or equitable relation to the adventure or the property such that the person benefits by its safe arrival or is prejudiced by its loss.

A contract without interest is void as a wager only where the assured also has no expectation of acquiring an interest, under s.4(2)(a), or where the policy is written “interest or no interest” or on policy-proof-of-interest terms, under s.4(2)(b). Section 7 makes defeasible and contingent interests insurable, which protects a buyer who might still reject the goods.

A buyer on CIF or CIP terms claims on the seller’s policy because A5 requires a direct right of claim. In English law the policy passes by assignment, before or after loss, by indorsement or in another customary manner (MIA s.50), and clause 15.1 extends “the Assured” to an assignee. Clause 15.2 excludes the carrier and other bailees from any benefit of the insurance.

Fair presentation and warranties after the Insurance Act 2015

For English-law contracts entered into or varied from 12 August 2016, the Insurance Act 2015 replaced the 1906 disclosure and warranty regime. The 1906 rules still govern older contracts, so the date of the open cover matters.

The changes that bear on value:

• Disclosure. MIA ss.18 to 20 were omitted, and s.17 now reads only that a contract of marine insurance is based on utmost good faith. Section 14(1) of the 2015 Act abolished avoidance for want of utmost good faith. The replacement is the s.3 duty of fair presentation: disclose every material circumstance the insured knows or ought to know, and make every material representation of fact substantially correct. A stated value is a representation of fact.
• Materiality. Section 7(3): a circumstance is material if it would influence the judgement of a prudent insurer in deciding whether to take the risk and, if so, on what terms.
• Remedies. Schedule 1 grades the remedy . A deliberate or reckless breach lets the insurer avoid, refuse all claims and keep the premium. Otherwise, an insurer that would not have written the risk may avoid but returns the premium. An insurer that would have charged more reduces the claim proportionately, by the premium actually charged over the higher premium: USD 400 charged against USD 500 that would have been charged pays 80% of the claim.
• Warranties. Marine insurance warranties no longer discharge the insurer. Section 10 suspends cover while a warranty is in breach and revives it on remedy. Section 9 abolishes basis of the contract clauses. Section 11 stops an insurer relying on breach of a term that could not have increased the risk of the loss that actually occurred, and the burden of showing that is on the insured.

Sections 16 and 17 let a non-consumer contract, which covers every trade cargo policy, contract out of most of this, but only by a term drawn to the insured’s attention and clear and unambiguous as to its effect. Section 9 cannot be contracted out of. Fraudulent claims fall under s.12, and s.13A, added by the Enterprise Act 2016 for contracts from 4 May 2017, implies a term that the insurer pays within a reasonable time.

Insuring above 110%: increased value, profit and duty

A buyer whose goods are worth more than the seller’s 110% cover, because the market has risen, because the goods were resold afloat, or because duty has been paid, buys an increased value insurance policy on top.

ICC clause 14 and the increased value policy

Institute Cargo Clauses clause 14.1 governs the primary policy. Where the assured effects increased value insurance, “the agreed value of the subject-matter insured shall be deemed to be increased to the total amount insured under this insurance and all Increased Value insurances covering the loss”, and each policy pays in the proportion its sum insured bears to that total. Clause 14.2 is the mirror wording for the increased value policy itself. On a claim the assured must evidence all other insurances.

With a seller’s primary cover of USD 110,000 and a buyer’s increased value cover of USD 20,000, the deemed agreed value is USD 130,000. A USD 13,000 partial loss is paid USD 11,000 by the primary insurer and USD 2,000 by the increased value insurer. The same clause sits at clause 12 of the Institute Cargo Clauses (Air) and clause 9 of the Institute War Clauses (Cargo) . The Marine Insurance Act has no increased value section: s.14 is headed “Quantum of interest” and deals with mortgagors, consignees and owners.

Duty, freight and taxes

Customs duty paid before a loss is a real loss to the importer, but the standard CIF plus 10% build stops at the frontier and the Institute Cargo Clauses contain no duty provision. Duty is insured either by a separate duty policy or by raising the agreed value. The DTV-Gueter conditions list duty, freight, taxes and levies, imaginary profit and increased value as separately insurable interests (Ziffer 1.1.3), which is the cleaner model.

