Marine Cargo Insurance for Pakistani Importers: What It Covers, What It Does Not, and How to Buy It

By Olympic AgenciesLast updated: 12 July 2026

Quick Answer

Marine cargo insurance protects the importer against loss of or damage to goods during the ocean voyage from the origin port to Karachi or Port Qasim. Institute Cargo Clauses A provides all-risks cover subject to stated exclusions, while Clauses B and C cover named perils only. Under FOB and CFR terms, the importer must arrange their own insurance because risk transfers at loading. Under CIF, the supplier arranges it, and the importer should verify the coverage is adequate.

Key facts
Clause A	All risks — the broadest cover, insuring against all risks of physical loss or damage except specifically excluded perils
Clause B	Named perils — covers fire, explosion, vessel stranding or sinking, overturning of land conveyance, collision, discharge at port of distress, and general average sacrifice
Clause C	Named perils, narrower — covers fire, explosion, vessel stranding or sinking, overturning of land conveyance, and collision; does not cover sea water damage or theft
FOB/CFR importers	Must arrange their own insurance because risk transfers at vessel loading — the supplier's responsibility ends before the ocean voyage
Insured value	Typically the CIF value plus 10 percent to cover incidental costs and a margin — this value should be declared to Customs as part of the CIF calculation

The ocean between an origin port and Karachi is not kind to agricultural cargo. A container of hybrid seed at the top of a stack catches sea spray through a leaking hatch cover and the germination rate drops below the contract specification. A flat-rack of tillage equipment lashed at the bow takes a green sea in heavy weather and the corrosion damage is discovered only when the container is opened at the examination yard. A consignment of bagged DAP in a container that was dropped during handling at a transshipment port arrives with torn bags and lost contents. Marine cargo insurance covers these losses — but only if the importer bought the right cover.

What are the Institute Cargo Clauses?

Marine cargo insurance is standardised globally through the Institute Cargo Clauses, published by the London-based International Underwriting Association. The three main clauses provide progressively narrower cover:

Clause A — All risks. The broadest cover. Clause A insures against all risks of physical loss of or damage to the cargo, except for specifically excluded perils: wilful misconduct by the insured, ordinary leakage or weight loss, insufficiency of packing, inherent vice of the goods, delay, insolvency of the carrier, and war and strikes — which can be bought back as additional cover. For agricultural cargo, Clause A covers the losses that actually happen: sea water damage, theft and pilferage, container handling damage, contamination, and non-delivery of an entire package.

Clause B — Named perils. Covers specifically listed perils: fire or explosion, vessel or craft being stranded, sunk, or capsized, overturning or derailment of land conveyance, collision or contact of vessel with any external object, discharge of cargo at a port of distress, and general average sacrifice. Clause B does not cover sea water damage unless caused by a vessel stranding or sinking, and does not cover theft, pilferage, or non-delivery.

Clause C — Named perils, narrower. The minimum cover and the standard required under a CIF contract unless otherwise agreed. Clause C covers fire or explosion, vessel stranded or sunk, overturning of land conveyance, collision, and general average — but does not cover sea water damage, theft, or non-delivery.

Cover	Clause A	Clause B	Clause C
Fire, explosion	Covered	Covered	Covered
Vessel sinking, stranding	Covered	Covered	Covered
Collision	Covered	Covered	Covered
Sea water damage	Covered	Only if vessel stranded/sunk	Not covered
Theft, pilferage	Covered	Not covered	Not covered
Container handling damage	Covered	Not covered	Not covered
Non-delivery	Covered	Not covered	Not covered

Who arranges the insurance?

Under the Incoterms rules:

FOB and CFR shipments. The risk transfers from the seller to the buyer when the goods are loaded on the vessel at the origin port. The buyer — the Pakistani importer — bears the risk of loss or damage during the ocean voyage and must arrange their own insurance. Our Incoterms guide covers how the risk transfer works under each term.
CIF shipments. The seller is required to arrange insurance, but the Incoterms insurance obligation requires only the minimum cover — Clause C — unless otherwise agreed in the contract. A CIF importer who does not negotiate a higher level of cover in the sales contract receives Clause C insurance, which excludes the perils most likely to cause a loss on an agricultural shipment. The importer can buy supplementary cover from a Pakistani insurer for the gap between the CIF insurance and the cover they actually need.

How much insurance should an importer buy?

