Cargo Insurance Value & Deductible Calculator

Convert an invoice, freight, insurance cost, and contract-confirmed expected profit, then model total loss, partial loss, and general average against the sum insured and deductible.

This shipment stress test uses Korean Commercial Act valuation and underinsurance rules as a reference. The issued wording, governing law, and insurer confirmation control.

Shipment and policy inputs

Use this shipment’s documents and issued wording instead of market averages.

1. Invoice and value build-up

2. Issued policy or quote

Underinsurance settlement

3. Loss and deductible scenarios

Deductible method

Value comparison status

Underinsurance review

Pro rata reference

Declared review value

$118,800

Insured ratio

92.6%

Total-loss modeled payout

$96,500

Total-loss retained amount

$22,300

Article 697 reference value

$108,000

Contract-confirmed expected profit

$10,800

Underinsurance gap

$8,800

Value build-up

Converted invoice$100,000
Freight, insurance, and other costs$8,000
Contract-confirmed expected profit$10,800
Declared review value$118,800

Total, partial, and general-average scenarios

ScenarioGross lossRecognized lossAfter settlement basisDeductibleModeled payoutRetained amountProtection
Total loss$118,800$106,920$99,000$2,500$96,500$22,30081.2%
Partial loss$47,520$42,768$39,600$2,500$37,100$10,42078.1%
General average$15,000$15,000$13,889$0$13,889$1,11192.6%

Total-loss gap decomposition

Unrecognized or excluded gap

$11,880

Underinsurance gap

$7,920

Deductible gap

$2,500

Policy-limit gap

$0

Exchange-rate ±10% sensitivity

These fixed shocks are sensitivities, not exchange-rate forecasts.

Rate changeApplied rateReview valueSum-insured difference
-10%0.9$107,800+$2,200
0%1$118,800-$8,800
+10%1.1$129,800-$19,800

Boundaries to confirm before binding

  • The sum insured is below the review value. Confirm the actual pro-rata wording.
  • Expected profit is not automatic. Confirm the express wording and Article 698 boundary.
  • The Article 674 pro-rata reference is selected. Check for different wording.
  • Confirm deductible treatment and the contributory-value limit for general average.
  • The exchange rate is a snapshot. Replace it with the binding-date rate.
  • The result does not quote premium, approve cover, settle a claim, or recommend a sum insured.

Calculation order and legal boundary

The model converts the invoice, adds Article 697 reference costs, adds only contract-confirmed expected profit, applies the selected underinsurance basis, then the deductible and sum-insured cap. An insurer or adjuster must determine loss, cover, exclusions, deductible application, and payment under the issued wording.

Related calculators

Why marine cargo insurance value needs its own calculation

Marine cargo insurance is not simply the invoice amount copied into a form. The cargo value at shipment, shipment and insurance costs, any expressly insured expected profit, the sum insured, the underinsurance wording, and the deductible all interact. Missing the exchange rate or one confirmed cost can leave a total-loss shortfall, while a partial loss can be reduced again by pro rata settlement and a deductible.

This calculator first converts the invoice into one display currency. It then builds a Korean Commercial Act Article 697 reference value, keeps Article 698 expected profit separate, and applies the entered policy terms to total loss, partial loss, and general average as independent scenarios. It is a deterministic document-review tool, not a premium quote or a claim settlement.

Who can use this tool

  • Exporters and importers setting a shipment-specific declared value
  • Trade, logistics, and finance teams reconciling an invoice, bill of lading, binder, and issued policy
  • Business owners comparing total-loss and partial-loss cash exposure under different deductibles
  • Cargo owners adding a separately estimated general-average contribution to their funding review

Cargo-owner insurance is not carrier cargo liability

This calculator: the cargo owner’s insured interest

The value starts with the owner’s cargo interest: converted invoice value, confirmed shipment and insurance costs, and separately insured expected profit. Direct cargo damage, general average, the sum insured, settlement basis, and deductible drive the modeled result.

A different question: carrier liability

Carrier or freight-forwarder liability asks whether a transport operator owes damages to a cargo owner and how a liability policy responds. Fault, legal liability, contractual limits, and compulsory insurance boundaries do not belong in this cargo-value formula.

Incoterms allocation, the point of risk transfer, the party expected to arrange insurance, carrier liability, and cargo-policy cover are separate questions. This tool does not infer an insurance duty or risk-transfer moment from CIF, CIP, or another trade term.

Korean-law reference checked for the 2026 rule set

Korea-based jurisdiction note

The legal reference is the Korean Commercial Act, law ID 001702 and MST 272919, marked current in the National Law Information OPEN API on August 16, 2026. That version was promulgated on July 22, 2025 and became effective on July 23, 2026. A foreign governing law, international clause set, or issued wording may produce a different value and settlement method.

