Cargo insurance transfers part of that risk, but only if it is arranged correctly. This guide explains who should insure, what cover to look for and how packing, surveys and inspections affect a claim.
Who insures: Incoterms decide
The sale contract’s Incoterms rule determines when risk passes from seller to buyer, and therefore who has an interest in insuring each leg. Under some rules the seller must arrange insurance for the buyer’s benefit; under others the buyer insures from the moment goods leave the seller’s premises or are loaded.
Read the Incoterms rule and the contract together, and make sure every leg from factory or yard to final foundation is covered by someone. Gaps often appear at handover points such as ports and inland depots.
Institute Cargo Clauses
Marine cargo policies are commonly written on the Institute Cargo Clauses. Clauses (A) give the widest, all-risks cover subject to exclusions; clauses (B) and (C) cover only named perils. For high-value power equipment, all-risks cover is usually preferred.
Read the exclusions carefully. Insufficient packing, inherent vice, delay and gradual deterioration are commonly excluded, which is why packing and preservation standards matter so much for claims.
Warehouse-to-warehouse cover
Cargo cover often runs from the moment goods leave the origin warehouse until they reach the final destination warehouse, subject to time limits after discharge. For power projects, the final destination may be a remote site, and storage before installation may fall outside the cargo policy.
Check when cover ends and arrange storage or construction cover to start at that point. Construction all-risks policies on the project often pick up equipment once it reaches site.
Insured value
Insured value is commonly set at the invoice value plus freight and a margin for additional costs. For used or refurbished equipment, agree the basis of value in advance, because settling value after a loss is difficult.
Underinsurance reduces claim payments proportionally under many policies. Make sure the insured value reflects replacement cost, including the cost of urgent replacement if the project depends on the item.
Packing and preservation
Insurers expect cargo to be packed suitably for the journey. Heavy equipment needs proper skids, lifting points, lashing, weatherproofing and corrosion protection. Rotating equipment may need shaft locks; electrical equipment needs moisture protection.
Poor packing can void a claim. Our article on preservation and storage for turbines explains how equipment is protected before and after shipping.
Surveys before and during loading
Pre-shipment surveys record the condition of equipment and packing before it leaves the origin. Loading surveys check stowage, lashing and lifting. For heavy lifts, a marine warranty surveyor may be required by the insurer to approve lifting and sea fastening plans.
Survey reports and photographs are powerful evidence if damage is found at destination. They show the equipment left in good condition and was handled as approved.
Heavy-lift, on-deck and mode choices
Shipping method affects risk. Cargo stowed on deck faces more weather exposure, and some policies treat it differently. Heavy-lift vessels, roll-on roll-off ships and containers each bring different handling risks. Our article on RoRo, breakbulk and container shipping compares those options.
Tell the insurer how the cargo will travel and confirm the terms that apply to each mode, especially for oversized items.
Delay in start-up cover
Damage to a critical item can delay a project’s start of operation, causing loss of revenue or extra costs. Delay in start-up cover, sometimes called advance loss of profits, can be added to marine cargo and construction policies to protect against that loss.
Insurers will ask which items are critical, how long replacements take and what mitigation exists. Spare parts strategies and alternative supply arrangements can improve terms.
General average and other surprises
If a ship faces an emergency and cargo or vessel is sacrificed to save the voyage, all cargo owners may be asked to contribute under general average. Without insurance, cargo can be held until a guarantee is provided.
Cargo policies normally cover general average contributions. This is one reason why even buyers confident in their carrier should insure.
Choosing an insurance adviser and policy
Use an insurance adviser who understands project cargo and heavy lifts, and give them full details of the equipment, route and handling plan. Specialist underwriters can offer better terms when they see good packing standards, approved lifting plans and experienced carriers. Review the policy wording, not just the schedule, and confirm how claims will be handled in each country on the route.
Annual open cover policies suit companies that ship regularly, while single-shipment policies suit one-off moves. For long projects with many shipments, an open cover with declarations for each shipment is often simpler to manage.
Receiving inspection and making a claim
Inspect cargo on arrival before signing delivery receipts without reservation. Note visible damage on the delivery documents, photograph it and notify the insurer and carrier promptly. Keep packing materials for inspection.
Claims need the policy, invoices, transport documents, survey reports, photographs and repair or replacement quotations. Our guide to shipping generators covers the documents that accompany each shipment.
About our logistics team
Our logistics coordinators move generators, turbines and station equipment from factories and yards to project sites on several continents. USP&E manages that movement as part of the EPC and O&M work it performs itself, not as a broker, with 24+ years of project delivery, 150+ power projects in 45+ countries and 25,000 MW contracted since 2002. Project delivery is described on our EPC projects page.
Offices: Colorado Springs (1755 Telstar Dr, Suite 300), Knoxville (800 S Gay St, Suite 700), London (162-168 Regent Street), Johannesburg (22 Kildoon Rd, Bryanston), Cape Town (31 Brickfield Road, Woodstock) and China (No. 1 Ningzhou Road, Wuxi). Regions: USA | AFRICA | UK | UAE | CHINA. ISO 9001 and ISO 45001 certified.
Cargo insurance questions
Who should insure power equipment in transit?
It depends on the Incoterms rule in the sale contract, which sets when risk passes. Make sure every leg from origin to site is covered by someone.
What are Institute Cargo Clauses (A)?
The widest standard cargo cover, insuring against all risks of loss or damage subject to listed exclusions such as insufficient packing and delay.
Does cargo insurance cover delays to the project?
Not normally. Delay in start-up cover can be added to protect against lost revenue or extra costs caused by damage to critical items.
What should be done if equipment arrives damaged?
Note the damage on delivery documents, photograph it, keep the packing and notify the insurer and carrier promptly.
Plan a safe shipment
Share the equipment list, route and contract terms, and our logistics team can help plan packing, surveys and handover points.
A short call on +27 10 822 2324 is often the quickest start; written questions go to info@uspeglobal.com or the logistics enquiry page. Equipment ready to ship can be found in our power equipment listings.