The value used for Marine Cargo Insurance should reflect the basis of valuation required by the policy.

It should not automatically be assumed that the insured value is simply the original purchase price of the goods.

How are commercial shipments commonly valued? #

Depending on the policy, the insured value can be based on:

• Invoice value.
• Cost of the goods.
• Freight costs.
• Insurance costs.
• An agreed percentage for anticipated profit or additional expenses.

Some cargo policies use a basis such as the invoice or cost value plus freight, insurance and an agreed percentage.

The actual valuation basis should be confirmed before cover is arranged.

What about stock transfers? #

Goods being transferred between locations may not have a sales invoice.

In these circumstances, the policy may use another basis such as:

• Replacement cost.
• Market value.
• Cost price.
• Another agreed valuation method.

How are used machines or equipment valued? #

Used machinery can require particular consideration.

Possible valuation methods can include:

• Purchase price.
• Market value.
• Replacement with equivalent equipment.
• Agreed depreciated value.

The insurer should understand that the goods are used rather than new.

Why does the valuation matter? #

If the value declared is too low, the business may not recover the full financial value of an insured loss.

The maximum value exposed in any one shipment should also be accurately disclosed when arranging an annual cargo policy.