Trade terms specify which party is responsible for insurance. For example, FOB stipulates that the buyer is responsible for insurance, and CIF stipulates that the seller is responsible for insurance. The party responsible for insurance must follow the provisions of the contract. If there are no specific provisions in the contract, insurance shall be handled according to relevant practices; otherwise, the damage to the goods caused by the risks encountered during the transportation of the goods shall be borne by the party responsible for insurance.
Choice of insurance type
Different insurance types mean that the results of compensation from the insurance company after the goods are damaged during transportation are different. If the insurance company chooses an insurance type with a large risk coverage, the insured will have to pay more insurance premiums; otherwise, the insurance premium paid will be less. Therefore, the seller or the buyer has different choices or requirements for insurance types. Therefore, the choice of insurance type is best to be clearly stipulated in the contract to avoid disputes in the future.
The principle of choosing insurance types is: to ensure the transportation risks of goods and reduce the expenditure of insurance costs. Therefore, the insurance type should be selected according to the characteristics of the goods and their packaging, the means and methods of transportation, the transportation area and port, etc. For example, grain products are easily affected by moisture. After long-distance transportation, moisture may evaporate, which can easily lead to shortages of such products. Such products will also absorb moisture from the air. Excessive absorption or immersion in seawater or fresh water can easily cause mildew. When choosing insurance for such products, short-quantity insurance and moisture and heat insurance are generally added on the basis of water damage insurance. For another example, liquid chemical products, if transported in bulk, are prone to shortages and contamination, so they should be insured for short-quantity insurance and contamination insurance; if they are packaged in iron barrels, iron cans, plastic barrels, etc., they are prone to leakage, so leakage insurance can be added on the basis of FPA.