You took out cargo insurance. Something went wrong. You made a claim.

Then you found out about the excess.

For thousands of Australian businesses every year, this is the moment freight insurance stops working as advertised. Not because the insurer acted in bad faith. Not because the claim was invalid. Because the excess — the amount you pay before the insurer pays anything — was larger than the claim itself.

This article explains how cargo insurance excess works, why the traditional $1,000–$2,000 excess structure effectively excludes the majority of real-world freight claims, and what the alternative looks like.

What is an excess in cargo insurance?

An excess (sometimes called a deductible) is the portion of any claim that you absorb before the insurer contributes. It's standard in most insurance products — home, car, business.

In marine and cargo insurance, the excess is typically applied per claim, per consignment.

So if your policy has a $1,500 excess and you make a claim for $900 worth of damaged goods, the maths is straightforward: you receive nothing. The loss is below the threshold.

If you claim for $2,000 in damaged goods, you receive $500. You've paid for cover, you've had a legitimate claim, and you've netted $500 on a $2,000 loss.

That's not a failure of the insurance system. That's the insurance system working exactly as designed — for a different customer, with a different risk profile, than most Australian freight businesses.

Where does the $1,000–$2,000 excess come from?

Marine insurance was built for the shipping industry: large cargo movements, ocean freight, high-value goods crossing international borders. The excess structure reflects that heritage.

When you're insuring a container of electronics worth $200,000, a $2,000 excess is a rounding error. You're protecting against catastrophic loss. The excess filters out minor claims that would cost more to administer than they're worth.

It makes sense — for that use case.

The problem is that this same structure gets applied to domestic road freight for Australian businesses shipping everyday goods. And in that context, a $1,000–$2,000 excess doesn't filter out minor claims. It filters out most claims.

The reality of Australian freight claims

Consider what freight damage actually looks like for a typical SME or eCommerce business:

• A parcel of clothing arrives soaked after a vehicle incident in the rain — goods value $600
• A fragile item is dropped during loading — goods value $350
• A partial consignment goes missing — goods value $1,200
• A pallet arrives with forklift damage — goods value $800

All legitimate losses. All below or barely above a $1,500 excess. All effectively unclaimable under a traditional marine insurance policy.

This isn't unusual. It's the norm. The vast majority of freight claims in the domestic Australian market fall below the $2,000 mark — which means the vast majority of freight claims under traditional policies pay out nothing.

Businesses that understand this stop relying on the policy for small losses. They absorb them as a cost of doing business. Over time, that silent absorption adds up significantly — and there's no way to recover it.

The double burden: premium plus loss

Here's what makes the excess problem particularly frustrating.

You pay a premium for cargo insurance. That premium is calculated as a percentage of your goods value — so the more you ship, the more you pay. Then, when something goes wrong, you discover that the loss has to clear an excess hurdle before the insurer steps in.

You've paid for protection you can't use on most real claims.

Some businesses respond by not claiming at all — they know the excess makes it pointless. Others claim anyway, only to find the payout is nominal. Either way, the insurance product isn't doing what they expected it to do.

This is one of the clearest examples of a gap in the Australian freight market: a product category designed for one type of customer being sold to a different type of customer, without the structural adjustments to make it fit.

Why small claims matter more than they look

Individual freight claims often feel small. A few hundred dollars here, a thousand there. But for a business shipping frequently, these losses compound.

A business sending 200 consignments a month at an average goods value of $1,500, with a damage rate of even 0.5%, is looking at one damaged consignment per month. At $750 average loss per incident, that's $9,000 a year in absorbed losses — every cent of it below the excess threshold on a traditional policy.

At higher shipment volumes, or with goods of higher average value, the numbers escalate quickly.

The excess isn't just a feature of the policy. It's a structural decision about who the policy is for. And for most Australian SMEs and eCommerce businesses, it's the wrong structure.

What "no excess" actually means

Some freight insurance products — particularly those designed for the domestic Australian market — are structured with no excess. You're covered from dollar one, on every consignment.

This changes the economics entirely.

A $400 damaged shipment is claimable. A $150 lost parcel is claimable. The insurance product works for the actual claims that actual businesses actually experience — not just the catastrophic losses that marine insurance was designed for.

No-excess freight insurance is typically offered as embedded cover: it's built into the booking process with your freight carrier or logistics platform. You select coverage when you book the shipment. If something goes wrong, the claim goes through the provider — not through a separate broker relationship with a marine insurer.

The claim resolution timeline matters here too. Traditional marine claims can take weeks or months to resolve. Modern embedded freight insurance products are designed to move far faster than that. For a business managing customer relationships, that speed difference is significant.

How to read a freight insurance excess clause

If you're evaluating a cargo insurance policy — or reviewing one you already hold — the excess clause is one of the most important things to check. It's usually buried in the policy wording.

What to look for:

The excess amount. Is it a flat dollar figure or a percentage of the claim? Flat dollar excesses are more predictable. Percentage-based excesses can compound on high-value claims.

Whether the excess applies per consignment or per event. A "per event" excess can mean a single incident affecting multiple consignments is treated as one claim — which could work in your favour. Per-consignment excess means each damaged shipment is treated separately.

Minimum claim thresholds. Some policies won't process claims below a minimum amount regardless of the excess. This is an additional filter on top of the excess itself.

Any franchise clause. A franchise clause is a variant of the excess where — if the loss exceeds the franchise amount — the insurer pays the full claim, not just the amount above the threshold. If the loss is below, nothing is paid. It sounds generous but operates like a hard floor.

None of these terms are disclosed prominently. They're in the fine print. Ask directly before you assume you're covered.

Excess vs. no excess: a side-by-side

Traditional marine insurance carries a typical excess of $1,000–$2,000 per claim, which means most small claims are excluded before a cent is paid. It's designed for high-value, infrequent cargo — cover is arranged through a separate policy, premiums are calculated as a percentage of cargo value, and claims are broker-managed, often taking weeks to resolve.

No-excess freight insurance has a $0 excess. Every loss is claimable. It's built for regular domestic freight — embedded at the point of booking, priced per consignment, and managed by the provider rather than a separate broker relationship. Claims move significantly faster than the traditional marine process.

The question worth asking your carrier

If your freight carrier offers transit protection or freight cover, ask them directly:

"Is there an excess on this product, and if so, how much?"

Then ask: "If I have a claim for $500 in damaged goods, what do I actually receive?"

The answer will tell you more about the product than any brochure.

If the product has a $1,000+ excess, you're looking at carrier-sponsored self-insurance or a marine-style policy. Your $500 claim pays nothing. If the product has no excess, you're looking at genuine per-shipment cover from dollar one.

The distinction matters. Not every product described as "freight insurance" operates the same way.

FreightInsure: built for the claims that actually happen

FreightInsure was designed specifically for the domestic Australian freight market — the long tail of SME shippers and eCommerce businesses whose claims don't fit the marine insurance mould.

No excess. Cover from dollar one. Embedded into the booking flow of freight carriers and logistics platforms across Australia.

The product exists because the excess problem is real, it's widespread, and the traditional insurance market has shown no particular interest in solving it for smaller businesses.

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