Insurance and customs value interact in one direction only. In a CIF-basis customs territory such as the EU, the premium paid is added to the customs value under Regulation (EU) No 952/2013 Article 71(1)(e); the sum insured is not. The landed cost and import duty article builds the duty base, and customs valuation under the WTO Agreement explains why the EU and the US treat insurance differently. Goods held in a bonded warehouse have not yet borne duty, and s.71(4) values goods customarily sold in bond at the bonded price.

Underinsurance: section 81 and the proportionate claim

MIA s.81 states the rule in one sentence: “Where the assured is insured for an amount less than the insurable value or, in the case of a valued policy, for an amount less than the policy valuation, he is deemed to be his own insurer in respect of the uninsured balance.” The underinsurance and average article covers the history of the word “average” in this sense.

Two consequences follow. On a valued policy, underinsurance exists only where the sum insured is below the policy valuation. If the policy values the goods at USD 200,000 and insures USD 200,000, the goods are fully insured for loss purposes even if they are worth USD 260,000, because s.27(3) makes the agreed value conclusive. The low valuation still costs the assured money, but through s.73 in general average, not through s.81.

Where the sum insured is below the valuation, a partial loss is paid in proportion. On the worked example value of USD 230,907.20 with only USD 200,000 insured, a 20% depreciation loss worth USD 46,181.44 on the full value is paid at 200,000 / 230,907.20 of that, which is USD 40,000.00. The assured carries USD 6,181.44 as its own insurer.

The Institute Cargo Clauses 1/1/09 contain no average clause. The proportion comes from the statute, not the wording.

Measuring a partial loss against the insured value

A partial loss of goods is settled as a percentage of the agreed value, never as the agreed value minus whatever the damaged goods fetch. The method comes from MIA s.71 and depends on whether the goods arrived damaged or part of them failed to arrive.

Damaged goods: section 71(3) and gross arrived values

Where goods are delivered damaged, s.71(3) pays “such proportion of the sum fixed by the policy in the case of a valued policy, or of the insurable value in the case of an unvalued policy, as the difference between the gross sound and damaged values at the place of arrival bears to the gross sound value”. Section 71(4) defines gross value as the wholesale price, or the estimated value where there is none, “with, in either case, freight, landing charges, and duty paid beforehand”.

The percentage method is deliberate. The destination market may have moved since the value was agreed; comparing sound and damaged prices in the same market on the same day isolates the physical damage from the price movement, and the agreed value then converts the damage into money. A surveyor’s report under the marine cargo damage investigation process supplies both arrived values, and the sale of the damaged goods is evidence of the second. Contamination claims on white cargoes and temperature damage in reefer containers are the classic cases where a cargo arrives whole and still loses most of its value.

Part of the consignment lost, and several species under one valuation

Where part of the goods is totally lost, s.71(1) pays the proportion of the agreed value that the insurable value of the lost part bears to the insurable value of the whole. This is the measure for bulk shortage claims and for containers lost overboard from a larger consignment. Goods that arrive but cannot be identified, because marks are lost, are a partial loss and not a total loss (s.56(5)).

A container stack collapse often produces both kinds of loss in one consignment: some boxes lost overboard, others landed damaged. Where several kinds of goods share a single valuation, s.72 apportions the valuation over their separate insurable values; where the prime cost of each kind cannot be traced, over their net arrived sound values. A mixed container of electronics and packaging materials declared under one value is the everyday case.

Deductibles, excesses and the franchise

The Institute Cargo Clauses (A), (B) and (C) 1/1/09 contain no deductible, excess or franchise provision. Any deductible is written into the policy schedule, the certificate or the open cover, and its wording decides whether it applies per claim, per conveyance or per package and whether it comes off before or after an underinsurance proportion. The MIA still carries the old memorandum rules on free-from-particular-average warranties in s.76, which apply only where a policy contains such a warranty.

Total loss and costs recovered on top of the sum insured

On an actual total loss (s.57), a valued policy pays “the sum fixed by the policy” under s.68, and the insurer is entitled to whatever remains of the goods under s.79(1). On a constructive total loss the test under s.60(2)(iii) and clause 13 is value on arrival, not the agreed value.

