Cargo insurance premium calculator (with minimum premium)
Premium, CIF price and insured amount, with an optional minimum premium
CIF = CFR ÷ (1 − markup × rate); premium = CIF − CFR. If you enter a minimum premium that is higher than the premium the rate gives, the premium is the minimum and CIF = CFR + minimum.
Example: goods of USD 20,000.00 plus USD 2,000.00 freight make a CFR of USD 22,000.00; at an insurance rate of 0.5 % (per cent), insured at 110% of CIF, the premium is USD 121.67 and the CIF price is USD 22,121.67 (rounded half up to 2 decimal places).
Result
Goods (FOB total)
USD 20,000.00
This calculator needs JavaScript to run. The formula and the worked example below work without it.
- CFR price
- USD 22,000.00
- Insurance premium
- USD 121.67
- CIF price
- USD 22,121.67
- Insured amount
- USD 24,333.84
- GoodsFOB unit price × quantity, rounded to 0.01USD 2.00 × 10,000 = USD 20,000.00
- CFR priceCFR = goods + freight and other chargesUSD 20,000.00 + freight and other charges USD 2,000.00 = USD 22,000.00
- Insurance factor kk = markup × insurance rate (per mille worked as one thousandth)Insured at 110% × rate 0.5% = k 0.55%
- Insurance premiumBy the rate: CFR × k ÷ (1 − k); with a minimum premium, the larger of the two, rounded to 0.01By the rate USD 121.67, premium USD 121.67
- CIF priceCIF = CFR + premiumUSD 22,000.00 + premium USD 121.67 = CIF USD 22,121.67
- Insured amountInsured amount = CIF × markup, rounded to 0.01USD 22,121.67 × 110% = USD 24,333.84
Formula
Goods and CFR = goods = FOB unit price × quantity; CFR = goods + freight and other chargeseach amount is rounded to 0.01 and used as printed
Factor k = k = markup ÷ 100 × insurance rate (per mille as 1/1000, per cent as 1/100)
Premium by the rate = CFR × k ÷ (1 − k)the premium is itself part of the insured CIF value, hence the division by (1 − k)
Minimum premium = premium = the minimum when it is greater than the premium by the rate; otherwise by the rateyou enter the minimum yourself; this site supplies no insurer's rate or minimum
CIF price and insured amount = CIF = CFR + premium; insured amount = CIF × markup ÷ 100
Not covered
- You enter the rate and any minimum premium; this site supplies and recommends no insurer's rate. The figures the page opens on are an example, not a rate to use.
- Rates vary by insurer and route, and the result is for reference, not a quotation.
- The premium is charged on the insured amount of a CIF price that already contains it (the same working as this site's FOB/CIF/CFR quotes). A freight forwarder's page that insures CFR × 110% without this step gives a slightly different figure.
- Every currency is worked to two decimal places; currencies with no minor unit, such as JPY and KRW, are not handled separately yet.
Worked example
Example inputs: Currency USD; FOB unit price 2; Quantity 10000; Freight and other charges 2000; Insurance rate 0.5; Rate is in % (per cent); Insured at (% of CIF) 110
| Step | Working |
|---|---|
| Goods | USD 2.00 × 10,000 = USD 20,000.00 |
| CFR price | No freight or other charges, so the CFR is the goods: USD 22,000.00 |
| Insurance factor k | Insured at 110% × rate 0.5% = k 0.55% |
| Insurance premium | By the rate USD 121.67, premium USD 121.67 |
| CIF price | USD 22,000.00 + premium USD 121.67 = CIF USD 22,121.67 |
| Insured amount | USD 22,121.67 × 110% = USD 24,333.84 |
FAQ
What does Cargo insurance premium give for an example?
Example: goods of USD 20,000.00 plus USD 2,000.00 freight make a CFR of USD 22,000.00; at an insurance rate of 0.5 % (per cent), insured at 110% of CIF, the premium is USD 121.67 and the CIF price is USD 22,121.67 (rounded half up to 2 decimal places).
How is a cargo insurance premium worked out?
Start from the CFR (goods plus freight). The premium is the rate on the insured amount (the CIF price × the markup, usually 110%), and the premium is itself part of the CIF price, so CIF = CFR ÷ (1 − markup × rate) and premium = CIF − CFR.
How does a minimum premium apply?
Many insurers set a minimum premium per policy. This tool takes the larger of the premium by the rate and the minimum you enter; when the minimum applies, CIF = CFR + minimum. You enter the minimum yourself; this site does not supply one.
Should the rate be per mille or per cent?
Either: pick the unit under “Rate is in”. 5‰ is 0.5%. Many calculators use per mille and many explainers use per cent; a wrong unit is a factor of ten, so the tool warns you to check the unit when the rate is above 2%.
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Results are for reference only. The figures confirmed by the tax authorities, banks and carriers prevail.Disclaimer