> ## Documentation Index
> Fetch the complete documentation index at: https://pelusium.mintlify.site/llms.txt
> Use this file to discover all available pages before exploring further.

# Cargo insurance

> How Pelusium cargo insurance works—premiums, claims, LP underwriting, and the pool pie.

# Cargo insurance

<Warning>
  **Players:** treat insurance as **experimental**. You can lose premium if a haul succeeds, and underwriters (LPs) can lose capital when claims pay. Rules and UX may change. Always read what **your wallet** is signing.
</Warning>

**Cargo insurance** is optional cover tied to a **freight job**. You pay a **premium** in **SUI** so that, if the haul fails under the policy rules, you can **claim** up to the insured **cargo value** from a shared **pool**. That pool is funded by **liquidity providers (LPs)** who deposit SUI hoping to earn premiums when jobs finish safely.

It is separate from **freight escrow** (payment for the haul) and from **speculation** (side bets on on-time vs late). Insurance is about **cargo value risk**, not courier pay.

<Warning>
  **Trust model:** **On-chain freight job state** is the source of truth for delivery, overdue refunds, and **undelivered** claims. **Destruction** claims (e.g. freighter destroyed en route) need a **signed destruction witness** from Pelusium’s configured **oracle**—not a raw killmail object the contract can read today. Treat destruction payouts as **oracle-dependent**.
</Warning>

<Note>
  If your deployment is paused or waiting on world-contract support, you may still browse insurance screens while final purchase or claim actions stop at signing.
</Note>

## Two roles

| Role                                        | What you do                                                 | How you make or lose money                                                            |
| ------------------------------------------- | ----------------------------------------------------------- | ------------------------------------------------------------------------------------- |
| **Insured** (usually shipper / cargo owner) | Buy a **policy** on a freight job; pay **premium**          | Lose premium if the haul succeeds; **claim cargo value** if the policy pays out       |
| **LP / underwriter**                        | **Deposit** SUI into the pool; later **unbond** to withdraw | Earn premiums when policies **expire** safely; lose when **claims** pay from the pool |

One job can have **at most one** active policy.

## What a policy covers

| Claim path      | Wins when (simplified)                                                                                                       | Trust basis                                                                    |
| --------------- | ---------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------ |
| **Undelivered** | Coverage window has ended and the job was **not delivered** (e.g. overdue / still in transit past end / cancelled per rules) | **On-chain** freight job state + time                                          |
| **Destruction** | Oracle-signed **destruction witness** matches the policy/job during coverage                                                 | **Pelusium oracle** signature (not native killmail verification in Move today) |

Coverage timing follows the job’s delivery window (plus a configured **grace** period). Exact start/end are set when you purchase—check the app for your policy.

You can usually **cancel** a policy only while the job is still **open** or **accepted** (not after pickup). Cancel refunds most of the premium minus a **cancellation fee**.

## Lifecycle

```mermaid theme={null}
flowchart TD
  A[Freight job exists] --> B[Get a signed premium quote]
  B --> C[Purchase policy — pay premium]
  C --> D{How does the haul end?}
  D -->|Delivered| E[Expire policy — premium earned by LPs]
  D -->|Fail under undelivered rules| F[Insured claims cargo value]
  D -->|Destruction witness| F
  D -->|Cancel before pickup| G[Partial premium refund]
  H[LPs deposit SUI] --> I[Pool can underwrite policies]
  I --> C
  E --> J[LP share of pool grows]
  F --> K[Pool pays claim — LP capital at risk]
```

1. **LPs deposit** into the shared pool (underwriting capital).
2. You create or pick a **freight job**, get a **premium quote**, and **purchase** a policy (premium + any small creation fee).
3. While the job is early enough, you may **cancel** for a partial refund.
4. If the job **delivers**, anyone can **expire** the policy: premium moves into the LP pool as earned yield.
5. If the job **fails** under claim rules, the insured **claims** and receives up to **cargo value** from the pool.

