Insurance for trading companies in Singapore
What a trading business in Singapore must insure
Two covers are compulsory by statute.
Work injury compensation insurance is compulsory for every employee doing manual work, such as warehouse and delivery staff, regardless of salary. It is also compulsory for non-manual employees earning S$2,600 a month or less. Third-party motor cover is compulsory for every vehicle used on a road under the Motor Vehicles (Third-Party Risks and Compensation) Act 1960.
The other obligations come from contracts.
- Sale contracts. The Incoterm decides who insures goods in transit. Under CIF and CIP the seller must buy cargo insurance for the buyer.
- Bank facilities. Trade financing usually requires goods to be insured with the bank noted as loss payee. EnterpriseSG's Enterprise Financing Scheme for trade loans supports financing of up to S$50 million per borrower group across all its facilities. The government risk-share is 50%, or 70% for young enterprises and those in challenged markets. Enhancements took effect on 1 April 2026.
- Leases and warehousing agreements. These set who insures stock held on a third party's premises.
Domestic general insurance premiums in Singapore reached S$6.09 billion in 2025, up 8.4%.
Covers most trading businesses carry
| Cover | Why | Compulsory? |
|---|---|---|
| Marine cargo | Loss or damage to goods in transit by sea, air or land | No, but required by CIF and CIP sales and by lenders |
| Stock throughput | Goods in transit and in storage under one policy | No |
| Property (stock) | Goods held in own or third-party warehouses | No, but required by lenders |
| Trade credit | Buyer insolvency or protracted default | No, but often required for receivables financing |
| Public and product liability | Injury or damage caused by goods sold | No |
| Work injury compensation | Warehouse, delivery and lower-paid staff | Yes, for manual workers and staff earning S$2,600 or less |
A marine cargo policy covers goods from the start of transit to the named destination. A trader holding stock for weeks between shipments should compare it with stock throughput, which continues cover through storage.
Risks specific to trading
Carrier liability is limited. Under the Carriage of Goods by Sea Act, a sea carrier's liability is capped at 666.67 Special Drawing Rights per package or 2 SDR per kilogram, whichever is higher. A container of high-value electronics can be valued at many times that cap. Carriers also have defences that remove liability altogether. Cargo insurance pays the trader's loss and leaves the insurer to pursue the carrier.
Underinsurance in transit and storage. Section 81 of the Marine Insurance Act 1906 states that an assured insured below insurable value is its own insurer for the balance. A shipment insured at invoice cost without freight and duty, or a declaration below actual value, reduces each claim in proportion.
War and route risk. In a written parliamentary reply on 4 August 2026, the Minister for Transport cited industry estimates for Strait of Hormuz transits. War risk cover for ships had risen to 3.5% to 7.5% of hull and machinery value per transit, from 0.10% to 0.25%. Those costs reach traders through freight rates and surcharges. Cargo war risk is a separate cover with its own terms and cancellation notice.
Buyer default. A trader on open-account terms carries the credit risk on every receivable until it is paid.
What moves the premium
Insurers rate a trading risk on the goods, the routes and the counterparties.
| Factor | Direction |
|---|---|
| Commodity type (bulk, steel, electronics, food, chemicals) | Theft-prone, fragile or perishable goods raise the cargo rate |
| Annual shipment value and largest single shipment | Higher values raise premium; large single shipments may need a higher limit |
| Routes and ports, including war and sanctions exposure | High-risk routes add war risk rates and restrictions |
| Packing and containerisation | Full container loads in sound packing support better terms |
| Storage duration and warehouse standards | Longer storage in unsprinklered sites raises property rates |
| Buyer spread and credit quality | Concentration in few buyers or weak markets raises credit premiums |
| Claims history over 3 to 5 years | Frequent losses raise rates and excesses |
For trade credit, the insurer sets a credit limit on each buyer. A buyer the insurer will not cover leaves that receivable uninsured, whatever the policy premium.
What the broker needs from you
Prepare these items before asking for quotations:
- Company profile, UEN and a description of goods traded.
- Annual turnover split by imports, exports and domestic sales.
- Main commodities, packing method and conveyance used.
- Origin and destination countries, and transhipment ports.
- Incoterms used in purchase and sale contracts.
- Largest single shipment value and average stock value held.
- Warehouse locations, operators and storage periods.
- Buyer list with credit terms, annual sales and overdue balances.
- Bank facility terms that set insurance requirements.
- Claims and bad-debt history for the past 5 years.
Sanctions screening matters for both cargo and credit. Insurers will not cover shipments or buyers that breach applicable sanctions, so declare any trade with sanctioned or high-risk countries.
Frequently asked questions
Do I need cargo insurance if I buy CIF?
Under CIF, the seller arranges the cargo insurance for the buyer. The Incoterms 2020 rules set minimum cover at Institute Cargo Clauses (C), which covers named major perils only. Buyers who want all-risks cover, or cover beyond the port to their warehouse, often buy their own contingency or top-up policy.
What is stock throughput and when does it beat separate cargo and warehouse policies?
Stock throughput covers goods from the supplier through transit, storage and onward delivery under one policy. It suits traders who hold stock in warehouses between shipments. It removes the gap between a cargo policy that ends on delivery and a property policy that may not cover stock in third-party warehouses. The stock throughput page sets out how values are declared.
Does trade credit insurance cover a buyer in a sanctioned country?
No. Credit insurers exclude transactions that breach applicable sanctions. They may also withdraw credit limits on buyers in countries that become sanctioned during the policy period. Screen buyers before shipment and declare any change to the insurer.
Who insures goods held in a third-party warehouse?
The owner of the goods should insure them. The warehouse operator's liability is often limited by its trading conditions, and its own policy may not cover customers' goods for full value. A stock or stock throughput policy covering named third-party locations closes the gap.
Sources
- Ministry of Transport: increases in war risk insurance premiums, marine insurance costs and freight rates
- Enterprise Singapore: Enterprise Financing Scheme – Trade Loan
- Singapore Statutes Online: Carriage of Goods by Sea Act 1972
- Singapore Statutes Online: Marine Insurance Act 1906
- General Insurance Association of Singapore: annual sector results 2025
- Ministry of Manpower: work injury compensation insurance
General information only, not advice on any particular policy. Cover depends on the policy wording and the insurer's terms.