Cargo insurance during transportation from China
Cargo insurance is an important aspect when exporting goods from China. The question of who is responsible — the carrier or the buyer — depends on the terms of the contract and the chosen delivery terms.
Why is it important to insure cargo from China?
- Risk of damage or loss — there is always a risk in international transportation.
- Significant cost of goods — insurance helps to minimize financial losses.
- Requirements of customs authorities and contracts — sometimes insurance is mandatory.
Allocation of responsibility: who should insure?
Incoterms – are standard trading terms that define the obligations of the parties for delivery and insurance.
In most cases, when using FOB (Free On Board) or CIF (Cost, Insurance, Freight) terms, the responsibility for insurance and its payment is distributed as follows:
- FOB: The buyer assumes responsibility for the insurance from the moment of loading.
- CIF: the seller is obliged to insure the cargo and include the cost of insurance in the price
The buyer’s liability arises if the terms of the contract stipulate that the buyer assumes cargo insurance or if the cargo is not insured by default. In this case, the buyer must independently provide insurance coverage in order to minimize the risks of financial losses.
The carrier’s liability is usually regulated by international conventions such as the Convention on the Contract for the International Carriage of Goods by Sea (Hamburg Convention) or the Warsaw Convention for Air Transport. In these cases, the carrier is responsible for the loss or damage to the cargo, unless he proves that the causes were circumstances for which he is not responsible.
A practical recommendation is to always clarify the terms of the contract and choose the appropriate type of insurance. In most cases, to protect their interests, buyers prefer to insure the cargo themselves or through intermediaries in order to avoid financial losses in case of damage or loss of goods.
As a result, the liability for cargo insurance from China depends on the terms of the transaction and the chosen delivery terms. It is important to anticipate all risks in advance and arrange appropriate insurance. If you find it difficult to make a choice or do not know what you need to do, our staff will be happy to advise you on all issues and help you arrange the service.