| As with health, automobile, and life having good | | | | Incoterms. Incoterms are a internationally recognized |
| insurance coverage is important. The uncertainty | | | | set of trading terms which define exactly when |
| involved with international shipping also requires that | | | | costs and risks change from buyer to seller and |
| competent insurance coverage be contracted. Once | | | | vis-a-versa. In fact, the Incoterms detailed in the |
| "insurable interest" has been proven, meaning there is | | | | contract will have a direct impact on the cost of the |
| no question as to who the goods belong to and that | | | | policy since the more risks that are assigned to you, |
| financial loss will occur in a case where the goods | | | | the more insurance coverage you will need to recoup |
| were damaged or lost during transport, then the | | | | your losses in case of an event. |
| insurance policy is binding and valid. | | | | For example in Ex-Works, or EXW contracts, the |
| The responsibility of the international shipping | | | | seller of the merchandise is recognized as having |
| company in regards to the cargo they are | | | | delivered the goods once they are made available for |
| transporting varies according to international | | | | pick up at his factory. The responsibility for insuring |
| conventions. The true value of the goods is not | | | | the merchandise falls on the buyer from that point |
| always covered by the policy. The actual value that is | | | | on. With Delivered-Duty-Paid, or DDP contracts, the |
| protected will end up varying from country to | | | | exposure to risk remains on the seller until the |
| country. So it is prudent to thoroughly check what | | | | merchandise has arrived at the location designated by |
| the laws are in the countries you are moving from | | | | the buyer free from all import duties and regulations. |
| and to. | | | | Therefore, the seller will need to contract an |
| Contracts of Sale and Insurance | | | | insurance policy until that point. |
| The most common risks that occur in international | | | | Although, there is no obligation to buy an insurance |
| shipping are damage, delays (which include customs | | | | policy when executing a EXW and DDP contract. Only |
| and quarantines), and complete loss of the cargo. | | | | the Incoterms CIF, Cost Insurance Freight, and CIP, |
| How these risks are settled between the buyer and | | | | Cost Insurance Paid, require an insurance contract, |
| the seller of the insurance policy should be explicitly | | | | and in both cases the obligation falls on the seller. |
| detailed within the contract using what is called | | | | |