Cargo insurance costs in Canada typically range from 0.05% to 1.5% of the shipment’s declared value, depending on factors like shipment type, mode of transport, cargo value, and risk exposure. KASE Insurance helps businesses secure tailored coverage for full financial protection.
Cargo insurance is one of the most overlooked yet essential parts of protecting a business’s bottom line. Whether you’re shipping finished products to customers across Canada or importing materials from overseas, every shipment is exposed to risks, theft, damage, accidents, and even political events that can jeopardize your goods and profits.
At KASE Insurance, we help Canadian businesses secure reliable cargo insurance coverage tailored to their operations, shipment type, and transit routes. This guide explains what cargo insurance is, how much it costs, and the factors that influence your premiums so that you can make confident, cost-effective coverage decisions.
What Is Cargo Insurance and Why Does It Matter?
Cargo insurance is a commercial insurance policy that protects goods in transit, by land, sea, air, or rail, against physical loss or damage. It covers the declared value of your shipment from the moment it leaves your facility until it reaches its destination.
Without proper coverage, you may be relying on your carrier’s limited liability, often just a few dollars per kilogram. For example, if a $250,000 shipment is lost, you might only receive a few thousand dollars in reimbursement. Cargo insurance closes that gap, ensuring your full cargo value is protected.
Why Is Cargo Insurance Critical for Canadian Businesses?
Shipping companies in Canada face unique logistical challenges due to Canada’s distinct trade environment.
- Vast distances and multi-modal transit increase risk exposure
- Severe weather, including ice storms, flooding, and snow, causes frequent shipping delays and losses
- Cargo theft in Ontario and Quebec alone accounts for millions in annual losses.
- Cross‑border trade with the U.S. adds another layer of logistical and legal complexities.
For a transportation business, these unique risks could result in the loss of an entire shipment and damage to your reputation. At KASE Insurance, we help companies navigate these challenges with coverage built for Canada’s transportation realities, minimizing downtime and protecting your supply chain at every step.
Learn more: Why Importers and Exporters Need Cargo Insurance
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Is Cargo Insurance Mandatory in Canada? |
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Cargo insurance isn’t legally required by federal or provincial law, but it’s functionally mandatory for many commercial operations. While the Canada Transportation Act and related provincial regulations govern carrier responsibilities, these laws generally protect carriers, not shippers. Unless you purchase cargo insurance, your goods are often uninsured beyond the carrier’s minimal liability limit. |
When Is Cargo Insurance a Requirement?
While cargo insurance isn’t legally required, certain business and trade circumstances make it a necessity, not just a safeguard.
- Contractual obligations: Many vendors, distributors, and government contracts require proof of cargo insurance coverage before goods are released or payments are processed.
- Bank or lender requirements: If your business finances inventory or shipments, lenders often mandate cargo insurance to protect collateral value.
- International trade: Under Incoterms 2020, terms such as CIF (Cost, Insurance, and Freight) and CIP (Carriage and Insurance Paid to) require sellers to insure goods during transit.
- High‑value shipments: Carriers, logistics providers, and freight brokers may reject or limit shipments for uninsured freight due to elevated risk exposure.
In short, cargo insurance isn’t legally mandatory, but shipping without it leaves your capital, contracts, and reputation unprotected.
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What Does Cargo Insurance Cover (and Not Cover)?
A well‑structured cargo insurance policy covers the majority of physical risks during shipment. However, specific coverage depends on your declared value, policy type, and route.
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Typical Cargo Insurance Coverage |
Common Exclusions |
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Land vs. Marine Cargo Coverage
Both land and marine cargo coverage deals with shipments, but they vary mainly in the type of transport, risks covered, and scope of shipment.
|
Type |
Description |
Ideal For |
|
Land Cargo Insurance |
- Protects goods transported over road or rail within Canada or North America. - It covers risks like collisions, theft, and weather-related damage during inland transit. |
Domestic and regional distributors |
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Marine Cargo Insurance |
- Applies to goods shipped by sea or air. - Protects against loss or damage from rough seas, port handling, air transport accidents, and international transit risks. |
Global trade and cross‑border logistics |
Simply put, land cargo insurance secures domestic and regional shipments, while marine cargo insurance safeguards imports, exports, and global logistics, ensuring full coverage from origin to destination.
