Cargo Insurance for Amazon Sellers
Your product liability policy answers for what your products do. The goods themselves, crossing an ocean or riding a truck to a fulfillment center, need their own protection, and carrier limits are lower than most sellers expect.
Why carrier liability is not cargo insurance
We work with hundreds of Amazon sellers, and the shipping loss that surprises them most is the one where the carrier was plainly at fault and still paid a fraction of the invoice. Every carrier in the chain, from the ocean line to the trucking company that drops pallets at a fulfillment center, works under a liability regime that caps what it owes. Those caps protect the carrier, not the owner of the goods.
Cargo insurance turns that around. It is first-party coverage: it pays you, the owner of the goods, for physical loss or damage in transit, up to the value you set, without waiting for a carrier to admit fault. Your insurer can then chase the carrier for whatever the law allows. The commercial liability policy described on our Amazon seller insurance requirements page answers for injuries your products cause. It says nothing about a container that goes over the side of a ship.
Ocean and air freight: limits written into law
Ocean shipments into the US move under the Carriage of Goods by Sea Act, which caps carrier liability at $500 per package or customary freight unit unless a higher value is declared on the bill of lading. Courts have disagreed over whether a package means the container, the pallet or each carton listed, so the way packages are counted on your paperwork shapes any recovery.
Air freight follows the Montreal Convention. Its cargo limit rose to 26 Special Drawing Rights per kilogram on December 28, 2024, up from 22. The SDR is a reserve asset created by the International Monetary Fund, and its dollar value is set every day. Weight-based limits are hard on light, valuable goods: a carton of earbuds or skincare serums is worth far more than its weight suggests, and those are exactly the products sellers fly in to restock quickly.
General average is the ocean risk few sellers have heard of. When costs are incurred to save a ship and its voyage, every cargo owner aboard shares them in proportion to cargo value, even if their own boxes were untouched. After the Dali struck the Francis Scott Key Bridge in Baltimore in 2024, its owner declared general average and containers were held until cargo owners posted security. One logistics firm reported the assessment at 55 percent of cargo value. Shippers with marine cargo coverage had their insurer post the bond, while the rest needed cash deposits or bank instruments before their goods moved.
Freight forwarders and their terms
Most sellers book through a freight forwarder rather than directly with an ocean line or airline. Read the forwarder’s terms and conditions before the first booking. The standard terms many US forwarders use cap their own liability at $50 per shipment or per package unless you declare a higher value and pay for it, and the forwarder answers mainly for its own mistakes, not for what happens aboard the vessel.
Those same terms usually say the forwarder arranges insurance only when you request it in writing. If the insurance box on your booking form is unticked, assume nothing protects the freight. When you do buy cover through a forwarder, ask for the certificate and the policy wording, then check how a loss is valued, whether cover runs from the factory door to the final warehouse and which goods it excludes. A forwarder’s insurance offer deserves the same reading as any other policy.
Incoterms decide when the risk becomes yours
The Incoterms on your purchase order fix the point where risk moves from your supplier to you, and that point is where your cargo cover needs to begin. Under EXW you carry the risk from the supplier’s premises. Under FCA it passes when the goods are handed to the first carrier. Under FOB and CIF it passes once the goods are on board the vessel, and both terms are meant for sea and inland waterway freight only. Under DDP the supplier carries the risk to the named destination.
CIF and CIP look like they solve the problem, since the supplier buys insurance. Under Incoterms 2020, CIF still asks only for the minimum Institute Cargo Clauses (C) cover, a narrow named-perils form, while CIP calls for the broader Clauses (A) at 110 percent of the goods’ value. Either way, your supplier chooses the insurer, often one in its own country, and you inherit its claims process. Many importers buy on FOB or FCA terms and place their own cover, which keeps the claim in their own hands.
FBA inbound: the last legs into Amazon
After customs, goods still travel from the port to a prep center and on to a fulfillment center or Amazon Warehousing and Distribution. Domestic truck and LTL carriers fall under the Carmack Amendment. A carrier owes the actual loss it causes, but federal law lets it offer rates that limit liability to a value the shipper declares or agrees to in writing, and LTL tariffs commonly price on a released value per pound. Carriers cannot give you less than nine months to file a claim or less than two years from a written denial to sue.
Once freight reaches Amazon, Amazon’s own terms take over. Its AWD service terms say units lost in transit from AWD to a fulfillment center are replaced or reimbursed under Amazon’s reimbursement policy, and that claims filed outside the claim window are not eligible. Some windows start on the verified delivery date, so a shipment marked delivered but received short needs a case opened quickly. Check the current claim windows in Seller Central and reconcile every inbound shipment as soon as receiving closes. Our guide to lost and damaged FBA inventory covers the reimbursement side in detail.
Reimbursement is not cargo insurance. Amazon pays on its own valuation, now tied to your sourcing cost rather than your selling price, and only for its own network. An annual cargo policy written from the factory to the fulfillment center, including the days at a prep center or 3PL, protects the stretches Amazon never touches.
Buying cargo insurance as an Amazon seller
Cargo insurance comes in two shapes. Single-shipment cover suits a seller who imports a handful of containers a year. An annual open cargo policy suits a steady importer: every shipment attaches automatically, you report shipments and values on a schedule, and nobody discovers after a loss that cover was never bought. Both use an agreed basis of valuation, commonly invoice cost plus freight plus a margin for expenses.
Read how the policy defines transit. A warehouse-to-warehouse clause should run from the supplier’s door, through ports and transshipment, to your prep center or the fulfillment center, with a stated number of days allowed in storage on the way. Ask how lithium batteries, hazardous materials and temperature-sensitive goods are treated, since some forms restrict them, and set the deductible so a pallet of crushed cartons is still worth claiming.
For a quote, gather last year’s shipping volume and next year’s forecast, typical and largest shipment values, routes and modes, the Incoterms you buy on, the products and their packaging, and any losses so far. Mithril1 looks at cargo alongside the rest of your Amazon seller insurance, so goods on the water, stock in storage and product liability are reviewed together.
A few useful answers
Common questions
Is cargo insurance required to sell on Amazon?
No. Amazon’s insurance rule is about commercial liability for injuries and damage your products cause. Cargo insurance is your own decision about protecting the goods while they travel, so weigh a typical shipment’s value against the carrier limits that would otherwise apply.
What does an ocean carrier owe if my container is lost?
Under the Carriage of Goods by Sea Act, generally no more than $500 per package or customary freight unit, unless a higher value was declared on the bill of lading. How the packages are counted on the paperwork shapes the result.
Does my supplier's insurance protect me on CIF terms?
Only to the minimum the term asks for, which under Incoterms 2020 is the narrow Institute Cargo Clauses (C) form, and a loss is handled by your supplier’s insurer. Ask for the certificate before the goods ship, or buy on FOB or FCA terms and place your own cover.
What is general average, and why should a small seller care?
It is the old maritime rule that every cargo owner shares the cost of saving a ship in trouble. The carrier can hold your container until you post security for your share, and a marine cargo policy is what usually provides that security for you.
Can one policy follow goods from the factory to a fulfillment center?
Yes, with a warehouse-to-warehouse transit clause and a storage allowance long enough for your prep center stop. Read how many days goods can rest at an intermediate warehouse before the transit cover ends.