Current Korean Commercial Act provisions used as boundaries for the cargo insurance model
ProvisionReference pointCalculator boundary
Article 697Cargo value at the time and place of shipment plus shipment and insurance costsThe user must confirm which entered costs belong in the issued valuation
Article 698Separate insurance-value boundary for profit or remuneration expected on arrivalNo universal statutory 10% uplift or CIF 110% rule is assumed
Article 674Pro rata underinsurance, subject to different party agreementThe user selects pro rata or a confirmed alternative-wording sensitivity
Article 694General-average contribution as a marine-insurance referenceThe tool does not adjust the contribution or determine contributory value
Articles 695, 699, and 700Marine-policy particulars and attachment or termination of cargo coverShip, route, shipment, origin, destination, and transit boundaries remain a checklist

Articles 669 and 670 also matter when the sum insured exceeds the review value, and Article 676 anchors loss valuation at the time and place of loss unless different wording applies. The screen labels underinsurance and overinsurance only as arithmetic comparisons. It does not decide whether an excess is material, whether a valued policy amount controls, or what an adjuster will accept.

How the declared review value is built

1. Convert the invoice

Converted invoice value equals invoice-currency amount multiplied by display-currency units per invoice-currency unit. The exchange rate must be replaced with the binding-date or policy-required rate; the calculator does not fetch or forecast a rate.

2. Separate Article 697 costs from Article 698 profit

Article 697 reference value equals the converted invoice plus entered freight, insurance cost, and other confirmed shipment cost. Expected profit equals that reference value multiplied by the user-entered percentage only when the contract-confirmation switch is on. Declared review value equals the Article 697 reference value plus that separately modeled expected profit.

3. Compare the sum insured

The raw insured ratio equals sum insured divided by declared review value. The pro rata settlement ratio is capped at 100%, so an entered sum above value does not multiply a modeled loss above 100%. Underinsurance gap and overinsurance amount are shown separately.

Scenario settlement order

  1. Set gross loss to the full review value for total loss, review value times the entered damage percentage for partial loss, or the entered contribution for general average.
  2. Set recognized loss to gross loss times the user-entered recognition percentage only after the relevant cover-confirmation switch is on.
  3. For pro rata settlement, multiply recognized loss by the capped insured ratio; for confirmed alternative wording, retain recognized loss at this step.
  4. Apply a straight deductible or the simplified franchise threshold, except for general average when its deductible switch is off.
  5. Cap the after-deductible candidate at the entered sum insured.
  6. Reconcile retained amount to the unrecognized gap, pro rata gap, deductible, and policy-limit gap.

Why the recognition percentage is editable

A coverage-condition label does not prove that every dollar of an assumed event is covered. Packaging, delay, inherent vice, route, notice, salvage, valuation evidence, endorsements, and exclusions can change the accepted loss. The percentage is a user sensitivity and must never be described as an insurer-approved adjustment.

Straight deductible versus franchise

A policy may use deductible, excess, franchise, minimum, percentage, package, event, or shipment wording. The calculator exposes two intentionally simple models so the difference is visible, but the issued clause always controls.

Comparison of straight deductible and franchise threshold outcomes
MethodModel ruleCandidate 1.5M, threshold 2MCandidate 3M, threshold 2M
Straight deductibleSubtract the deductible from the candidate01M
Franchise sensitivityZero at or below the threshold; no deduction above it03M

Confirm whether the actual franchise uses below or at-or-below wording and whether it applies per package, event, conveyance, or shipment. General-average deductible treatment is a separate switch because it must be checked independently.

Step-by-step workflow

  1. Select invoice and display currencies. Use KRW for a Korean-currency review or USD when the policy and funding plan are both dollar-based.
  2. Enter the dated exchange rate. Record its date and source outside the calculator so the binder can be reconciled later.
  3. Separate freight, insurance, and other shipment costs. Include only values supported by documents and confirmed as part of the policy valuation.
  4. Confirm expected profit. Do not turn on the uplift merely because 110% appears in market practice; copy the actual quote or wording.
  5. Copy the sum insured and settlement basis. Select pro rata unless different wording has actually been confirmed.
  6. Review cover, exclusions, and transit. Use the ICC selector as a label, not an automatic coverage engine.
  7. Enter damage, deductible, and general-average assumptions. Reconcile each retained amount to the four displayed gap components.

Worked example: USD 100,000 shipment reviewed in KRW

Assume a USD 100,000 invoice at KRW 1,350 per USD, KRW 8M freight, KRW 1M insurance cost, and KRW 1M other confirmed shipment cost. Expected profit is expressly included at 10%, the sum insured is KRW 150M, direct-loss recognition is 90%, and the straight deductible is KRW 2M. Partial damage is 40%; the general-average contribution is KRW 20M with 100% recognition and no deductible in that scenario.

