Marine insurance for exporters: Why and what are the types?

1. Marine insurance for exporters: Why and what are the types? Risks are a part and parcel of any business transaction, regardless of the geographical footprint. In international trade as well the risks are varied and numerous. The biggest risk exporters face though is the risk of damage or loss during transportation. Despite knowing the perils of the export and import business, exporters are reluctant to invest in marine cargo insurance. Especially when transportation providers are ready to pay claims as a cost of doing business and customer goodwill. If exporters do opt for marine/cargo insurance, it is because insurance is mandatory in a trade term. This is dependent on the standard sale terms agreed upon by the exporter and buyer. Why does your export business need cargo insurance? •You are at the risk of shutting up shop: Here today, gone tomorrow is a very phrase that comes to mind. It is crucial to protect businesses from any risk. If you are exporter who has received only a decided upon sum at the time of shipment or an importer who has paid in full to receive the goods, you are at the risk of suffering a financial loss if your goods are lost or damaged while in transit. •General average – General average an internationally accepted principle dictates that all parties involved will need to share the loss equally when certain types of accidents occur to the vessel that is carrying your goods. Which means you will have to post a bond or deposit cash to gain access to your goods. •Contract demands – Your sales contracts may require you to provide ocean insurance on demand of the buyer. Specifically if the sales term specified is either CIP or CIF. Not adhering to the sales contract will only mean more problems for you, legal and otherwise. •Limited carrier liability – Carriers legally can be held responsible for losses that occur in transit. A few examples are acts of god, general average, etc.) Even if the carriers are liable, it is decided by the contract in the bill of lading or by law. The money recovered, most often, will not compensate for even half of the expense you incurred. •Intermediaries are not responsible – Even if intermediaries such as clearing and forwarding agents, carrier ports and customs authorities handle your goods at various stages they are not legally obligated to compensate. It is 100 per package at present for goods transported by sea. Airlines on the other hand only have to shell out $16 per kg. So now that we have established that opting for marine insurance is a must, let us learn about the types of Marine insuranceavailable. •Open policy – Open policy otherwise also known as blanket policy or floating policy will be offered by the insurance provider under contract. This policy will cover all shipments made by the exporter over a period of time (one year usually) or for a specific value that requires renewal once the insured amount is exhausted. This policy is beneficial for big-time exporters only. If an exporter opts for open policy, he or she is required to regularly declare every shipment made to

2. any location including types of goods and means of conveyance including multimodal transport and transshipment to decide on the insurance premiums and invoice accordingly. The insurance provider holds the right to cancel the insurance policy if they find that the exporter did not declare that the goods reached the buyer to avoid paying the insurance. Exporters can avail the proof of insurance coverage anywhere between 2-5 days and more. •Specific policy – As the name implies, this type of marine insurance policy for exporters covers only a particular shipment or one shipment only. The cover comes into force from the point of departure and ceases on arrival at the destination country. A reason why this policy is also known as voyage policy. This policy is widely used in various countries across the world by individuals and small businesses. Proof of insurance coverage under this policy can be availed within a few minutes by just filling in and signing the blank insurance certificates supplied by the insurer.

3. Insurance companies usually take into account the institute cargo clauses which contains the conditions of insurance in detail for cargo in transit. These clauses will make it clear what items in the cargo will be covered in case of damage or loss. These clauses will dictate the premium you will have pay. Institute cargo clause A – This is the widest cover available. You will have to pay the highest premium as you will be offered total coverage/protection from risk. Institute cargo clause B - This clause is slightly more restrictive than clause A. You will have to pay a moderate premium as only the most valuable items in your cargo will be covered or only partially covered. Institute cargo clause C – The most restrictive coverage available. The premium, as well as, the cargo coverage will be low in this case. For more details click below: http://www.eximdesk.com/buzz/marine-insurance-for-exporters-why-and-what-are-the-types? channel=Organic_Doc