Cargo insurance covers loss of or damage to goods while in transit by land, sea and air.
Insurance for exports
Many exporters arrange insurance and freight but pass on the cost to the buyer. Where this is the case, your agreed terms are likely to be Cost Insurance Freight to a named destination port - in other words you are charging your customer for the cost of goods as well as insurance and freight to the port or airport of their choice.
Foreign buyers often insist on this service, because insurance rates in the UK are relatively cheap.
The benefits:
you have greater control over the risk as the UK insurance industry is highly regulated
you could win business from competitors who do not offer insurance
Remember that if you leave your buyer to arrange insurance, they will do so before paying for the goods. You may not be paid in full if there's a problem and they're not adequately insured. In addition, if the goods are rejected when they get to the port of entry or to the customer's premises, they won't be covered by insurance, and the responsibility will be back with you.
Insurance for imports
You will minimise your risks if you arrange insurance of goods that you import. You'll know how much you are paying and what's included. Your supplier might not be able to give you full details of insurance cover they arrange, or if they do, the information may not be entirely reliable.
The following types of cover are available:
open cover - for all journeys
specific (voyage) policy - for one-off shipments
seller's interest contingency - back-up for physical loss or damage where you have not arranged the cargo insurance
Where to get cargo insurance
A specialist cargo insurance broker will find you a good price, ensure the cover suits your needs and help you with claims. Search for a cargo insurance broker on the British Insurance Brokers Association (BIBA) website (link is external).
Some banks offer cargo insurance as part of a finance package. You can also ask your freight forwarder for a quote, so as to compare their costs and service with those offered by specialist brokers.
You need to be aware that carriers, freight forwarders or third-party service suppliers will not automatically insure goods that are under their care or control. They can only do so if instructed in writing.
Insurance intermediaries must be registered with the Financial Services Authority (FSA). This applies to freight forwarders and others who provide insurance of goods in transit.
