The process of exporting goods to other countries can seem complex and difficult to navigate. There are a lot of different options to consider such as method of transport, type of insurance cover, what packaging is needed and more. We thought it would be a good idea to give you a brief overview of what insurance cover you might need when exporting, and how to ensure you are adequately protected.
When purchasing marine cargo cover, it’s likely to be beneficial to buy it on a ‘Cost, Insurance and Freight’ (CIF) basis, factoring in a percentage to cover your profit. This means that in the event of a claim, your costs, the price of your insurance and the money you’ve paid for freight will be covered, to help you replace the item and ship it to your buyer. You can purchase CIF on an ‘all-risks’ basis which will cover nearly everything that could happen to your goods however, make sure you check your policy for what isn’t covered. If you request to include cover for war risks, then you will be as well covered as can be hoped for.
If you use a Freight Forwarding service they will often have their own cover and may offer you extra insurance cover as part of their service. This can be helpful and freight forwarding services can greatly reduce the burden on you during the export process as they take care of a lot of the paperwork, however we would always advise that you get your own insurance policy as well so that you maintain control.
As well as insuring your goods in transit, you will also need to make sure your liabilities are appropriate for the goods you’re shipping. Discuss with your broker what specifics are required for your business.
When getting an insurance policy for your exporting business, you may see different countries listed as within or excluded from the policy’s ‘territorial limits’ and then separate reference to the ‘jurisdictions’ covered by the policy. That’s because cover will apply to your products being exported to a range of ‘territorial limits’ but may not cover legal action pursued within those countries.
In basic terms, the territorial limits are places where the incident may occur and still be covered by your policy, whereas the jurisdictions are the countries where claims must be pursued through the court system, in order to be covered.
So, hypothetically, you may be exporting to Canada and it may be covered as a territorial limit, but if the policy doesn’t cover Canada as a jurisdiction then you will only have legal costs covered for a claim if it is pursued in UK courts, where the jurisdiction is held.
If you take out marine cargo insurance with war risks, you would typically be covered for virtually any loss as long as the loss isn’t considered ‘inevitable’ or inherent in the nature of the goods. Examples of inherent risks are; evaporation, rust, oxidisation, discolouration, natural deterioration, vermin, inadequate packing, electrical/mechanical derangement.
It is important to check your policy wording to be sure but in the event of disaster, you should be able to recoup the cost of the loss and arrange for a new shipment to go to your customer.
Want to discuss this further or in need of a quote? Give us a call on 020 3883 7976 from Monday-Friday, 9am-5.30pm to speak with a member of our team.
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