Hunton Insurance Recovery Blog

As reported in the Washington Post, the cost of cargo theft losses in the US is surging, even though the number of reported incidents has not changed. This surge reflects the type of cargo being stolen: thieves are targeting high-value technology, including electronics, computer chips, and servers destined for high-tech facilities and data centers. These components can be worth tens of millions of dollars per shipment, thus making proper insurance more important than ever.

While cargo theft is not a new risk, the escalating value of stolen goods marks a notable shift in the exposure landscape. For commercial policyholders, this trend raises important insurance and risk management considerations—particularly whether existing cargo, inland marine, and stock throughput limits remain adequate in light of evolving loss severity.

Why the Value Shift in Cargo Losses Matters for Insurance

Supply chain risk affects the supply chain as a whole. All stakeholders are therefore at risk of being underinsured for escalating loss values. Affected stakeholders include (1) property owners and manufacturers, (2) shippers, (3) brokers and logistics providers, (4) carriers, (5) consumers who are left without their purchases, and (6) the lenders financing large-value shipments. However, the most immediate financial exposure typically exists with the property owner and the carrier. A property owner or manufacturer’s risk is straightforward—they are the owners of the stolen property. But carriers also face a substantial risk as they often bear liability for the theft in the first instance.

From an insurance perspective, the recent shift in the value of the goods matters. Many traditional cargo and inland marine programs are structured around consumer goods, raw materials, or relatively modest per‑load values. Property owners and carriers should not assume that cargo limits align with the full value of modern, high-tech shipments. Depending on the policy, coverage may be limited to invoice value or subject to declared-value caps, deductibles, and sublimits—any of which can create a significant uninsured gap where a single shipment includes high-value equipment or components. These policyholders should re-evaluate their cargo, inland marine, and stock throughput limits against current shipment values and ensure they are adequate to cover the shift in cargo values.  

Further, if companies are counting on contractual risk transfer provisions in carrier agreements, broker contracts, or indemnity provisions, they may quickly discover that counterparties’ insurance programs are insufficient for high‑value cargo or are eroded by exclusions. This is especially important when engaging in interstate transport as carriers may seek to invoke the statutory damage limitations under the Carmack Amendment, which can limit recoverable damages based on a declared value, a per-pound or per-shipment cap, or other agreed-upon limitations. As a result, even where liability is established, the amount recoverable from the carrier may fall substantially short of the actual value of the loss.

Cargo Insurance Is Not One‑Size‑Fits‑All: Key Coverage Issues

Many companies assume that cargo (marine or inland) insurance will respond automatically to a theft occurring during transit. In practice, however, coverage can vary significantly depending on the policy structure, the circumstances of the loss, and the insured’s role in the supply chain—particularly where responsibility for the goods has shifted among shippers, carriers, and intermediaries.

Key coverage issues often turn on who qualifies as an insured, as coverage differs significantly among property owners, carriers, manufacturers, freight brokers, and logistics providers. These policies are designed to protect distinct interests within the supply chain.

Cargo liability policies, for example, generally protect the carrier’s exposure—responding only where the carrier is legally liable for the loss—rather than insuring the underlying ownership interest in the goods themselves. By contrast, policies such as cargo (including “shipper’s interest”), carriers’ interest, and stock throughput are intended to insure the value of the goods, often without regard to fault for the loss.

Another key issue is whether a loss occurred “in transit,” during temporary or long-term storage, or after delivery was deemed complete. For example, many marine cargo policies contain Warehouse to Warehouse clauses, which can exclude coverage for long-term storage. As the Washington Post article notes, there is no uniform definition of cargo theft, and losses may be categorized differently across jurisdictions and policies—raising potential issues under policy definitions and exclusions.

Additionally, cargo policies frequently impose specific loss-prevention requirements, especially for high-value technology shipments. Policyholders should carefully review these conditions—such as provisions related to attended vehicles, approved parking locations, trailer seals, or escort procedures—as noncompliance can create coverage issues even where the theft itself is clear.

Finally, where theft involves deception, such as fraudulent carriers, falsified bills of lading, or “fictitious pickups,” insurers may argue that the loss falls outside traditional theft coverage or is subject to exclusions for voluntary parting, fraud, or dishonest acts. While these schemes may trigger a crime policy, insureds should look out for coverage gaps as theft schemes become more sophisticated.

Underreporting Can Affect Coverage

While some policyholders may be reluctant to report cargo thefts consistently, whether due to reputational concerns, investor sensitivity, or other business considerations, this hesitation can have unintended insurance consequences.

Incomplete reporting can complicate notice requirements, affect coverage, and obscure loss aggregation across shipments, locations, or periods. Additionally, when one criminal group targets multiple shipments with similar tactics, aggregation and occurrence definitions can greatly impact recovery.

Following a cargo theft, prompt notice and thorough documentation can make the difference between a smoothly paid claim and a protracted dispute. Policyholders should report the theft, notify their insurers, and take care to preserve key records such as bills of lading, invoices, packing lists, GPS data, surveillance footage, and communications between property owners, carriers, and/or brokers. Insurers frequently require evidence of what was lost, when the loss occurred, and which party had custody at the time—details they will invariably seize upon if they are not available. 

Practical Takeaways for Policyholders

The surge in high‑value cargo theft is more than an investigative trend—it is a coverage issue with real consequences for property owners and carriers moving valuable goods through complex supply chains. Taking a fresh look at existing insurance in light of current trends is invariably the best way to stay ahead of a developing landscape.

Recent case law further highlights expanding risk across the supply chain. In Montgomery v. Caribe Transport II LLC, the US Supreme Court held that negligence claims against freight brokers—such as negligent carrier selection—are not preempted, eliminating a key defense and shifting disputes to fact-specific “reasonable care” inquiries. This development is expected to increase litigation and insurance exposure, underscoring that reliance on brokers does not eliminate risk and may instead introduce additional layers of potential liability.

Companies should consider:

• re-evaluating cargo, inland marine, and stock throughput limits against current shipment values;
• reviewing exclusions that may apply to standard or deceptive theft schemes; and
• assessing whether contractual risk transfer aligns with counterparties’ actual insurance programs.

As thieves adapt to what is most valuable and most portable, insurance programs (and those who procure them) must evolve as well. The risk is not just the loss of cargo—it is the gap between theft exposures and insurance programs built for an earlier era.