Industry Insights
Every year, Australian businesses lose millions of dollars to freight that arrives damaged, late, or not at all.
Most assume they're covered. Most aren't.
This guide explains what freight insurance actually is, how it works, what it does and doesn't cover — and why the assumption that "the carrier will cover it" has left more businesses out of pocket than any other single freight mistake.
Freight insurance — also called goods in transit insurance or cargo insurance — covers the value of your goods while they're being transported. If something is lost, damaged, or stolen in transit, a freight insurance policy pays out against the value of what was lost, subject to the policy terms.
That's the simple version.
The reality is more nuanced, because two very different things tend to get conflated in conversations about freight protection: carrier liability and freight insurance. They are not the same.
When you hand goods over to an Australian freight carrier, that carrier's responsibility for those goods is defined by the terms of their consignment note, T&Cs, or special agreement. Most Australian road freight carriers operate as "not a common carrier," which means they are not automatically responsible for loss or damage — their liability is whatever their contract says it is.
Carrier liability is a contractual position. It is not insurance.
Here's what that distinction means in practice:
It's capped. Most Australian carriers limit their liability contractually, often by reference to weight rather than value. Caps are typically calculated on a per-kilogram basis, which for many shipments means a recovery limit well below the actual value of the goods.
The burden is on the shipper. To recover under carrier liability, shippers typically need to establish that the loss falls within the specific terms the carrier has accepted responsibility for under their consignment note or T&Cs. That burden sits with the shipper.
Common exclusions apply. Acts of God (storms, floods, weather events), inherent vice (where the nature of the goods made them prone to damage — e.g., perishables spoiling or fragile items breaking), inadequate packaging, concealed damage not noted at delivery, and damage caused by third parties are all commonly excluded from carrier liability contracts.
Recovery is often partial. Even where a carrier accepts liability, payouts are often calculated by weight, not declared value. A kilogram of high-end electronics is compensated at the same rate as a kilogram of paper.
If a freight claim has ever gone nowhere, this is usually why.
Freight insurance is a separate product, backed by an insurer, that covers the value of goods in transit against a defined set of covered events — independent of whether the carrier was at fault.
Under a freight insurance policy, a claim is made against the insurer — not the carrier. The claim is assessed against the policy terms, not against the carrier's contract.
Typical covered events include:
Common policy exclusions include:
Coverage varies by policy. Always read the Product Disclosure Statement before relying on a policy.
Traditional freight insurance and marine insurance policies typically carry an excess — the amount a shipper pays before the insurer pays anything. In the Australian market, that excess commonly sits at $1,000 to $2,000 per claim.
Worth thinking about what that means in practice.
A large share of freight claims are for everyday amounts — a broken item, a partial shipment, goods worth a few hundred dollars. If the excess on a policy sits at $1,000, claims below that threshold return nothing to the shipper, even when a covered loss has occurred.
Traditional marine insurance was designed for large, infrequent, high-value shipments — not the day-to-day cadence of a business shipping dozens or hundreds of consignments a week.
Some embedded freight insurance products — including FreightInsure — are structured without an excess, meaning coverage applies from the first dollar of loss. For high-volume, lower-value shipping patterns, that structure can change the economics of whether a policy is worth having.
Excess is one of the most important numbers to check when comparing freight insurance options.
Freight insurance is relevant for any business that ships goods — manufacturers, retailers, importers, and eCommerce operators — where the financial impact of a lost or damaged consignment would be material.
The categories of shipper where freight insurance is commonly used include:
eCommerce businesses shipping high volumes of consumer goods, where claims are frequent and customer experience depends on fast resolution.
Importers and exporters dealing with international shipments, where the complexity of cross-border freight increases exposure.
B2B suppliers shipping goods with high per-unit value, where a single damaged consignment can represent a significant loss.
Businesses that have previously lodged a carrier liability claim and found that the recovery didn't match their expectation of what "being covered" meant.
For many Australian businesses, the value of a lost or damaged shipment would have a material financial impact. In those cases, freight insurance is commonly used to close the gap that carrier liability leaves.
"Marine insurance" and "freight insurance" are sometimes used interchangeably, but they are distinct categories.
Historically, all goods-in-transit insurance was classified as marine insurance — a legacy of the shipping industry and the governing Marine Insurance Act 1909 (Cth).
In practice today, marine insurance typically refers to coverage for sea freight, including hull and cargo coverage for international ocean shipments. It tends to be structured for large, infrequent, high-value cargo — commodities, bulk imports, one-off movements.
Freight insurance, as used in the Australian domestic market, is broader. It covers road, rail, air, and sea freight, and is structured for the regular cadence of business shipping rather than one-off large cargo movements.
For domestic shipping within Australia, freight insurance is the relevant category. For international shipments, a marine insurance or international goods-in-transit policy may apply — often alongside domestic freight cover.
There are two main ways Australian businesses access freight insurance:
Direct policies. Taken out directly with an insurer or through a broker. The shipper pays a premium, typically calculated as a percentage of goods value, and manages claims directly.
Embedded freight insurance. Offered at the point of booking through a freight carrier, 3PL, or logistics platform. Cover is selected per consignment. The carrier or platform has a distribution arrangement with an insurer, and coverage is activated as part of the booking flow.
Embedded freight insurance has grown in the Australian market because it removes friction. No separate broker relationship. Coverage activated per shipment. Claims managed by the provider, not by the shipper.
FreightInsure is an embedded freight insurance product available in Australia. It's built into the booking flow of freight carriers and logistics platforms, is structured without an excess, and targets claims resolution within five business days.
Whether comparing freight insurance policies directly or asking a carrier what cover they offer, these are the questions that matter:
1. Is there an excess? If yes, how much? An excess of $1,000 or more means low-value claims return nothing.
2. What is the coverage limit? What's the maximum payable per consignment? That limit needs to match typical shipment values.
3. What events are covered? Accidental damage, theft, weather, loading and unloading — the specific list matters.
4. Who underwrites or funds the cover? Coverage can be backed by a licensed insurer, or structured as a warranty product funded by the carrier or a third party. These structures have different regulatory frameworks and consumer protections. It's worth understanding which applies to any product being considered.
5. What is the target claims resolution time? Claims turnaround times vary significantly between providers. Worth asking directly what the target resolution time is, and whether that target is backed by operational data.
6. Do I need to prove carrier fault? With a genuine insurance policy, a claim is assessed against the policy terms — not against the carrier's contract. If the process requires establishing carrier fault, that's a carrier liability claim, not an insurance claim.
Freight insurance exists to do one thing: ensure that when goods are lost or damaged in transit, the financial impact lands on an insurer rather than on the shipper.
Carrier liability sounds like it should do the same job. It doesn't. The gap between what carriers are contractually obliged to cover and what businesses assume they're covered for has cost Australian businesses for a very long time.
Understanding the gap is the first step. Closing it is the second.
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