Freight Insurance: Comprehensive Guide to Protecting Your Cargo in the UAE

Cargo insurance is essential protection for international shipments, yet many shippers operate with inadequate coverage or misunderstand their existing protection. The UAE's major marine insurers including AIG, ADNIC (Abu Dhabi National Insurance Company), Tokio Marine, and Dubai National Insurance offer comprehensive cargo coverage for businesses.

Understanding Carrier Liability Limitations

Carrier liability is limited by international conventions—approximately USD 500 per package for ocean freight under the Hague-Visby Rules, and around USD 20 per kilogram for air freight under the Montreal Convention. These limits rarely cover full cargo value.

These limitations exist because carriers cannot evaluate the value of sealed packages. Shippers who want full value protection must arrange their own marine cargo insurance through UAE-licensed insurers.

Institute Cargo Clauses (ICC)

Marine cargo insurance in the UAE is governed by Institute Cargo Clauses A, B, and C, along with Inland Transit clauses for land transportation:

Institute Cargo Clauses A (ICC A): Comprehensive all-risk coverage for partial or total loss from insured perils. This is the recommended coverage for most commercial shipments.

Institute Cargo Clauses B (ICC B): Coverage for partial or total loss from accidental damage to the carrying vessel, plus specific perils like lightning, earthquakes, volcanic eruptions, and water entry into the vessel.

Institute Cargo Clauses C (ICC C): Most limited coverage, typically covering only major casualties like fire, collision, and total loss of vessel.

Policy Types Available in UAE

Open Insurance Policies: Valid for one year, providing automatic coverage for all cargo shipped. Declaration of shipments can be made case-by-case, monthly, or quarterly—ideal for regular importers.

Single Cargo Policies: Developed for one-time shipments, suitable for individuals or companies with infrequent shipping needs.

Freight Forwarder Packages: Some insurers offer "Logistics Secure" packages combining cargo handling liability, public liability, and employee coverage in a single policy.

What's Covered

UAE marine cargo insurance provides cover against accidental physical loss and/or damage during transit by sea, air, land, or parcel post, including:

- Natural calamities: volcanic eruptions, storms, lightning - Cargo damage from collisions, jettison, overboard accidents, seawater damage - Unexpected events: fires, explosions, grounding - War risks, kidnapping, and piracy (with additional premium)

Common Exclusions

- Poor packaging or inadequate protection - Will or actions of the assured or their agents - War, terrorism, and political risks (unless specifically covered) - Deterioration or natural decay in perishables - Financial loss from delivery delays

Claims Procedures

When damage occurs, immediate notification to the insurer and carrier is essential. Document damage with photographs before further handling, and preserve damaged goods for inspection.

Required documentation: commercial invoice, packing list, bill of lading, survey report, and proof of loss amount. Major UAE insurers like AIG provide Marine Loss Control Engineering services for risk prevention.