In today’s global supply chain, freight forwarders and logistics providers are essential in getting goods from origin to destination. Yet while these partners manage the movement of your cargo, the responsibility for financial loss or damage may still fall on you—unless the proper insurance protections are in place. Too often, businesses assume their freight forwarder’s insurance is enough to cover their cargo. In reality, forwarders’ liability insurance can be limited in scope, leaving major gaps that may not align with your business interests. To safeguard your operations, it’s essential to verify your forwarder’s insurance coverage and consider placing your own Ocean Cargo or Stock Throughput policy—solutions that offer broader coverage and keep you in control of the claims process.
Understanding Liability Insurance for Freight Forwarders
Liability insurance for freight forwarders is a broad term for coverage that protects against financial damage from shipping delays, clerical errors, or damaged cargo. Research shows that an estimated $100 billion to $1.5 trillion worth of product is lost due to delays and inefficiencies in the supply chain. If your forwarder doesn’t have the right coverage, the financial responsibility will likely fall on you in the event of a loss.
Key Risks in Freight Forwarding and Logistics
The logistics industry operates in a fast-paced, high-stakes environment. In the event of one of these incidents, you may experience product loss or revenue loss if your freight forwarder doesn’t have the right coverage.
Cargo Damage or Loss
Throughout its journey through the supply chain, cargo is exposed to theft, improper handling, weather, and accidents.
Documentation Errors
Incorrect bills or lading, invoices, or customs documents can lead to delayed shipments or hefty legal fines. E&O insurance ensures that logistics companies are protected from the financial repercussions of incorrect paperwork.
Before doing business with a freight forwarder, it is essential to verify their insurance coverage and ensure the protection of you and your cargo.
Step 1: Verify Your Freight Forwarder’s Insurance Coverage
Before handing over your cargo, request and review proof of insurance from your freight forwarder.
Certificate of Insurance (COI)
Request a current Certificate of Insurance that clearly outlines:
- Policy types and effective dates
- Policy limits and exclusions
- The name of the insured party
- Carrier information and contact details
This document allows you to evaluate whether your forwarder’s insurance aligns with the value and nature of your cargo.
Core Coverages You Should Expect
Ensure your forwarder carries the following policies:
- Freight Forwarder Liability Insurance – Covers loss or damage caused by mishandling, theft, or improper delivery of goods.
- Errors & Omissions (E&O) Insurance – Protects against financial losses caused by documentation errors, incorrect routing, or other professional mistakes.
- Warehouse Legal Liability Insurance is important if your cargo is stored during transit. It covers events such as fire, water damage, and theft.
- General Liability Insurance – Covers third-party bodily injury or property damage related to logistics operations.
- Contingent Cargo Insurance – Offers limited secondary coverage if a primary cargo policy does not fully cover a claim.
Ask to Be Added as an Additional Insured
Whenever possible, request that your business be named as an Additional Insured on your freight forwarder’s liability policy. This status can extend policy protections to your company, giving you direct rights under the policy in case of a claim.
Evaluate Coverage Limits and Exclusions
Assess whether the forwarder’s policy limits are sufficient based on your shipment’s value. Watch for:
- Sub-limits on specific perils
- Exclusions for certain commodities, geographies, or transit methods
- Deductibles that may erode the value of coverage
Step 2: Understand the Gaps—and Why Forwarder Coverage Alone May Fall Short
While your freight forwarder’s insurance may provide some peace of mind, it is typically structured to protect the forwarder’s liabilities, not yours. In most cases:
- The forwarder must initiate claims, and you may not have any standing to deal directly with the insurer.
- International conventions, such as the Hague-Visby Rules, limit coverage by limiting liability based on weight, not cargo value.
- Delays, disputes, or denials may arise, primarily when your forwarder uses subcontracted carriers or third-party warehouses.
Bottom line? Relying solely on your forwarder’s insurance can leave critical gaps in your protection.
Step 3: Secure Control with Ocean Cargo or Stock Throughput Insurance
If you want complete visibility and authority during the claims process—and confidence that your cargo is protected from end to end—consider placing your policy.
Ocean Cargo Insurance
Ocean cargo policies are designed to protect goods in transit by sea, air, or land, providing broad protection against loss or damage due to theft, weather events, mishandling, and other shipping risks.
Key benefits include:
- Direct control of claims – You deal with your insurer directly, not through a third party.
- Customizable limits and terms – Tailored to your specific goods, routes, and risk tolerances.
- Coverage across carriers and legs of the journey – Critical when multiple parties handle the shipment.
Stock Throughput Insurance (STP)
Stock Throughput Insurance offers comprehensive “cradle-to-grave” protection for businesses with frequent shipping and warehousing activity. It covers your cargo:
- In transit (from supplier to customer, globally)
- In storage (including third-party warehouses)
- During production or processing (when applicable)
Advantages of STP policies include:
- Consolidated protection under one policy, simplifying claims and reducing administrative complexity.
- No gaps in coverage between stages of transit and storage.
- Lower premiums over time due to bundled risk.
A Partnership Where Understanding Meets Action
Since 1947, Coughlin Insurance Services has committed its resources to assist distributors, importers, and exporters, ensuring they are protected against the unpredictable nature of the food trade industry. As specialists who understand the nuances and vulnerabilities of the global food distribution network, we have fine-tuned our insurance solutions to cater to this industry’s evolving dynamics. Our affiliations with the Association of Food Industries (AFI), National Frozen & Refrigerated Foods Association (NFRA), and the Peanut And Tree Nut Processors Association (PTNPA), reinforce our commitment to safeguarding your business with unparalleled expertise. We ask you to consider a partnership where understanding meets action.
You may have been recommended to us by one of our many satisfied customers, or you may have searched online for “Food Industry Insurance near me.” However you found us, we’re happy to welcome you. To discuss your needs and objectives and how we can help your company, please contact JJ Van Aman, Vice President of Sales email: jj@coughlinis.com or tel: 973-598-5884 or reach out for a free insurance quote today!