Why Air Cargo Still Needs Insurance

Airlines carry limited legal liability for cargo loss or damage under the Montreal Convention — capped at roughly 22 Special Drawing Rights (SDRs) per kilogram, regardless of the goods' actual value. For high-value, fragile, or urgent shipments, this cap covers only a fraction of the loss, making independent air cargo insurance essential rather than optional.

What Air Cargo Insurance Covers

1. Physical Loss or Damage in Transit
Covers cargo from the point of dispatch through to final delivery, including damage from mishandling, rough loading/unloading, or accidents during ground transport to and from the airport.

2. Total Loss of Shipment
Covers complete loss of cargo due to aircraft crash, fire, or catastrophic incident during flight.

3. Theft and Pilferage
Covers partial or full loss from theft during ground handling, warehousing, or transit — a risk not adequately addressed by airline liability limits.

4. Non-Delivery
Covers cargo that goes missing entirely and is never delivered to the consignee.

5. Ground Transit (Airport-to-Airport Extension)
Extends cover to the road transit legs — factory to origin airport, and destination airport to buyer's warehouse — closing gaps the airline's own liability doesn't touch.

6. Handling and Loading Damage
Covers breakage, crushing, or damage during cargo handling, loading, and unloading at origin or transit airports.

Institute Cargo Clauses (Air) — Coverage Tiers

• Institute Cargo Clauses (Air) — All-risk equivalent for air freight, covering most physical loss/damage except a defined list of exclusions

• Institute War Clauses (Air Cargo) — Add-on for loss due to war, hijacking, and hostile acts

• Institute Strikes Clauses (Air Cargo) — Add-on for loss due to strikes, riots, and civil commotion