The importance of Marine Insurance
3 July 2013
Fortunately, most exported goods make a successful journey overseas and arrive at their final destination safely.
Unfortunately, there are occasions when things do not go entirely to plan and this could result in goods arriving damaged or worse still, not arriving at all, having been lost or stolen en route. It is at this stage we often here the aforementioned cry of, “We thought you’d insured them!” from a dismayed exporter who has just found out his customer does not intend to pay for the goods.
Marine Insurance can be a very complex subject but it is one that is ignored at peril. Every exporter should have at least a basic understanding of the principals involved and thereby be in a position to make an informed decision whether or not to undertake insurance responsibilities (liabilities) themselves.
In simple terms, goods should only be insured for transit by one of the following three parties.
The seller of the goods (Exporter)
The buyer of the goods (Importer)
The Forwarding Agent
Only one of the above should undertake to insure the goods for transit and the Forwarding Agent will never insure them automatically; he must be given specific instructions to do so.
Whether the seller or buyer is responsible for insurance is a matter to be decided between themselves at the outset of the contract and it should be incorporated within the ‘Terms of Sale’.
All major Banks, Forwarding Agents, Chambers of Commerce etc. strongly recommend the use of INCOTERMS for this purpose the latest edition of which is, INCOTERMS 2010.
If you do not know who is responsible for insuring the goods in transit, it could be they are travelling totally uninsured or at best with only Limited Liability cover.
Hopefully all your export dealings will be problem free but if something does go wrong, don’t be the one who says, “We thought you’d insured them”.
Article kindly supplied by Future Forwarding Company Ltd.
