Why Freight Forwarders Sell Insurance
Published on May 2, 2025
Title: Freight forwarders selling insurance — are they trying to rip you off? Think again!
Foreign trade business owners, when a freight forwarder asks you to purchase cargo insurance, is your first reaction: “They just want to make more money off me”? Stop right there! They are actually helping you buy a safety net for your business!
Let us do the math: If you do not buy insurance and your cargo unfortunately falls overboard or goes missing, do you go to the freight forwarder or the shipping line for compensation? Under the Hague Rules, the carrier’s liability for cargo damage is typically capped at only twice the freight amount! That amount may not even cover your lawyer’s fees. And these kinds of lawsuits are lost nine times out of ten.
Not to mention the possibility of General Average — for example, if a vessel runs aground. Even if your cargo is completely intact, without insurance, the shipping line can legally detain your goods and make you share millions in salvage costs! At that point, your cargo is drifting at sea, you will not receive a single penny, and you still have to pay out of pocket.
But if you have insurance, the insurance company takes on all of this.
Take it from Lao Tao: As long as the cargo value exceeds USD 5,000, insurance is a must! Do not gamble tens of thousands of dollars in cargo to save the cost of a cup of milk tea.
Follow me — I am Lao Tao in international logistics, and I will help you avoid the pitfalls of foreign trade logistics!
In-Depth Analysis
This article provides a deeper analysis based on the video content.
Title: Freight forwarders selling insurance — are they trying to rip you off? Think again!
Foreign trade business owners, when a freight forwarder asks you to purchase cargo insurance, is your first reaction: “They just want to make more money off me”? Stop right there! They are actually helping you buy a safety net for your business!
Let us do the math: If you do not buy insurance and your cargo unfortunately falls overboard or goes missing, do you go to the freight forwarder or the shipping line for compensation? Under the Hague Rules, the carrier’s liability for cargo damage is typically capped at only twice the freight amount! That amount may not even cover your lawyer’s fees. And these kinds of lawsuits are lost nine times out of ten.
Not to mention the possibility of General Average — for example, if a vessel runs aground. Even if your cargo is completely intact, without insurance, the shipping line can legally detain your goods and make you share millions in salvage costs! At that point, your cargo is drifting at sea, you will not receive a single penny, and you still have to pay out of pocket.
But if you have insurance, the insurance company takes on all of this.
Take it from Lao Tao: As long as the cargo value exceeds USD 5,000, insurance is a must! Do not gamble tens of thousands of dollars in cargo to save the cost of a cup of milk tea.
Follow me — I am Lao Tao in international logistics, and I will help you avoid the pitfalls of foreign trade logistics!
Summary
The above is a detailed introduction about why freight forwarders sell insurance. If you have any questions, please feel free to contact Votrich International Freight for consultation.