Some costs sit outside the sum insured. Institute Cargo Clauses clause 16 obliges the assured to take reasonable measures to avert or minimise loss and to preserve rights against carriers and other bailees. In return, insurers “will, in addition to any loss recoverable hereunder, reimburse the Assured for any charges properly and reasonably incurred”. MIA s.78 is the statutory sue and labour provision, and s.77 allows successive losses to exceed the sum insured.

Clause 12 reimburses extra charges of unloading, storing and forwarding the goods to the insured destination where an insured risk ends the transit short of it. Clause 12 does not state whether those charges are payable in addition to the sum insured, unlike clause 16, and the answer on a large casualty turns on the policy wording and the adjuster’s view.

General average: contributory value is not insured value

A cargo’s insured value and its general average contributory value are different numbers set by different instruments. The first comes from the policy; the second from the York-Antwerp Rules incorporated in the bill of lading or sea waybill . Institute Cargo Clauses clause 2 covers general average and salvage charges “adjusted or determined according to the contract of carriage and/or the governing law and practice”, incurred to avoid loss from any cause not excluded by clauses 4 to 7.

Rule XVII of the York-Antwerp Rules 2016

Under the York-Antwerp Rules 2016 Rule XVII(a)(i), cargo contributes on “the value at the time of discharge, ascertained from the commercial invoice rendered to the receiver or if there is no such invoice from the shipped value.” Rule XVII(a)(ii) includes the cost of insurance and freight unless the freight is at the risk of interests other than the cargo, and deducts loss or damage suffered before or at discharge. Two provisions are new in 2016: the adjuster may deem the invoice to reflect the value at discharge irrespective of the place of final delivery, and may exclude cargo whose inclusion would cost more than its contribution.

Rule XIX(b) punishes a low declaration: goods declared at less than their real value are allowed any general average loss on the declared value but contribute on their actual value. Rule XXI(b), amended by the CMI Assembly at Antwerp in October 2022, runs interest at the USD Prime Rate plus 2% a year until three months after the adjustment. Rule XXIII extinguishes contribution claims, including claims under average bonds and guarantees, unless suit is brought within one year after the adjustment is issued. The outer limit is six years after the adventure ends, and the rule does not apply between the parties and their own insurers. There is no York-Antwerp Rules 2024; the 2016 text is the current CMI recommendation, and the 2004 and 1994 editions still apply where a contract incorporates them.

Section 73 and the underinsured cargo contribution

MIA s.73(1) pays the general average contribution in full “if the subject-matter liable to contribution is insured for its full contributory value”; if not, the indemnity is reduced in proportion to the underinsurance. Section 73(2) applies the same rule to salvage charges, which cover awards under the Salvage Convention 1989 and Lloyd’s Open Form .

Because Rule XVII takes the invoice to the receiver, a cargo resold afloat at a higher price can contribute on more than the seller’s policy covers. The table uses the worked example cargo, resold to the receiver at USD 280,000, in an adjustment with an assumed contribution rate of 12%.

The shortfall is uninsured unless the receiver bought increased value cover, and the full contribution still has to be secured before the carrier releases the goods. The general average security article covers the bonds, guarantees and cash deposits, the last of which Rule XXII requires to be held in a special account in the adjuster’s name. The average adjuster article covers who calculates the rate.

Double insurance, subrogation and the carrier recovery

The insured value also limits what the assured keeps when more than one source pays.

Double insurance arises where two or more policies cover the same interest and together exceed the indemnity allowed by the Act (MIA s.32). The assured may claim in any order but cannot recover beyond the indemnity. Under a valued policy it gives credit against the valuation, without regard to actual value, for sums received from other policies. Any excess is held in trust for the insurers, who contribute rateably under s.80. A seller’s CIF policy and a buyer’s own open cover declaring the same shipment is the common source.

Subrogation in marine insurance is governed by s.79. After a total loss the insurer takes over the assured’s rights from the time of the casualty. After a partial loss no title passes and the insurer is subrogated only “in so far as the assured has been indemnified”. Whether the recovery succeeds turns first on the carrier’s duty of due diligence to make the ship seaworthy . Its amount runs on the carrier’s own measure: the Hague-Visby Rules and their package and unit limitation , the older Hague Rules , the Hamburg Rules where they apply, or the Rotterdam Rules , which are not in force, where a contract borrows them. None of those regimes looks at the insured value, and the cargo claim time bar of the applicable regime runs regardless of the insurance timetable.

