Ad valorem is not insurance: what you actually bought
There is a line on the invoice: “Insurance 0.3% — EUR 148.00”. To most people that means the cargo is insured.
Often it means something else.
Two products, one line
Cargo insurance is a contract of insurance. Its parties are you and an insurance company. It pays under the terms of the policy: if an event the policy covers occurs, the claim is paid, and it does not matter whether anyone is liable for it.
A declared value charge, often called ad valorem, is a different thing. The carriage conventions set limits of liability — the maximum a carrier pays for cargo lost or damaged. The conventions also allow the sender to declare a higher value and, on payment of an additional charge, to raise that limit.
The essential difference: raising the limit works only when the carrier is liable.
When the carrier is not liable
The carriage conventions provide for cases in which the carrier is relieved of liability. Among them — the inherent nature of the goods, insufficient packing, circumstances the carrier could not avoid and the consequences of which it could not prevent, and acts of the sender.
If the damage arose from such circumstances, the carrier pays nothing. And then it no longer matters that its limit of liability had been raised: a limit that never comes into play can be of any size.
Insurance pays in those cases — if the event is covered by the policy. That is the difference being paid for.
How to tell them apart from the documents
Three signs that can be checked in a few minutes.
First, whether there is a policy or an insurance certificate. Real insurance has a document naming the insured, the insurer, the sum insured and the terms of cover. If you never received that document, you probably do not have a contract of insurance.
Second, whether a declared value is entered in the transport document. The CMR consignment note and the air waybill both have a field for it. If it is filled in, this is almost certainly a raised limit, not insurance.
Third, who you are paying. An insurance premium ends up with an insurance company; a charge for raising the limit stays with the carrier.
What to do with it
First — know which product you have. That is a question about documents, and the answer is one or the other.
After that it is no longer an invoicing question but a risk management one, and it belongs to your insurance broker: whether you need cargo cover, of what kind and for whom. We express no view on that — it is a regulated activity, and we do not carry it on.
What we can say precisely: whether the charge you paid bought what it says it bought, and whether it could have had any effect at all.