What is Contingent Cargo Insurance?

Written by : TATA AIG Team
·
Published on : 2025-10-06

Contingent cargo insurance is a type of marine insurance policy that provides coverage to shippers, exporters or logistics companies. It gives the exporters or freight brokers coverage and reduces their total dependency on primary insurance.

Thus, contingent cargo coverage benefits freight forwarding companies by adding an additional safety net to cover their financial liability in case of claim exclusions or disputes and reducing risks.
Here is a blog explaining the importance of contingent cargo insurance for freight brokers and its applications.

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List of Content

  • bullet
    What is Contingent Cargo Insurance?
  • bullet
    How Does Contingent Cargo Insurance Work?
  • bullet
    Who Should Buy Contingent Cargo Insurance for Freight Brokers?
  • bullet
    Contingent Cargo Coverage
  • bullet
    Conclusion

What is Contingent Cargo Insurance?

Marine contingent cargo insurance provides additional protection for valuable goods exported by an exporting company, seller or freight forwarder. But how is it any different from marine cargo insurance, and who benefits from it?

Marine cargo insurance offers coverage for cargo or goods being transported via a vessel, like a ship. Shipowners or transportation companies usually buy this type of marine insurance policy. While this primary insurance covers the goods, it is bought by the transportation companies. As a result, the logistics providers are left totally dependent on their policies in adverse cases.

This means that in case of a dispute for the claim raised or a rejected claim, it adds a significant financial burden on the intermediaries. Thus, the best contingent cargo insurance can protect the freight brokers’ financial losses.

Also Read: Special Cargo Insurance Policy in Marine Insurance

How Does Contingent Cargo Insurance Work?

To understand the contingent cargo insurance application, we must first understand the role of the parties involved in a typical export sale.

A Shipper: This is the company or the seller shipping goods to make a sale to someone offshore. They send their consignment to shipping companies.

Freight Broker: This is a middleman between a shipping company (or carrier) and an exporter. They help both parties make a deal for the consignment to be shipped to its destination.

Carrier: The carrier is a shipping company that owns a vessel, such as a boat or an aeroplane, which will facilitate the transportation of the consignment or freight.

Managed Risk Club: This entity is responsible for securing a marine cargo insurance policy on behalf of the shipper to protect the cargo.

Now, typically, with just cargo insurance, the goods will be protected while they are still in the carrier's possession. In case of a claim, the money will be paid to the carrier through the insurance, who is then liable to pay the shipper.

However, in disputes where the carrier refuses to pay the shipper, the shipper turns to freight brokers to recover the loss. In this case, the primary insurance will not cover the intermediaries. However, with contingent cargo insurance, middlemen can claim it and reduce their financial losses.

Also Read: How Does Marine Insurance Work?

Who Should Buy Contingent Cargo Insurance for Freight Brokers?

  • Freight Brokers

It is specially designed for brokers who coordinate shipments but do not own the goods.

  • Logistics Providers

Companies that manage transport logistics for multiple clients.

  • Low-Risk Businesses

Firms looking to avoid financial risks when carriers fail to cover cargo losses.

  • Freight Forwarders

Contingent cargo insurance providers cover entities acting as intermediaries in the shipping
process.

  • Client-Focused Businesses

The forwarders or logistics companies that aim to maintain strong client relationships.

Contingent Cargo Coverage

The contingent cargo coverage includes the following:

  • Damages caused to the cargo during the transit
  • Loss incurred due to theft
  • Loss incurred due to third-party liabilities
  • Liability claims
  • Damages caused by fire, natural calamities, collisions, etc.
  • Loss due to insufficient coverage, policy cancellation or exclusions from the carrier’s primary insurance

Also Read: Is Marine Insurance Mandatory?

Conclusion

Contingent cargo insurance serves as an important safety net for intermediaries involved in global trade. The right contingent cargo insurance policy ensures the financial security of freight brokers by protecting the value of goods during transit and maintaining client relationships. It covers risks that are not typically covered by the primary insurance bought by carriers or suppliers.

If you are looking for transit coverage, explore the TATA AIG marine insurance policy. With our comprehensive cargo insurance policy and tailored solutions, You can ensure protection for your cargo.

Buying Marine Insurance? Know What You’ll Need First

Your Shipment’s Safety, Just ₹591 Away—Get Insured Today!

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