For both commercial and smaller parcel shipments, exporters usually choose the insurance carrier that provides coverage for an international delivery. Yet in the end, the importer has to pay cargo insurance costs listed on the shipper’s commercial invoice. One of the hidden challenges of international trade is that importers are vulnerable to excessively high insurance rates imposed by a foreign insurance company.
How to Compare Import Insurance Rates
One solution is to consult a reputable customs broker who is knowledgeable about the most competitive cargo insurance rates.
For smaller importers who cannot afford to pay a customs broker’s consultation fees, freight forwarders are another source that can provide the most recent import insurance premium rates from a number of different cargo insurance companies.
Some freight forwarders are also licensed customs brokers, and are up to date on transportation availability, costs, best shipping routes, import and export requirements of many countries as well as the most competitive cargo insurance rates.
Other freight forwarders own their own cargo insurance division like P.A.F. Shipping Insurance. Based in Los Angeles, P.A.F. has been in business for over 35 years and provides online quotes for marine freight coverage from several insurance companies.
The lists below present average import insurance rates for different types of:
- international cargo insurance policies
- imported commodities.
All dollar amounts in this article are in U.S. currency.
Premium Rates for Total Loss Insurance
Total loss insurance covers complete loss or replacement of a shipped cargo. A total loss marine insurance contract specifies the insured risks, such as natural disasters, fires and explosions. The insurance company assesses the eligible claim amount based on the lowest cost replacement or repair value for the shipment. If the current resale value of the cargo is greater than the replacement or repair value, the underwriting insurance company will not grant the claim total loss status.
Among the following commodities imported from abroad, jewelry (spelled jewellery in Canada) has the highest premium rate of $47.50 per $1,000. That rate is over 7.5 higher than the insurance quote for new or used machinery.
- Bottled Beverages … US$8.20 per $1,000 of cargo’s insured value
- Chemicals … $8.20
- Computers … $16.70
- Frozen Meats … $23.70
- Household Goods … $23.40
- Jewelry … $47.50
- New or Used Machinery … $6.20
- Non-Perishable Food … $6.20
- Steel (bars, coils and sheets) … $26.
Frozen meats also have a comparatively high insurance rate that is nearly 4 times greater than the insurance premium for a shipment of non-perishable food. Non-perishables include unopened canned goods, uncooked rice and dry breakfast foods.
Premium Rates for Basic Insurance
A basic insurance covers more risks than total loss cargo insurance policies. Depending on the shipped good, basic rates can be from 5% to 40% higher than premiums for total loss insurance.
Below are sample premium rates per $1,000 for a basic import insurance policy.
- Bottled Beverages … US$10.7 per $1,000 of cargo’s insured value
- Chemicals … $10.70
- Computers … $19.20
- Frozen Meats … $26.20
- Household Goods … $25.90
- Jewelry … $50
- New or Used Machinery … $8.70
- Non-Perishable Food … $8.70
- Steel (bars, coils and sheets) … $28.50.
Steel materials, which have the highest insurance rates in part due to their bulk and weight, have a basic insurance rate that is 9.6% higher than the premium rate for total loss coverage. In contrast, the rates for machinery or non-perishable food shipments are over 40% greater.
Premium Rates for All Risk Insurance
An all risk cargo insurance policy covers more losses than either total loss or basic import insurance. Despite the name, however, specific perils such as acts of war, terrorist attacks, pirate ransom attempts are excluded from all risk coverage.
Premium rates for an all risk policy can be nearly 3 times higher than the more restrictive total loss coverage.
- Bottled Beverages … US$18.7 per $1,000 of cargo’s insured value
- Chemicals … $18.70
- Computers … $27.20
- Frozen Meats … $34.20
- Household Goods … $33.90
- Jewelry … $58
- New or Used Machinery … $16.70
- Non-Perishable Food … $16.70
- Steel (bars, coils and sheets) … $36.50.
Bottled beverages cost about 2.3 times higher under an all risk policy when compared with total loss coverage. Machinery and non-perishable food share the lowest premium rate for all risk coverage. Still, an all risk policy insuring commodities in those categories is 2.7 times more expensive than if the exporter bought total risk coverage.
Shopping for Best Import Insurance Rates
This article presents different types of cargo insurance and sample premium rates. While this can give exporters and importers a general benchmark for comparing ocean import insurance costs, the amount of claims that insurance companies will actually reimburse varies significantly.
P.A.F. Shipping Insurance is an example of a freight forwarding company with customs brokerage expertise. This type of reputable and experienced freight forwarder can help both individuals and companies find the most comprehensive freight insurance rates. At the same time, exporters and importers are better able to find the most comprehensive coverage that meets their specific shipping needs.
Daniel Workman - A senior business and finance writer who also does French translations, notably international trade and insurance materials.
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