Navigating Tariff Uncertainty: Essential Cargo Insurance Insights for U.S. Importers

By: James Sanzone | April 22, 2025

James Sanzone is AVP, Ocean Marine Underwriter with Munich Re Specialty – Global Markets. An experienced insurance professional, Sanzone blends technical knowledge with strategic thinking to provide innovative solutions to clients and colleagues.

In the ever-changing world of global trade, U.S. importers face a host of challenges, from geopolitical tensions and supply chain disruptions to – most recently – fluctuating tariffs.

These issues not only impact operational costs but also have significant implications for cargo insurance. The uncertainty surrounding tariffs, in particular, has introduced complexities that necessitate a thorough understanding of current issues to ensure adequate insurance protection.

Insured Value Inflation

Rising tariffs increase the declared value of imported goods, as duties, taxes, and fees contribute to the total landed cost. This increase in value requires corresponding adjustments to insurance coverage.

For example, a shipment previously insured for $5 million may now necessitate coverage of $6.5 million due to added tariff-related expenses. Without updated coverage limits, businesses risk significant financial exposure in the event of loss or damage.

In response to evolving market conditions, brokers and insureds are increasingly requesting flat premium quotes for cargo insurance, rather than premiums calculated as a rate applied to the insured value of goods.

While this may offer simplicity and predictability for clients, it raises concerns amid rising cargo values. As the value of shipments inflates, flat premiums do not adjust to reflect the corresponding increase in exposure and potential claims costs.

Cargo Value Accumulation

To offset higher tariffs, many importers are consolidating shipments, increasing order sizes, and rushing to try to stay ahead of new tariff implementation dates.

While this approach can help manage costs, it leads to a concentration of high-value goods at various points in the supply chain. Warehouses, ports, and distribution centers now handle larger volumes of valuable cargo, increasing the potential financial impact of a single loss event.

Factors such as new ocean carrier alliances, labor strikes, and geopolitical events further exacerbate cargo accumulation risks, increasing the need for careful risk assessment and management.

Demurrage Costs and Delays

Port congestion in recent years has led to longer-than-usual delays for cargo pick-up and substantial demurrage costs. Daily demurrage rates vary by port and carrier, but they can add up quickly, and extended dwell times amplify the need for cargo insurance solutions that account for storage-related exposures.

Tariff-related complexities in customs clearance processes can result in even longer wait times at ports, leading to increased demurrage and detention fees. Higher import values caused by tariffs also impact the security amounts required by U.S. Customs and Border Protection.

This security, required on all imports into US commerce, usually comes in the form of surety bonds, and it can take time to procure new bonds at higher amounts. These delays not only add to the financial burden but also extend the period during which goods remain exposed to risks such as spoilage, theft, or damage.

Increased Theft Risk

Elevated tariffs increase the value of cargo, making shipments more attractive to thieves. Criminal organizations often target goods in transit or those stored for extended periods at vulnerable locations like ports and rail yards.

Operating under uncertainty and rushing shipments, importers may be compelled to use unfamiliar forwarders and carriers, increasing their exposure to fraud and theft. A 2024 CargoNet report revealed a 27% increase in cargo theft incidents, with electronics, automotive parts, and consumer goods among the main targets.

Enhanced security measures, such as GPS tracking and secure storage practices, can help mitigate these risks, but comprehensive cargo insurance remains essential in addressing potential losses. It is paramount that clients work with supply chain experts to help manage the ‘unknowns’ within existing and future supply chains.

10 Steps to Improved Insurance Protection

Of course, the complex and constantly evolving nature of global trade has always presented challenges for businesses engaged in international supply chains. Faced with the additional uncertainly brought on by tariffs, how should U.S. businesses react? To ensure you’re fully protected, consider the following:

1) Understand the Scope of Coverage

Not all cargo insurance policies are created equal. It’s essential to comprehend what risks are covered and, more importantly, what’s excluded. Common exclusions might include specific types of goods, certain routes, or particular perils like acts of war or natural disasters.

For instance, some policies may not cover losses due to improper packaging or inherent vice (the natural characteristics of the goods that might cause deterioration). Always read the fine print and ask your insurer to clarify any ambiguities.

2) Accurately Declare Cargo Value

Underestimating the value of your cargo to save on premiums can be a costly mistake. In the event of a claim, the insurer will only compensate up to the declared value, leaving you to cover the shortfall. Ensure that the declared value reflects the true cost of the goods, including expenses like shipping, handling, and potential profit margins.

3) Assess the Mode of Transportation

Different modes of transport—be it sea, air, or land—come with varying risks. For example, maritime shipments might face perils like piracy or rough seas, while road transport could be susceptible to accidents or theft. Tailor your insurance policy to address the specific risks associated with the chosen transportation method.

4) Consider Geopolitical and Environmental Factors

Shipping routes that pass through politically unstable regions or areas prone to natural disasters present heightened risks. Ensure your policy accounts for these factors, and consider purchasing additional coverage if necessary.

For instance, if your cargo passes through a region with a history of civil unrest, confirm that losses due to political violence are covered.

