What Is Air Cargo Insurance?
Air cargo insurance is the form of cargo insurance designed for goods carried by air: it addresses physical loss of or damage to the goods for the cargo owner (or the party that has the interest the policy recognises), and is also called cargo insurance (air). Its subject is the goods.
It is not the same as aviation insurance: cover for the aircraft itself (hull) or for the liability of the airline operator and the airport operator is the subject of the Aviation Insurance page. The air carrier's liability to the cargo owner is in turn governed by a separate legal regime and does not replace cargo insurance. This page is general information only and does not constitute the scope, price, acceptance or a guarantee of payment of any specific policy.
Cargo Insurance vs the Air Carrier's Liability
In international carriage by air, the carrier's liability for loss of, damage to and delay of cargo is governed by the 1999 Montreal Convention, to which Türkiye is a party. The Turkish Commercial Code also reserves the special provisions on carriage by air (TCC Art. 852). The main points on the carrier's liability are:
- Liability limit: For cargo, the limit is 26 Special Drawing Rights (SDR) per kilogramme (Montreal Convention Art. 22(3)); this replaced the previous 22 SDR as of 28 December 2024. The consignor may raise the limit by making a special declaration of interest in delivery (declared value) and paying any supplementary sum.
- The limit relative to cargo value: A per-kilogramme limit can fall far below the real loss on high-value, light goods (for example electronics, pharmaceuticals, jewellery); the difference is the subject of cargo insurance.
- Short time limits: Under the Montreal Convention a written complaint is required within 14 days for cargo damage and 21 days for delay (Art. 31: periods run from receipt in the case of damage and from the date the cargo was placed at the consignee's disposal in the case of delay; the complaint must be in writing and made forthwith after the damage is discovered), and the right to sue is subject to a two-year limitation period (Art. 35). The periods should be verified separately from the applicable text.
- Recourse: After paying a claim, the cargo insurer may seek recourse against the carrier; recourse is limited by the carrier's liability regime, its limit and notice conditions.
Clause Structure for Air Carriage: ICC (Air), War and Strikes
For goods carried by air, the Institute Cargo Clauses (Air) (excluding sendings by post) 1/1/09 are widely used in the market. This is a separate set from the ICC (A), (B) and (C) clauses used for sea cargo and is structured for the conditions of air carriage; as its title states, it excludes goods sent by post. Sample texts of the clauses contain an all-risks cover and exclusions; scope, exclusions and periods must all be verified from the actual wording in the policy.
- War and strikes are separate clauses: For air cargo, the Institute War Clauses (Air Cargo) and the Institute Strikes Clauses (Air Cargo) may be used separately. They are not automatically part of the main clause and are agreed separately.
- Duration under the war clause: In sample wordings, war cover attaches when the goods are loaded on the aircraft and ends on unloading at the final place of discharge or after a stated period following the aircraft's arrival (15 days in the sample texts); where carriage continues by sea after the aircraft, it may be provided that the sea-cargo war clauses apply to that leg. The exact provisions depend on the wording version used.
- Start and end of cover: Whether it is airport to airport or door to door depends on the clause used and on the policy provisions; road pre-carriage and on-carriage (road feeder) may be covered depending on the wording.
For the sea-cargo counterpart of war and strikes risks, see Marine Cargo War and Strikes Insurance.
Topics Specific to Air Cargo
- Post and courier shipments: The ICC (Air) clause excludes goods sent by post; a separate structure may be needed for courier and express shipments.
- High-value and theft-sensitive cargo: For electronics, pharmaceuticals, jewellery and similar goods, theft and short-delivery risk and security conditions are assessed under the wording.
- Packing and pallets: Damage from insufficient packing or palletising may be excluded; the suitability of the packing for air carriage matters.
- Airport storage and transhipment: Goods may wait in a cargo terminal during carriage; whether these stages are covered depends on the wording. For carriage combining air and road, see Multimodal Transport Insurance.
- Temperature-sensitive air cargo: Loss from refrigeration failure or temperature deviation needs separate assessment; see Temperature-Controlled Cargo Insurance.
- Air freight agents (forwarders): The liability an IATA agent or forwarder assumes by issuing an air waybill is a separate matter; see Freight Forwarder Liability.
Air Cargo, Carrier Liability, FFL and Aviation Insurance
Scroll the table horizontally to see all columns.
| Air cargo (goods) | Air carrier liability | FFL | Aviation insurance | |
|---|---|---|---|---|
| Subject | Physical loss of or damage to goods carried by air | The carrier's legal liability for loss of, damage to and delay of cargo (Montreal Convention) | A forwarder's or air freight agent's legal liability to its customer | The aircraft hull and aviation liabilities (airline, airport, MRO and others) |
| Insured interest | Interest in the goods (usually the cargo owner; depends on terms of sale) | The air carrier | Forwarder / agent | Aircraft owner, operator, airport operator and others |
| Nature of cover | Physical damage to goods | Legal liability; limit 26 SDR per kg | Legal liability | Hull damage and legal liability |
| Where cargo value exceeds the limit | The difference is the subject of the cargo policy | The limit applies (absent a special declaration) | Liability limits depend on the wording | Loss in value of the goods is not its subject |
These products are not substitutes for one another. Goods need cargo insurance, the carrier's liability is for the carrier's own insurance, a forwarder's liability to its customer needs FFL, and the aircraft and aviation liabilities need aviation insurance.
Exclusions and Policy Limits
The following are examples; the list is not exhaustive and each exclusion may have exceptions or conditional cover.
- Delay: Loss from delay is excluded in most cargo clauses.
- Insufficient packing and preparation: Packing, palletising or preparation not suited to air carriage is excluded in some wordings.
- Ordinary leakage, loss in weight or volume, and wear and tear: Losses arising from the natural character of the goods are excluded in some wordings.
- Inherent vice: Deterioration or damage arising from the nature of the goods themselves is excluded in some wordings.
- Wilful misconduct: The assured's wilful misconduct is among the exclusions in sample wordings.
- War, strikes and similar risks: Dealt with outside the main clause under separate clauses and conditions.
- Deductibles and limits: A deductible per shipment or per event, and per-shipment or annual limits, are defined in the policy.
Information Needed for a Quotation and Underwriting
- The type, value, weight and packing of the goods
- Points of departure and arrival, transhipment, and road pre- and on-carriage
- Shipment frequency and annual transported value (single shipment or open cover need)
- Terms of delivery (Incoterms) and the party to be insured; see the Incoterms Guide
- Air waybill (AWB) and carrier details; whether a special declaration of interest was made
- Conditions requiring temperature control, security or high value
- Requested war and strikes cover
- Loss history and requested deductibles
This list is an example; the information and documents requested vary by insurer and policy structure and should not be read as a single mandatory standard form for every insurer. Acceptance, requests for further information and terms rest with the relevant insurer.
Frequently Asked Questions
What is air cargo insurance and how does it differ from the airline's liability?
Doesn't the airline pay for the loss? Why is cargo insurance needed?
Is air cargo insurance the same as aviation insurance?
Are war and strikes risks covered in an air cargo policy?
Which periods matter for cargo damage?
Are post and courier shipments covered?
What information is needed for a quotation?
Neolife's Role
Neolife Group can assess the relevant information and contracts, explore suitable local insurance and reinsurance solutions, carry out placement work and compare the quotations received. This does not imply the capacity of any particular insurer or reinsurer, acceptance of cover, price or any commitment to pay; these are subject to the rules of the relevant insurer, to legislation and to the policy terms.