## How the money moves (simple pie examples)

Numbers below use the default-style **1.5%** premium and **10%** cancel fee (short-rate style). Your quote and deployment may differ—always trust the wallet preview.

### Example A — haul succeeds

You insure **100 SUI** of cargo value and pay **1.5 SUI** premium.

* The haul **delivers** → policy **expires**.
* That **1.5 SUI** premium is earned by the **pool** (LPs). You do **not** get cargo payout from insurance (you didn’t need it).

```mermaid theme={null}
pie title Example A — where the 1.5 SUI premium goes on success
    "Earned by LP pool" : 100
```

### Example B — claim pays

Same policy: **100** cargo value, **1.5** premium. The claim path succeeds.

* You receive **100 SUI** claim payout from the pool.
* Your **1.5 SUI** premium was already paid in; economically the pool is funding the large payout (premium is tiny next to cargo value).

```mermaid theme={null}
pie title Example B — claim payout vs premium paid in
    "Claim to insured (cargo value)" : 1000
    "Premium you already paid" : 15
```

For LPs, a claim is the risk they underwrite: large payouts shrink pool value relative to shares.

### Example C — cancel before pickup

You paid **1.5 SUI** premium; cancel fee **10%** → **0.15 SUI** stays with the pool, **1.35 SUI** refunded.

```mermaid theme={null}
pie title Example C — cancel (10% short-rate fee)
    "Refund to insured" : 90
    "Cancellation fee to pool" : 10
```

## Pool capacity (why quotes can be refused)

The pool will not sell unlimited cover. A **max coverage ratio** caps how much **locked exposure** (sum of active cargo values) can sit against pool value—for example around **50%** on cautious deployments.

```mermaid theme={null}
pie title Example pool headroom (illustrative 50% max exposure)
    "Max locked coverage allowed" : 50
    "Must stay unallocated / buffer" : 50
```

If the pool is full or paused, new policies can fail even if you have SUI for the premium.

## LPs: deposit and unbond

* **Deposit** — You send SUI; you receive an **LP position** with **shares** of the pool.
* **Request unbond** — Start withdrawing some or all shares; a **cooldown** applies (often on the order of days—check the app).
* **Complete unbond** — After the cooldown, burn those shares for your pro‑rata slice of current pool value (which may be up or down if claims hit during the wait).

LPs earn when premiums **expire into the pool**; they lose when **claims** pay. There is **no guaranteed APY**.

## Insurance vs speculation vs escrow

|                              | **Freight escrow**                       | **Insurance**                           | **Speculation**                 |
| ---------------------------- | ---------------------------------------- | --------------------------------------- | ------------------------------- |
| **Purpose**                  | Pay the **courier** (and optional goods) | Cover **cargo value** if the haul fails | Side bet on **on-time vs late** |
| **Who puts money in**        | Shipper locks escrow                     | Insured pays premium; LPs fund pool     | Bettors stake For / Against     |
| **Who gets paid on success** | Courier (per job rules)                  | **LPs** earn the premium                | **For** bettors (if on-time)    |
| **Who gets paid on fail**    | Often shipper refund paths               | **Insured** claims cargo value          | **Against** bettors             |

## What works today

* Shared **insurance pool**: LP deposit / unbond, policy purchase with signed quote, cancel, expire on delivery, claim undelivered, claim destruction with oracle witness.
* App surfaces under **Insurance** (policies and underwrite) when your deployment has pool IDs configured.

## What’s still rough

* Pricing may be a simple **flat** premium (sometimes with a distance factor)—not a full risk model yet.
* Destruction claims depend on the **oracle** pipeline; undelivered claims are closer to pure on-chain job state.
* Treat every premium and LP deposit as money you can lose.

## Related

* **[Shipping & freight jobs](/shipping)** — the haul insurance attaches to
* **[Speculation pools](/speculation)** — optional side bets on the same job’s timing
* **[Glossary](/glossary)** — short definitions
* **[FAQ](/faq)** — common questions