Optional Add‑Ons to Customize Your Coverage
Add-ons broaden your policy’s scope, helping close potential coverage gaps your standard coverage may leave open. You can tailor your cargo insurance to suit your specific operations, routes, and cargo types with these additional coverages:
- Reefer Breakdown Coverage: Protects temperature-controlled goods from spoilage in the event of refrigeration system failure.
- Warehouse‑to‑Warehouse Coverage: Extends protection through every storage point between origin and destination.
- Contingent Cargo Insurance Coverage: Covers shipments when you’re not the named shipper (e.g., drop‑shipping scenarios).
- War, Strike, and Terrorism Coverage: Safeguards shipments passing through politically unstable regions.
- Debris Removal and Cleanup: Covers additional costs if a shipment loss requires environmental or site cleanup.
Pro tip: Ensure endorsements are selected strategically, based on your supply, cargo profile, and risk exposure, so that no shipment moves without coverage.
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How Much Does Cargo Insurance Cost in Canada?
In Canada, cargo insurance costs typically range between 0.05% to 1.5% of the shipment’s declared value, depending on the type of goods, transportation mode, and risk exposure. You can purchase policies per shipment (single‑transit coverage) or as annual open policies for frequent shippers.
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Mode |
Typical Rate (% of shipment value) |
Example Scenario |
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Truck (domestic) |
0.05% – 0.3% |
Toronto–Calgary freight run |
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Air (international) |
0.25% – 0.6% |
Canada–U.S. electronics shipment |
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Marine (containerized) |
0.1% – 0.5% |
Imports from Europe or Asia |
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High‑risk/perishable |
0.75% – 1.5% |
Temperature‑controlled or fragile cargo |
Here’s an example:
Shipping $500,000 worth of medical devices overseas at 0.6% would cost approximately $3,000, which is less than 1% of the cargo value.
What Factors Affect Cargo Insurance Rates?
Insurance companies draft most cargo insurance policies based on the following factors:
- Shipment Value – Higher declared values mean higher premiums, but under‑declaring can invalidate claims.
- Type of Goods – Fragile, flammable, or high‑theft items (like electronics or alcohol) raise risk exposure.
- Packaging Quality – Proper crating, moisture control, and labelling can reduce rates.
- Mode of Transport – Air is costlier but faster; marine and road shipping face environmental and theft risks.
- Route and Destination – Shipments through high-theft regions or politically volatile zones incur higher costs.
- Claims History – Businesses with clean loss records often receive discounted premiums.
- Deductible Level – Higher deductibles reduce premiums but increase out‑of‑pocket costs.
KASE Insurance brokers negotiate on your behalf with multiple carriers to secure the most competitive premium while maintaining strong protection. We balance risk, compliance, and affordability so you secure cost-effective, comprehensive coverage.
Cargo Insurance vs. Carrier Liability: What’s the Difference?
Many Canadian businesses assume their carrier’s insurance protects their shipment. In reality, carrier liability is extremely limited.
|
Feature |
Cargo Insurance |
Carrier Liability |
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Who Buys It |
Shipper or consignee |
Carrier |
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Coverage Value |
Full declared shipment value |
Often capped at ~$2.00/lb (domestic trucking) or 26 SDR/kg (air cargo) |
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Fault Requirement |
No; covers insured events |
Yes; must prove carrier negligence |
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Claims Process |
Direct with the insurer |
Through a carrier dispute |
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Customization |
Fully tailored to cargo type and route |
Fixed by regulation or contract |
In short, cargo insurance fully protects your shipment’s value, while carrier liability offers only minimal, fault-based coverage, leaving most losses uncovered unless you have your own policy in place.
Learn more: Cargo vs. Freight Insurance: What's the Difference?
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Common Mistakes to Avoid When Buying Cargo Insurance
Before purchasing cargo insurance coverage, consider these common pitfalls to ensure your shipments are fully protected and that your claims process goes smoothly.
- Assuming freight forwarders provide full protection. Freight forward insurance usually covers only their own liability, not the full value of your goods. Always confirm whether your cargo is insured independently.
- Failing to declare the true shipment value. Undervaluing to save on premiums can void claims or lead to partial payouts. Be transparent about your cargo’s actual worth to avoid penalties or disputes.
- Overlooking Incoterms responsibilities. Your trade agreement determines who bears risk in transit: you or your buyer/seller. Misunderstanding these terms can leave your shipment uninsured at critical points.
