Is cargo insurance required by law for air freight shipments?

No — it's optional, not a legal requirement, though it's a common and often prudent commercial practice for higher-value cargo given the Montreal Convention's default liability cap.

Does an all-risk policy cover every possible loss cause?

Despite the name, 'all-risk' policies typically still carry specific exclusions (inherent vice, inadequate packing, war/strikes in some policies without an added rider) — confirm the specific policy's exclusions with the insurer rather than assuming truly unlimited coverage.

How does cargo insurance interact with VAL cargo handling?

They're separate mechanisms addressing different risks — VAL handling is a physical security procedure at the airport, cargo insurance is a financial protection against loss regardless of cause. See our valuable cargo (VAL) handling guide for how the two typically work together on a high-value shipment.

Air Freight Fundamentals

Cargo Insurance Basics for Freight Forwarders

Carrier liability under the Montreal Convention caps recovery at 22 SDR/kg by default — cargo insurance is the separate mechanism that actually protects a shipment's full commercial value.

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Separate from

Montreal Convention carrier liability

All-risk

Common air cargo policy type

Full invoice value

Typical coverage basis, not weight-based

Insurer, not carrier

Party responsible for claims payment

Two different protections, often confused as one

A carrier's liability under the Montreal Convention is capped at 22 SDR per kilogram by default (see our Montreal Convention guide) — a fixed ceiling that's frequently well below a shipment's actual commercial value, and one that generally only applies where the carrier is legally at fault for loss, damage, or delay in the first place.

Cargo insurance is a separate contract with an insurer, typically an all-risk marine cargo policy (despite the name, commonly used for air shipments too) covering the shipment's full declared or invoice value against a broad range of loss causes, often including risks the carrier wouldn't be liable for at all under the Montreal Convention's fault-based framework.

Declared value for carriage (paid to the carrier as a supplementary charge to raise the carrier's own liability cap) and cargo insurance (a separate policy from an insurer) are two different tools that can be used together or separately — confirm which, if either, is in place for a given shipment rather than assuming one substitutes for the other.

Coverage Gap Note

Without separate cargo insurance, a shipment's protection is limited to the carrier's Montreal Convention liability cap (or declared value, if arranged)

For high-value shipments, confirm whether cargo insurance, declared value for carriage, or both are appropriate — relying solely on the Montreal Convention's default 22 SDR/kg cap can leave a significant gap between what's recoverable and the shipment's actual value.

General industry practice regarding marine/air cargo insurance and its relationship to Montreal Convention carrier liability.

Worked example

A worked example: comparing outcomes with and without cargo insurance

Take a 20kg high-value electronics shipment worth CAD $15,000 that's lost in transit, with no declared value for carriage arranged.

Without cargo insurance, recovery from the carrier is capped at 22 SDR × 20kg under the Montreal Convention's default limit — a figure very likely far below the CAD $15,000 actual value, and only recoverable at all if the carrier is found liable in the first place.

With an all-risk cargo insurance policy covering the full CAD $15,000 declared value, the shipper's insurer pays out against the policy's terms independent of whether the carrier is ultimately found liable under the Montreal Convention — a materially different and more complete protection for high-value cargo.

What UAL flags for high-value shipments

We flag the gap between Montreal Convention default liability and a shipment's actual value for high-value cargo, and can point shippers toward cargo insurance arrangement — UAL isn't an insurer itself, and coverage is arranged through the shipper's own insurance provider or broker.

High-value shipment risk flagging

Coordination alongside declared value for carriage arrangements

Frequently asked questions

No — UAL isn't an insurer. We flag when cargo insurance is worth considering for a high-value shipment and can point shippers toward arranging it through their own insurance provider or broker, but the policy itself is a separate contract.

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Montreal Convention: Carrier Liability and Claims Basics

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General industry practice regarding cargo insurance and Montreal Convention carrier liability. Last verified July 2026.