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Secrets of International Trade

Insurance for Exporters


Part 1

Part 2




To exporter's advantage, to be responsible for insurance - it cannot prevent accidental losses but can prevent financial losses.

When goods have to be shipped to a foreign country, there are always the risk that they may be damaged,
destroyed, or stolen and may vary, according to the country of destination, the route and method of shipment.

To be protected from financial loss as a result of this risk, either the firm that sells the goods or the firm that buys them, arrange for insurance.

It is to the exporter's advantage to be responsible for placing the insurance on the shipment.

Such insurance cannot prevent accidental losses but can provide reimbursement for financial loss should the exporter's shipment somehow fail to arrive or arrive intact.




Marine Insurance Defined

For shipments to countries overseas, the type of insurance that are arranged is known variously as marine insurance.

It is also sometimes called ocean marine insurance to distinguish it from "inland marine insurance".

Basically, marine insurance is a contract between one party (usually the exporter) and another party (an insurance company).

In return for the payment of a fee (the insurance premium) by the insured (exporter), the insurance company agrees to reimburse the insured in full or in part for any financial loss suffered from various specified risks.


The Need for Marine Insurance

The cost of marine insurance is quite small compared with the cost of the goods shipped and the freight charges involved.

Therefore, the benefit of the marine insurance, in terms of financial reimbursement if disaster strikes, is usually well worth the cost.

Not much help can be expected from the shipping company for the exporter, if the goods are damaged or lost, even while in its care.

Various statutes, plus the printed clauses in ocean bills of lading - the contract between the shipper and the carrier, limit the liability of the shipping company for such losses.



In order to recover losses from the carrier, the exporter must be able to prove want of due diligence, in other words, the shipping company was negligent.

It is difficult for an exporter to prove at what point damage or loss occurred. However, a marine insurance policy is often arranged on a warehouse-to-warehouse basis.

In other words, the risk of financial loss from damage or loss occurring during inland transit in the exporting country and abroad as well as during ocean shipment.
Such a policy relieves the exporter of the burden of proving when or where any loss actually occurred.

If, someone else's goods are damaged or destroyed during the voyage and in order to save the ship, then the exporter may be called upon to pay part of the cost. This is known as general average.

Here, the point that is being made is that the exporter's goods may be held in the foreign port until such a claim is settled.  

By having marine insurance, including general average coverage, the exporter avoids the risk of such a delay.

Part 1/2 < This Page
Insurance for Exporters and Marine Insurance Defined

Part 2/2
Responsibility for Insurance & Advantages of Arranging Insurance

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