A both-to-blame collision clause in the contract of carriage can require the cargo owner to repay the carrier the part of the cargo’s own claim that the other ship recovers from the carrier. Institute Cargo Clauses clause 3 indemnifies the assured against that liability for an insured risk. Where the carrier claims a lien on the cargo for unpaid freight or general average, the lien does not change the insured value but can delay the release that a claim settlement depends on.

Open covers and declarations of value

Most traders do not buy a policy per shipment. They hold an open cover or floating policy and declare each shipment under it, and the declaration is where the insured value is set in practice.

MIA s.29(3) requires declarations in order of dispatch or shipment. For goods they must comprise all consignments within the terms of the policy, and the value must be honestly stated, but an omission or erroneous declaration “may be rectified even after loss or arrival, provided the omission or declaration was made in good faith”. Section 29(4) is the trap: unless the policy provides otherwise, a value declared only after notice of loss or arrival makes that declaration unvalued, so the s.16(3) default applies and the uplift is lost.

The open cover’s basis of valuation clause sets the formula each declaration applies, for example CIF plus a stated percentage. The LMA Joint Cargo Committee has made a basis of valuation clause available on the London Wordings Repository to address the gap between production and sales cost where goods can be replaced. The committee’s clause work is covered under the Joint Cargo Committee .

A freight forwarder or NVOCC that offers cargo insurance at booking usually declares under its own open cover and issues a certificate in the shipper’s name. The value it declares is whatever its booking system computes; checking that figure against the contract price and the A5 minimum is the shipper’s job.

Currency of the insured value

Incoterms 2020 CIF and CIP A5 require cover in the currency of the contract. The Institute Cargo Clauses and the Marine Insurance Act 1906 contain no exchange-rate rule for claims. A policy that insures sales in several currencies, or an open cover declared in USD for goods sold in EUR, should state the currency of the agreed value and the conversion date in its basis of valuation clause. Without that, a currency move between shipment and claim produces an argument the documents cannot settle.

York-Antwerp Rules 2016 Rule XXI(b) ties general average interest to the USD Prime Rate, but the adjustment itself may be prepared in another currency, and the cargo’s contributory value follows the invoice currency. Where the policy currency and the adjustment currency differ, the s.73 comparison between insured value and contributory value is made after conversion, and the rate used should be the one the policy specifies.

Regional overlays: China, Germany and the United States

English law is the default for London-market wordings, and Institute Cargo Clauses clause 19 imports it. Three national regimes differ in ways that change the insured value, and each applies only where the policy is governed by it.

PRC Maritime Code, 2025 revision

The Maritime Code of the People’s Republic of China was revised on 28 October 2025 by the Standing Committee of the National People’s Congress, promulgated by Presidential Order No. 58, and in force from 1 May 2026. It replaces the 1992 Code (Presidential Order No. 64, in force 1 July 1993) and renumbers the marine insurance chapter as Articles 240 to 282. The renderings below are from the Chinese text; no official English text of the revision has been published.

The constructive total loss row is the practical difference. Under the Chinese code a high insured value makes abandonment harder to justify; under English law it has no effect.

Germany: DTV-Gueter conditions

Section 209 of the German Insurance Contract Act (VVG) excludes marine insurance, so German cargo cover is contractual. The GDV’s DTV-Gueter 2000/2011 conditions , published as non-binding model conditions, define the insured value in Ziffer 10.2. It is the common commercial value of the goods at the place of dispatch at the start of cover, plus insurance costs, costs up to the carrier’s receipt, and freight finally paid. Imaginary profit at 10% is insured only by special agreement (Ziffer 10.3). Where the agreed value substantially exceeds the real value the insurer may ask for it to be reduced (Ziffer 10.5), and underinsurance produces proportionate recovery (Ziffer 17.5).

United States: state law

The United States has no federal marine insurance statute. In Wilburn Boat Co v Fireman’s Fund Insurance Co , 348 U.S. 310 (1955), the Supreme Court held that “Congress has not taken over the regulation of marine insurance contracts”, and left questions with no established federal admiralty rule to the states. Many US-issued cargo policies therefore choose English law and practice expressly, and the Institute Cargo Clauses do so by clause 19.

