International cargo insurance is a protection mechanism that can be contracted by the exporter or the importer. The main purpose of international cargo insurance is to protect buyer and seller against damage caused by accidents with the cargo.
Having insurance is always recommended. But when we talk about international cargo, which will spend a lot of time on board a ship or – a little less time – on a plane, international cargo insurance is even more essential. In addition to transit time, these goods may also undergo more handling for customs inspections and more loading and unloading processes.
How does international cargo insurance work?
Regardless of whether we are dealing with an export or an import, international cargo insurance is essential. It can be the responsibility of both the seller and the buyer.
What will determine who is responsible for contracting the insurance is the Incoterm negotiated and agreed between the two parties. Incoterms are globally agreed codes with standardized rules that govern all terms of responsibility of a cargo.
The Incoterms guide who is responsible for what in the entire process of transporting, insuring and delivering cargo negotiated between different countries. It is this code that establishes the exact moment of transfer of responsibility from the seller to the buyer for the goods, who must contract the transport and contract the insurance.
When the parties to the negotiation sign the deal on Incoterm FOB, for example, international cargo insurance is the responsibility of the buyer. In Incoterm DDP, the responsibility for international cargo insurance is the seller's. That's why it's extremely important to observe the Incoterm of the business, because it defines a number of important issues.
Advantages of international cargo insurance
Having international cargo insurance is synonymous with tranquility in transport. In the midst of a giant chain of international transport, theft, breakdowns and damage are constant events. And we can still mention the risk of accidents involving the means of transport, which can damage or destroy the cargo.
Having insurance is essential.
Maintaining the integrity of cargo is a concern of those who sell and those who buy.
In addition, according to Brazilian regulations, all cargo in circulation must be insured.
What is the deadline for receiving compensation?
After delivery of all documentation to the insurer, the indemnity period is 30 days. If other documents, in addition to the basic ones, are requested, the deadline will be suspended and its count will be restarted.
How much does international cargo insurance cost?
The value of international cargo insurance depends on a few factors: what is the merchandise, how is the packaging, if the products are perishable, what is the destination of delivery, period of coverage, types of coverage, frequency of occurrences and indemnity amounts. Each insurance policy is unique.
Who can hire?
The responsibility for contracting international cargo insurance is related to the type of negotiation and purchase and sale contract. This is all defined through Incoterm: this contract provides for who is responsible for contracting the insurance and from what time.