5) Evaluate the Insurance Provider’s Credibility

The reliability of your insurer is paramount. Research their claim settlement history, financial stability, and reputation in the industry. An insurer with a track record of delayed or disputed claims can add stress during an already challenging time. It’s advisable to choose providers known for their transparency and prompt claim settlements.

6) Regularly Review and Update Your Policy

The dynamics of global trade are continually evolving. Factors such as fluctuating tariffs, changes in trade regulations, and emerging risks necessitate periodic reviews of your insurance coverage. Regularly updating your policy ensures it aligns with current realities and provides adequate protection.

7) Implement Risk Mitigation Strategies

While insurance provides a safety net, proactive measures to minimize risks are equally important. This includes investing in quality packaging, choosing reputable carriers, and implementing robust security protocols during transit and storage. Such practices not only reduce the likelihood of losses but can also lead to more favorable insurance premiums.

8) Understand the Claims Process

Familiarize yourself with the procedure for filing a claim. Knowing the required documentation, timelines, and contact points can expedite the process during stressful situations. Ensure that all necessary records, such as shipping documents, invoices, and inspection reports, are maintained meticulously.

9) Explore Coverage Options Beyond Standard Policies

Standard cargo insurance policies might not cover all potential risks. Depending on your specific needs, consider additional coverages such as:

All-Risk Coverage: Provides comprehensive protection against all perils except those explicitly excluded.
Named Perils Coverage: Covers only the risks specifically listed in the policy.
Warehouse-to-Warehouse Coverage: Extends protection from the point of origin to the final destination, including interim storage periods.

10) Factor in Legal and Regulatory Compliance

Ensure that your insurance policy complies with international regulations and the legal requirements of the countries involved in your shipping routes. Non-compliance can lead to claim disputes or denials.

Stay informed about international shipping regulations and ensure compliance with all requirements. By meticulously considering these factors, importers can secure cargo insurance that not only meets legal requirements but also provides genuine peace of mind.

Remember, the goal is to safeguard your business against unforeseen events, ensuring continuity and financial stability in an unpredictable global market.

In today’s dynamic trade environment, rising tariffs are creating significant challenges for businesses involved in global supply chains.

Beyond the increased costs, tariffs impact affecting various aspects of risk management, including cargo insurance. To maintain operational resilience, businesses must proactively adjust their insurance coverage, implement strong risk management practices, and stay informed about global economic developments. &

The Critical Role of Defense Counsel in Securities Class Actions: BHSI’s Approach

Working to help insureds find the legal representation they need.

Securities class actions are an unfortunate fact of life for U.S. public companies large and small. When a company and their directors and officers are sued for securities fraud, finding the right defense counsel is mission critical. The securities defense bar is a small subset of all U.S. law firms, but choosing the right firm, and the right attorney within the right firm, remains a daunting task.

How can the directors and officers named as defendants in a securities class action get it right?

Berkshire Hathaway Specialty Insurance (BHSI) believes it has an answer. BHSI maintains a list of securities defense firms that, in its view, provide the best defense in this crucial area. But their “Preferred Counsel” program goes even further, offering insureds several financial and other incentives unique in the D&O marketplace.

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In 2024, there were 220 “core” securities class actions filed (i.e., alleging 10b5 and section 11 violations), as compared with 209 filings in 2023. Claimed damages rose by 23 percent last year, with 27 lawsuits alleging damages of over $5 billion. Likewise, settlement numbers followed this trend, with typical settlements ranging between $30 million and $40 million. Ten securities class actions settled for $100 million or more, and the total value of all settlements in 2024 was over $6 billion. In addition to traditional securities class actions, “mega” shareholder derivative cases continue to rise, with many of them settling at $100 million or more.

With alleged damages in securities claims frequently in the billions, even for medium and smaller sized public companies, trying a securities class action becomes a “bet the company” proposition.

Given such exposure, and the cost and complexity of litigating these cases, defending a securities class action calls for the very best legal representation. That is where BHSI aims to help its customers navigate this important decision.

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William Carroll, SVP Public Commercial Insurance and D&O Product Lead, BHSI

In June 2024, BHSI launched its Preferred Counsel Program, which offers insureds financial and other benefits for working with one of 25 carefully vetted law firms.

“These firms have demonstrated a deep understanding of securities class actions and the unique challenges our customers face,” William Carroll, SVP public commercial insurance and D&O product lead for BHSI, said. “BHSI can ensure that our policyholders receive the highest quality legal representation when they need it most.”

With trial a rarity, and looming discovery costs risking depletion of D&O insurance proceeds, job number one for the defense attorney in a securities class action is defeating the case at the pleadings stage on motion to dismiss. “Our goal is to have the best attorney on each particular case that provides the client with the highest probability of getting a suit dismissed at pleading stage,” said Carroll.

As Peter L. Critchell, VP public commercial and financial institutions and technical claims lead, points out, however, roughly half of all securities class actions survive a motion to dismiss and move into the discovery phase – a costly, time-consuming and perilous journey offering few rewards for the defense. All securities defense firms advertise their success at getting cases dismissed, and all are ostensibly prepared to go to trial. In BHSI’s view, however, the number of firms that consistently demonstrate success, both at the pleadings stage and beyond, is surprisingly small. “These cases need to be handled by counsel with the highest levels of expertise,” Critchell said.