KRW results for the USD 100,000 cargo insurance worked example
ItemGross value or lossModeled payoutRetained or value gap
Article 697 reference valueKRW 145,000,000Not applicableNot applicable
Review value with expected profitKRW 159,500,000Not applicableKRW 9,500,000 underinsured
Total lossKRW 159,500,000KRW 133,000,000KRW 26,500,000
Partial loss at 40%KRW 63,800,000KRW 52,000,000KRW 11,800,000
General averageKRW 20,000,000KRW 18,808,777KRW 1,191,223

Reconcile the KRW 26.5M total-loss retention

  • KRW 15.95M unrecognized-loss gap
  • KRW 8.55M pro rata underinsurance gap
  • KRW 2M straight deductible
  • KRW 0 additional policy-limit gap

Fixed exchange-rate sensitivity

A 10% lower rate produces a KRW 144,650,000 review value. A 10% higher rate produces KRW 174,350,000. Those figures measure value sensitivity; they are not forecasts.

How to interpret the status

Underinsurance review

The entered sum insured is below the declared review value. If the actual policy uses pro rata settlement, even a partial loss may create a ratio gap before the deductible.

Overinsurance review

A higher sum insured does not automatically create a larger payable loss. Review Articles 669 and 670 where Korean law applies, the agreed value, actual loss value, and express expected-profit wording.

Coverage review needed

At least one coverage-condition, direct-loss, exclusions, or transit confirmation is missing. Resolve the scope question before relying on the amount comparison.

Entered values match

The review value and sum insured are equal, but complete indemnity is not guaranteed. Recognition, deductible, sublimits, exclusions, evidence, and adjustment can still leave retained loss.

Document checklist before binding

  • Invoice currency, amount, exchange-rate date, and rate source
  • Whether freight, insurance cost, packing, inspection, and loading costs belong in the insured value
  • Whether expected profit is insured, its percentage, and its stated sum
  • Subject matter, insured peril, sum insured, premium, and insurance period
  • Ship, flag, type, loading and discharge ports, origin, and destination
  • ICC(A), ICC(B), ICC(C), or custom wording plus every endorsement and exclusion
  • Deductible or franchise amount, inclusive wording, and package, event, or shipment application
  • General average, salvage, loss-mitigation cost, residue, and adjustment-expense treatment
  • Pro rata underinsurance, valued-policy wording, alternative agreement, and other insurance

Frequently asked questions

Should every cargo policy use 110% of CIF?

No. A 10% expected-profit uplift or CIF 110% is not a universal Korean statutory percentage for every contract. Keep the Article 697 cargo-and-cost reference separate from Article 698 expected-profit insurance and copy the issued valuation wording.

Does selecting ICC(A) make 100% of every loss payable?

No. A clause label does not decide a particular event, exclusion, loss amount, or deductible. Review packaging, delay, inherent vice, route and transit, endorsements, notice, and evidence, then use the recognition percentage only as a sensitivity.

Will a sum insured above value be paid in full after total loss?

Not necessarily. Where Korean law applies, Articles 669 and 670 address excess and valued insurance, while Article 676 addresses loss value. The overinsurance amount on screen is an arithmetic comparison, not a payment entitlement.

Can I add general average to the partial-loss row?

That can double count the same incident data. This tool keeps direct total or partial loss separate from a general-average contribution. Use the adjustment statement, contributory value, policy cover, and deductible wording for an actual event.

Are a franchise and a deductible the same?

Not in this model. A straight deductible is subtracted from the candidate. The simplified franchise pays zero at or below the threshold and waives the deduction above it. The issued clause and unit of application control.

Can I send this result as a binding instruction?

Use it as a question and reconciliation sheet, not a binding instruction. Attach the invoice, bill of lading, quote or binder, and wording, then obtain written confirmation of value components, expected profit, cover, exclusions, deductible, and transit period.

Sources, update cycle, and limits

The legal source was checked through the Korean National Law Information OPEN API on August 16, 2026: Commercial Act law ID 001702, MST 272919, current version effective July 23, 2026. The reviewed provisions are Articles 638-3, 666, 669, 670, 674, 676, 694, 695, 697, 698, 699, and 700. Recheck the statute after amendment, the wording at binding and renewal, the exchange rate and shipment costs for every shipment, and loss inputs during adjustment.

  • The calculator does not quote premium, approve underwriting, settle a claim, or recommend a sum insured
  • Damage percentages, recognition percentages, and general-average contributions are user assumptions, not adjustment findings
  • Foreign governing law, York-Antwerp Rules, Incoterms, and policy-specific clauses require separate professional review

Open the invoice and policy, then reconcile one shipment

Save the value build-up and three scenarios as a structured list of questions for the insurer or broker. When the binder or policy arrives, replace the exchange rate, expected-profit assumption, coverage condition, and deductible with the final written terms.