Does cargo insurance cover damage caused by poor packing or bad stowage?

Why this exclusion decides so many claims

Almost any transit damage can be described as a packing problem. The pallet that came apart, the crushed carton, the coil that shifted, the machine that broke loose: in every one of those cases a surveyor can conclude that the cargo "was not prepared for the voyage". And if nobody documented how the shipment left, that conclusion is hard to contradict.

The logic of the exclusion is reasonable: cargo insurance covers the fortuitous, what happens to the goods along the way, not what the goods already carried with them from the plant. A carton that cannot take stacking or a machine with no bracing does not fail because of the voyage; it fails during it, because it was never prepared for it. The practical problem is not the rule but the evidence.

Why it matters who stowed

In the market, stowage is looked at in two ways depending on where it happened and who did it:

• Stowage on board, at the terminal or at the port. When the container is poorly lashed on deck, the stack collapses or cargo is badly arranged in the ship's hold, the damage was caused by the execution of the carriage. In general, the market treats it as a transit risk, the kind of risk cargo insurance usually covers under the applicable conditions, and it also opens the path to recovery against the carrier.
• Stowage inside the container. This is the grey area. Depending on the applicable conditions, the underwriter may read it as preparation of the cargo, that is, as packing. How much it matters whether the insured or a third party, such as the supplier or a consolidator, did it depends on the conditions of the certificate and on what can be proven.

So the useful question for an intermediary is not "was it well packed?" but "who did it, and how do we prove it?".

What to check and document before shipment

• Who packed? — What to check: Whether it was the exporter, a packing facility, the supplier or a consolidator; How to prove it: Name of the responsible party on the packing list or shipping instruction
• Was the packing usual for this voyage? — What to check: Type of cargo, transport mode, transhipments, climate, duration; How to prove it: Packing specification and photos at closing, with the package identifiable
• Who loaded and lashed the container? — What to check: Whether it was the insured, the supplier, a depot or a consolidator; How to prove it: Photos of loading, lashing and the numbered seal; record of who did it
• What condition was the container in? — What to check: Floor, roof, doors, smell, moisture; How to prove it: Inspection or photos at pick-up; a container in poor condition may explain damage later blamed on packing
• Can condition at origin be evidenced? — What to check: High-value cargo, machinery, project cargo, damage history; How to prove it: Report from a recognised inspection company at the time of shipment
• Was recovery preserved? — What to check: The carrier's legal time bars for that mode; How to prove it: Written claim to the carrier within the time bar, even before the amount is known
• What do the certificate conditions say? — What to check: How they treat packing, internal stowage and evidence of origin condition; How to prove it: Review with the Proteus Cargo team before issuing

None of these practices guarantees the outcome of a claim on its own, but all of them strengthen the insured's position against a report that says "inadequate packing".

What the market usually leaves out

• Insufficient packing or preparation, whether by the insured or carried out before the insured transit begins, depending on the applicable conditions.
• Inherent vice of the goods and ordinary wear and tear.
• Damage that existed before the insured transit began.
• Purely financial losses arising from the damage, such as penalties or loss of profit.

For a general overview of what a policy covers, see what international cargo insurance covers. If you handle machinery or vehicles, where lashing and stowage matter a great deal, see also how RoRo cargo is insured.

What an intermediary gains by explaining this well

A freight forwarder or customs broker who clarifies before the shipment who packs, who stows and what will be documented helps their client avoid one of the most common declinatures in the trade, and moves from vendor of formalities to adviser on the operation. With Proteus Cargo you don't need to become an underwriting expert: you rely on a policy already underwritten, backed by world-class insurers and reinsurers in the markets of London, Germany and France; we issue the certificate and handle the claim on the client's behalf, and you add a revenue line on the book you already serve. More in partner program vs. insuring on your own.

Today we insure more than 12,000 shipments a year across 7 countries: Chile, Peru, Mexico, Colombia, Argentina, Paraguay and Ecuador. The exact scope for each type of cargo and each packing or stowage case is reviewed with our team before issuing.

Does your client pack at their own facility, or consolidate with third parties?

Let's talk about your book, your commodity types, and how to document the shipment so that packing is not the weak point of the claim.

Book a meeting with Proteus Cargo