The firms on BHSI’s preferred counsel list are selected for a combination of legal firepower and commercial practicality. As Critchell said, “They are all fierce litigators who also know how to run a case effectively and efficiently, with an eye toward the eventual resolution – including negotiating with the top plaintiffs firms, all of whom are tough litigators in their own right.”

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Peter L. Critchell, VP Public Commercial and Financial Institutions and Technical Claims Lead, BHSI

BHSI’s preferred counsel endorsement is aimed at steering their customers to the “best of the best” securities litigation defense firms. To serve this end, the endorsement contains a number of industry-leading financial and other incentives, available in the event the insured chooses counsel from the preferred list.

The first financial incentive is an immediate reduction in the amount of the self-insured retention. The reduction is based on an agreed percentage of the retention amount – typically 25 percent – and is applied at the beginning of the claim.

The second financial incentive, also a retention reduction feature, is triggered when and if the defendants do not prevail on the motion to dismiss. At that juncture, with the case proceeding toward the costly territory of discovery and potential settlement, BHSI’s endorsement offers an additional reduction of up to 100 percent of the amount remaining in the SIR – a feature that is unique in the D&O marketplace.

“We are essentially putting our money where our mouth is,” Carroll said. “The true economic benefit for the client can range from a few hundred thousand dollars to millions.”

But the benefits BHSI’s endorsement provides do not end there. The endorsement is available for all insureds for whom BHSI provides primary insurance and allows them the freedom to choose a law firm from the preferred counsel list – or not. Also, BHSI’s customers are free to use all the firms in any jurisdiction in which securities litigation is filed in the United States. BHSI believes all the firms on its preferred counsel list are competent to litigate cases anywhere in the country.

The program has proved an immediate success. Carroll reports that the insurer has been able to grow its primary public D&O portfolio by over 20 percent since rolling out the program last year.

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Finally, BHSI considers its market-leading endorsement a source of mutual benefit for its insureds, for its preferred counsel firms, and for BHSI itself.

Building strong relationships with law firms is a key feature of the program from BHSI’s perspective. This benefits the firm’s clients who are, after all, also BHSI’s customers. “A strong bond between the insurer and legal counsel is especially important in securities litigation,” said Critchell. “In part because we as claims professionals add real value to the process, particularly once settlement discussions commence. Firms that recognize this smooth the entire process for their clients.”

Carroll weighed in: “As underwriters, we work hand in hand with our claims teams in assessing the risks of securities litigation for our customers, and we consider our claims professionals a major value add. The law firms in our program understand this and actively partner with us.”

Building relationships on the claim side, getting the right firms on the preferred counsel program, and involving BHSI early in conversations about the choice of defense firm is crucial. As Critchell explained, “Having relationships with these law firms that extend through the life of the claim and beyond, is important both on the claims and underwriting side. When issues arise, we’re comfortable communicating with each other.”

“While we can’t guarantee outcomes, our familiarity and experience with these attorneys provides a level of comfort and confidence in the legal process,” Carroll concluded.

To learn more, visit: https://www.bhspecialty.com/.

Berkshire Hathaway Specialty Insurance (www.bhspecialty.com) provides commercial property, casualty, health care professional liability, executive and professional lines, transactional liability, surety, marine, travel, programs, accident and health, medical stop loss, homeowners, and multinational insurance. The actual and final terms of coverage for all product lines may vary. It underwrites on the paper of Berkshire Hathaway’s National Indemnity group of insurance companies, which hold financial strength ratings of A++ from AM Best and AA+ from Standard & Poor’s. Based in Boston, Berkshire Hathaway Specialty Insurance has offices in Atlanta, Boston, Chicago, Columbia, Dallas, Houston, Indianapolis, Irvine, Los Angeles, New York, Plymouth Meeting, San Francisco, San Ramon, Seattle, Stevens Point, Adelaide, Auckland, Barcelona, Brisbane, Brussels, Calgary, Cologne, Dubai, Dublin, Frankfurt, Hong Kong, Kuala Lumpur, London, Lyon, Macau, Madrid, Manchester, Melbourne, Munich, Paris, Perth, Singapore, Sydney, Toronto and Zurich. For more information, contact [email protected].

The information contained herein is for general informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any product or service. Any description set forth herein does not include all policy terms, conditions and exclusions. Please refer to the actual policy for complete details of coverage and exclusions.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Berkshire Hathaway Specialty Insurance. The editorial staff of Risk & Insurance had no role in its preparation.

Berkshire Hathaway Specialty Insurance (www.bhspecialty.com) provides commercial property, casualty, healthcare professional liability, executive and professional lines, surety, travel, programs, accident and health, medical stop loss, and homeowners insurance. The actual and final terms of coverage for all product lines may vary. It underwrites on the paper of Berkshire Hathaway's National Indemnity group of insurance companies, which hold financial strength ratings of A++ from AM Best and AA+ from Standard & Poor's.