Freight Insurance for Imports: The Cost Inside Your Duties

International cargo insurance on an ocean import typically costs between 0.3% and 0.5% of the insured value. On a US $50,000 FOB shipment with $3,000 in freight, the premium would run between $159 and $265. Even so, many importers buying FOB skip the policy. That works until the first loss. The carrier’s liability for the contents of a container is capped by international convention, and whatever the cap does not cover comes out of the importer’s pocket.

Insurance is part of the customs value

Brazil’s Customs Regulation (Decreto 6.759/2009, Article 77) defines the customs value of imported goods as the price actually paid or payable, plus international freight and insurance to the port or airport of discharge. Import Duty (II), IPI on imports, and PIS/COFINS on imports are all calculated on this customs value. ICMS, the state-level tax, starts from the customs value plus federal duties.

On CIF purchases, insurance is already inside the exporter’s price. The importer declares that value in the import declaration without splitting the components. CIF and CIP Incoterms put the obligation to arrange insurance on the seller. On FOB or EXW terms, the importer carries the cargo risk from origin or from the port of loading, and the choice to insure is theirs.

If the importer decides against a policy, they declare insurance as zero in the customs value breakdown. The tax effect is small. A $200 premium on a $53,000 customs value would add roughly $40 in federal duties, depending on the product’s tariff rate. Dropping the insurance barely moves the tax bill. The exposure, though, changes completely, because $200 in premium savings means nothing against a total loss.

The carrier’s liability covers a fraction of the cargo value

Brazil has not ratified the Rotterdam Rules. Carrier liability in international ocean transport still follows the Commercial Code and the conventions referenced in the bill of lading. Most major shipping lines’ B/Ls point to the Hague-Visby Rules, which cap compensation at 666.67 SDR (Special Drawing Rights) per package or 2 SDR per kilogram of gross weight, whichever is higher.

For medium- to high-value goods like electronics, auto parts, pharmaceutical inputs, or machinery, that liability limit rarely comes close to the actual cargo value. An importer who ships $50,000 in electronic components weighing 2,000 kg in a 20-foot container and suffers a total loss gets the convention ceiling from the carrier. The rest comes out of the company’s own cash.

The carrier can be held liable for the full value if willful misconduct or gross negligence is proven. In practice, though, proving gross negligence is hard and litigation drags on for years. With transport insurance the process is shorter. The importer files a claim with the insurer, gets paid under the policy terms, and the insurer goes after the carrier through subrogation.

The premium costs less than the risk it covers

The premium for international cargo insurance depends on the commodity, the mode of transport, the route, and the insured party’s loss history. In the Brazilian market it generally falls between 0.3% and 0.5% of the insured value, which is usually the goods value plus international freight. For the earlier example (FOB $50,000 + freight $3,000), at a 0.4% rate the cost would be $212. Basic coverage includes particular average, general average, theft, and total loss.

General average is a risk many uninsured importers only hear about when the notification arrives. If the ship’s master jettisons containers during a storm or incurs extraordinary expenses to save the voyage, every cargo owner on board contributes to the loss in proportion to the value of their goods. Without a policy, the importer pays their share out of pocket. With a policy, the insurer covers the general average contribution.

On the domestic leg, from the port of discharge to the final destination, different rules apply. Decree-Law 73/1966 (Article 20) makes transport insurance compulsory in Brazil for goods belonging to legal entities. A corporate importer that collects cargo from the port and trucks it to a warehouse needs coverage for that stretch, whether or not they bought international insurance.

Freight forwarders typically offer insurance as a line item in the freight quote. When comparing proposals from different forwarders, check whether insurance is included or listed separately, and what type of coverage is being offered. An all-in freight quote may or may not include insurance, depending on the forwarder and the scope of the proposal.

Frequently Asked Questions

Is cargo insurance mandatory for imports?

On the international leg, Brazilian law does not require cargo insurance. The obligation exists when the purchase Incoterm requires it (CIF and CIP), in which case the seller arranges and pays for the policy. On the domestic leg, from the port or airport to the final destination, Decree-Law 73/1966 makes transport insurance compulsory for goods belonging to legal entities in Brazil.

What happens if the cargo is damaged and the importer has no insurance?

The importer can claim against the carrier, but the ocean carrier’s liability is capped by the international conventions referenced in the bill of lading (B/L). For medium- to high-value goods, that limit usually covers only a fraction of the actual loss. The importer absorbs everything above the cap.

How Tier2 Cargo Records Insurance in the Shipment File

In Tier2 Cargo, insurance is entered as a fee on the import shipment with its own calculation rule: a percentage of the cargo value, a flat amount, or any other formula the forwarder configures. The cost shows up at the quote stage, carries through invoicing, and stays visible at settlement. The shipment margin includes insurance alongside every other revenue and cost line. When the forwarder resells the insurance to the importer, the spread between what it paid the insurer and what it charged the client appears as margin on that line.

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