Why Freight Forwarders Sell Insurance
Published on May 2, 2025
Title: Freight forwarders pushing insurance is a scam? Don’t be naive!
Foreign trade bosses, when a freight forwarder asks you to buy cargo insurance, is your first reaction: “They just want to make more money off me”?
Stop right there! This is about buying a talisman for your business!
Let’s do the math:
If you don’t buy insurance and your cargo unfortunately falls overboard or goes missing, do you go to the freight forwarder and the shipping line for compensation?
Under the Hague Rules, the carrier’s liability cap for cargo damage is typically only twice the freight amount!
That amount might not even cover your lawyer’s fees! And these lawsuits are lost nine times out of ten.
Not to mention if you encounter General Average — for example, if a vessel runs aground — even if your cargo is perfectly intact, as long as you don’t have insurance, the shipping line can legally detain your goods and make you share millions in salvage costs!
By then your cargo is drifting at sea, you can’t get a single cent, and you still have to pay out of pocket.
But if you had purchased insurance, all of this would be borne by the insurance company.
Take it from Lao Tao:
If your cargo value exceeds $5,000, insurance is a must!
Don’t gamble tens of thousands worth of cargo to save the price of a milk tea.
Follow me — I’m Lao Tao in international logistics, helping you avoid the pitfalls of foreign trade logistics!