How is the premium calculated?
The premium of a marine cargo policy is the result of multiplying the CIF value of the shipment by a percentage rate. That rate is not a fixed number: underwriters build it from a base rate by cargo family and adjust it with several technical and commercial factors. Our calculator reproduces, in a simplified manner, the same logic the marine market applies in Latin America.
Base rate by cargo family
Each type of cargo carries an inherent risk profile that determines its base rate. Electronics (0.55%) and chemicals (0.65%) sit at the top of the table because of their high theft attractiveness and sensitivity to contamination or temperature. Machinery (0.45%) and general cargo (0.45%) sit in the middle range. Vehicles (0.40%), textiles (0.38%) and especially bulk commodities (0.25%) benefit from lower rates because the unit value, the format or the type of damage they typically suffer is more controlled.
Transport mode
Air transport carries a multiplier of 0.70 over the ocean rate. The reason is straightforward: a transit of 24 to 72 hours dramatically reduces exposure to weather, handling and theft compared with an ocean voyage of 25 to 45 days. As a counterpart, the value per kilogram is usually much higher, so the absolute premium does not necessarily drop in the same proportion.
Selected coverage (ICC A / B / C)
The Institute Cargo Clauses define the scope of cover and therefore the cost. ICC (A) covers all risks except a closed list of exclusions and applies multiplier 1.00. ICC (B) covers an intermediate list of named perils (fire, sinking, stranding, jettison, total loss of package overboard) with multiplier 0.70. ICC (C), the most basic, only responds to major catastrophic perils and applies multiplier 0.50. For high-value cargo or LCL shipments, the market practically defaults to ICC (A).
Trade lane
The route adjusts the final rate based on the historical loss record, port security, average transit time and number of transhipments. Asia-Pacific (multiplier 1.15) is the highest-rated route due to its long transits and concentration of mega-hubs with intensive handling. The Caribbean (1.10) and South America (1.05) add a security surcharge. Europe (1.00) is the reference. North America (0.95) benefits from short transits and modern infrastructure.
Final formula and minimum premium
The premium is calculated as: CIF value × base rate × mode multiplier × coverage multiplier × route multiplier. A minimum premium of USD 50 applies — a common practice in the marine market to cover the issuance and administration cost of any certificate, regardless of the insured value.
Frequently asked questions
Is this calculator accurate for my final premium?
No. It is a reference estimate built on average market rates. The real premium depends on additional variables that an underwriter analyses case by case: packaging, the loss history of the insured, the specific origin and destination (not just the region), the chosen deductible, and additional clauses such as War, Strikes (SRCC) or Theft (TPND). The estimate works as a budgeting tool, not a binding quotation.
Why is the CIF value used and not the FOB value?
Because international practice — and most marine policies — insures the cargo for its CIF value plus 10%, the so-called "imaginary profit" that compensates the insured for ancillary expenses and the expected commercial margin. If you only have the FOB value, simply add ocean freight and the estimated insurance to obtain the CIF value before entering it into the calculator.
What is the difference between ICC A, B and C?
ICC (A) is "all risks" cover and protects against any physical loss or damage except an explicit list of exclusions. ICC (B) and (C) are "named perils" covers: they only respond to events expressly listed in the wording. ICC (C) covers only catastrophic events (fire, sinking, collision, jettison); ICC (B) adds another intermediate group (earthquake, total loss of package overboard, water entry into the vessel). For high-value or LCL cargo, ICC (A) is the natural standard.
Does this premium include War and Strikes (SRCC) cover?
No. The standard ICC (A), (B) and (C) clauses expressly exclude war risks and strikes, riots and civil commotions (SRCC). Both covers are added through specific endorsements (Institute War Clauses Cargo and Institute Strikes Clauses Cargo) and usually represent an additional 0.02% to 0.05% on the insured value. On any sensitive route they are essentially mandatory and are included in an official quote.
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