The insured value should be the CIF value — the cost of the goods, the freight, and the insurance — plus a margin, typically 10 percent, to cover incidental costs such as survey fees, the importer's overhead, and the lost profit margin on goods that arrive damaged and cannot be sold.

The insured value and the declared customs value should be consistent. If the importer insures the goods at CIF plus 10 percent — PKR 11,000,000 — but declares the CIF value to Customs at PKR 9,000,000 to reduce the duty bill, the discrepancy between the insured value and the declared value is evidence the declared value was understated. The importer should declare the actual transaction value and insure at the full value at risk.

What should an importer do when cargo arrives damaged?

Before accepting delivery, inspect the cargo and the container. Photograph any damage to the container, the seal, or the cargo.
Notify the insurer or their survey agent immediately — most policies require notification within a specified period after discharge.
Engage a surveyor acceptable to the insurer to inspect the damage and prepare a survey report. The survey report is the primary evidence for the claim.
Lodge a claim with the carrier as well as the insurer — the carrier may be liable for the damage, and the insurer may pursue the carrier for recovery after paying the importer's claim.
Keep the damaged goods available for inspection by the insurer or the carrier. Do not dispose of them until the survey is complete and the insurer has authorised disposal.

The importer who follows the claims procedure and has the documentation — the survey report, the bill of lading, the insurance certificate, the commercial invoice — can expect the insurer to settle a valid claim. The importer who does not follow the procedure — who accepts delivery without inspection, disposes of the damaged goods before the survey, or cannot produce the documentation — may find the claim denied.

Olympic Agencies has coordinated marine cargo insurance for agricultural shipments imported through Karachi Port and Port Qasim since 1982. Our freight forwarding service includes insurance placement with Pakistani underwriters for FOB and CFR shipments, and insurance-cover verification for CIF shipments. WhatsApp us your cargo value and voyage details and we will confirm the right insurance cover.

Insuring an agricultural shipment? Let us help you confirm the right coverage before the vessel sails.

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Frequently Asked Questions

Do I need marine cargo insurance if I buy on CIF terms?+

Under CIF, the supplier is required to arrange insurance, but the Insurance clause requires only the minimum cover — Institute Cargo Clauses C — unless the contract specifies otherwise. Clause C does not cover sea water damage, theft, pilferage, or non-delivery, which are the most common causes of cargo loss on agricultural shipments. The importer who buys on CIF should verify the supplier's insurance coverage and, if it is Clause C only, consider buying supplementary cover from a Pakistani insurer for the gap between Clause C and the all-risks cover the importer actually needs.

Which Institute Cargo Clause should I buy for agricultural cargo?+

Clause A — all risks — is the standard recommendation for most agricultural cargo. Bagged seed, fertiliser, machinery, and food commodities are all vulnerable to the risks that Clauses B and C exclude: sea water ingress through a leaking hatch cover, theft during transshipment, damage during container handling, and contamination. The premium difference between Clause A and Clause C is modest relative to the value of the cargo and the breadth of additional cover. The exporter who insures under Clause C to save a few dollars in premium on a CIF sale is not doing the importer a favour.

How is the insured value related to the customs value?+

The insured value — typically CIF plus 10 percent — should reflect the full value at risk. The customs value for Pakistan is the CIF value, which includes the actual freight and insurance costs. If you insure at CIF plus 10 percent and the declared CIF to Customs is lower because the freight and insurance were understated, the discrepancy between the insured value and the declared customs value is a red flag if Customs becomes aware of it. The insured value and the declared CIF value should be consistent — both reflecting the actual transaction economics.

Should I buy insurance from a Pakistani insurer or through the foreign supplier?+

Buying from a Pakistani insurer gives you a local claims process, local surveyors, and the ability to enforce the policy in Pakistani courts if necessary. Buying through the supplier's foreign policy — which may be cheaper — means the claims process is in the supplier's country, with a foreign insurer, and any dispute is subject to foreign law. For FOB and CFR shipments, the importer arranges their own insurance, typically through a Pakistani insurer or a local agent of an international underwriter. For CIF shipments, the supplier arranges insurance — but the importer can and should verify the coverage and, if necessary, buy supplementary cover.

Olympic Agencies

Clearing agricultural cargo - seeds, fertilizers, and machinery - at Karachi Port and Port Qasim since 1982. Members of PIFFA and the Chamber of Commerce.