- Skipping coverage for domestic hauls. Most losses in Canada occur on short routes within 400 km of origin. Even if you ship locally, include these hauls in your policy for complete protection.
- Ignoring policy exclusions. Overlooking exclusions such as “improper packaging” or “inherent vice” can result in denied claims. Review your policy details before binding coverage.
- Forgetting warehouse and storage risks. Standard coverage typically ends once goods cease to move. Add warehouse-to-warehouse coverage to protect against losses during storage or transfers.
- Letting policies lapse. Even brief gaps between renewals can leave shipments uninsured. Maintain continuous coverage to ensure every load is protected.
Our expert brokers at KASE Insurance guide Canadian businesses through the fine print, helping you avoid common pitfalls, compare options from top insurers, and secure cargo insurance coverage that fits your exact shipping profile.
How to Get a Cargo Insurance Quote with KASE
Getting insured is simpler than you think. KASE brokers handle every step, from assessing shipment details to comparing quotes, ensuring your policy meets all legal and contractual standards while minimizing unnecessary costs.
Here’s what to prepare before requesting a quote:
- Shipment description and declared value
- Mode(s) of transport and destination(s)
- Frequency (single shipment vs recurring)
- Packaging specifications
- Claims history (if applicable)
- Preferred coverage type and limits
Once we receive this information, we’ll compare quotes from top Canadian insurers and structure your policy within 24–48 hours.
Request Your Free Cargo Insurance Quote
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Why Cargo Insurance Matters in 2025 and Beyond
Cargo insurance is more critical than ever for Canadian businesses. Global supply chains are facing increasing risks from theft, weather events, and regulatory changes, all of which can disrupt operations and profits.
The global shipping environment is becoming more volatile:
- Cargo theft is rising in Canada. CargoNet reported 3,625 reported cargo thefts in the U.S. and Canada in 2024, representing a 27% increase from the previous year.
- Extreme weather is becoming more frequent. Floods, wildfires, and storms now cause billions in annual logistics losses, affecting both domestic and international shipping.
- Cross-border regulations are tightening. New international borders and customs rules demand better risk management, especially for high-value or temperature-sensitive goods.
- Trade volume is expanding. With Canadian exports projected to grow through 2030, each shipment represents more financial exposure without proper insurance.
It’s more important than ever to insulate your logistics network from financial disruption. KASE Insurance can help your business stay protected, not only by selling policies, but also by building long-term strategies centred on risk prevention and recovery.
Key Takeaways
- Cargo insurance safeguards goods against transit risks, including theft, weather-related incidents, and accidents.
- Coverage types differ for land (domestic) and marine (international) shipments.
- Optional add-ons like reefer breakdown or warehouse-to-warehouse coverage enhance protection.
- Premiums depend on shipment value, mode, goods type, route, and claims history.
- Carrier liability is limited; independent cargo insurance ensures full financial protection.
- Accurate declaration, continuous coverage, and understanding Incoterms prevent claim disputes.
- KASE Insurance offers customized policies and quick quotes for Canadian businesses.
FAQs About Cargo Insurance in Canada
No, but it’s strongly recommended for commercial shipments. Many Ontario carriers include limited liability under the Highway Traffic Act, but this doesn’t protect your business assets.
Usually not. Their policy protects their contractual obligations, not your cargo’s full value.
Yes. Even local transport is exposed to theft, fire, and collision losses.
All-Risk covers every cause of loss unless excluded. Named Perils covers only the listed causes, like fire or theft. KASE generally recommends All-Risk for most businesses.
For most clients, KASE can issue a quote within 24 hours and bind coverage in under three business days.
The three main types of cargo insurance include:
- Open cargo insurance covers shipments for a set period.
- Single cargo insurance covers one specific shipment.
- Contingent cargo insurance protects when you’re not the named shipper.
Protect Your Supply Chain with KASE Insurance
More than just a safety net, cargo insurance is a strategic investment in your business resilience. Whether you’re shipping across Ontario, exporting to the U.S., or importing globally, KASE Insurance helps you protect every load, every mile, and every dollar.
We’re your trusted partner for transportation and logistics coverage across Canada, providing:
- Competitive premiums from leading Canadian insurers
- Specialized expertise in transportation, logistics, and manufacturing sectors
- Fast claims assistance and renewal management
- Bundled protection with General Liability, Surety & Bonding, and Property coverage
Talk to a KASE Cargo Insurance advisor today to get a custom quote designed for your business’s unique risks.