The cargo insurance market in figures

The International Union of Marine Insurance reported on 21 September 2026 that global marine insurance premium rose 5.5% in 2025 to USD 42.6 billion, and that cargo premium reached USD 24.2 billion, 57% of the total and 6.9% above 2024. Europe wrote 37.6% of cargo premium and Asia 36.4%. IUMI put 2025 cargo loss ratios at around 40% for Europe, around 45% for Latin America, just below 70% for Asia, and approximately 40% for the United States, down from around 75%, a fall IUMI says “may partly reflect under-reporting”. IUMI also noted that insured values are generally rising.

The IUMI Stats Report 2025 put 2024 cargo premium at USD 22.64 billion, 1.6% above 2023, with cargo loss ratios improving for a sixth consecutive year. Neither publication gives premium rates, and none are quoted here.

Cargo premium is only one of the lines that pay on a casualty. The hull policy pays the ship’s share of general average, P&I clubs pay the carrier’s cargo liability, and war risks insurance covers the perils the standard clauses exclude, with additional premium charged for voyages to Joint War Committee listed areas . Strikes, riots and terrorism on cargo fall under the separate Institute Strikes Clauses (Cargo) , and air shipments under the Institute Cargo Clauses (Air) .

Limitations

The legal statements are English law under the Marine Insurance Act 1906 as amended by the Insurance Act 2015, with named overlays for China, Germany and the United States. Commonwealth jurisdictions that enacted their own versions of the 1906 Act, the Nordic Marine Insurance Plan and cargo conditions, and French and Japanese law are not covered, and each can differ on the points above. The 2016 amendments apply only to English-law contracts entered into or varied from 12 August 2016; open covers older than that still run partly on the 1906 disclosure and warranty rules.

The PRC Maritime Code material is a reading of the Chinese text of the 2025 revision, in force from 1 May 2026, in the absence of an official English translation. Transitional rules for policies concluded under the 1992 Code are not addressed.

The Institute Cargo Clauses referred to are the LMA and IUA wordings dated 1/1/09, CL382 to CL387. The 1/1/82 wordings are a separate set with different clause numbering and content. A real policy can carry schedules, endorsements, deductibles, valuation clauses and choice-of-law terms that override any statement here. UCP 600 Article 28 is relied on only for sub-articles (e) and (f)(ii).

Premium rates in the worked examples are assumed inputs, not market quotations, and the general average rate of 12% is illustrative. The insured value calculator on ShipCalculators.com computes the value and premium from a rate the user supplies; it does not price a risk, value a cargo for a claim, or replace a broker’s placement or a surveyor’s assessment.

The earlier Institute Cargo Clauses 1982 are treated in their own article, including how their clause numbers map onto the 1/1/09 set.

Related Articles

• Cargo insurance and the Institute Cargo Clauses : what the (A), (B) and (C) wordings cover and exclude, transit and duration, and the war and strikes clauses.
• Incoterms explained : the eleven Incoterms 2020 rules, the delivery and risk points, and the A5 insurance obligations.
• General average and the York-Antwerp Rules : the doctrine, the adjustment, and cargo’s share of a casualty.
• Landed cost and import duty : the duty and tax stack that sits on top of the CIF value at destination.
• Freight forwarding and Incoterms : the forwarder, the carriage contract, and who arranges cover under each trade term.
• Marine cargo damage investigation : the survey that produces the sound and damaged values a partial-loss claim needs.
• Commercial invoice and packing list : the documents that fix the contract price and, for general average, the contributory value.
• Container stack collapse : a casualty type where general average, partial loss and total loss often arise on the same voyage.
• White cargoes and contamination claims : damage claims where the sound and damaged value comparison decides the outcome.
• Seaworthiness and due diligence : the carrier’s obligation that governs whether the cargo insurer’s subrogated recovery succeeds.
• Heavy lift and project cargo operations and marine reefer container systems : two trades where the agreed value and the replacement cost diverge most.
• International Chamber of Commerce and CISG sale contracts : the bodies and instruments behind the sale contract that fixes the price the 110% is measured against.
• Maritime arbitration and letters of indemnity : where valuation and release disputes end up.
• Loss of hire insurance : the shipowner’s income cover, a different interest from the cargo’s value.