International cargo insurance, or insurance for goods in international trade, is one of the key elements and important operations of import and export activities. Learn more about this topic with insights from Truong Thanh Logistics.
1. International Cargo Insurance Services
International cargo insurance is a crucial component of import and export operations.
So, what is international cargo insurance? What are the steps and required documents for the claim process when an insured event occurs?
To find out more, please read the detailed advice from Truong Thanh Logistics below.
2. What Is International Cargo Insurance?
What is insurance? Insurance is a financial commitment between an insurer and an insured party.
The insurance policy is valid for a specific period, during which the insured is responsible for paying a sum of money (the premium) to the insurer under the agreed-upon conditions. In turn, the insurer is responsible for compensating the insured for losses to the insured object caused by risks specified in the agreement (the insured event).
What is cargo insurance? Cargo insurance is a compensation agreement between an insurer and an insured party.
When a cargo insurance agreement is reached, the insurer will compensate the insured for loss or damage to the goods during transit, provided that the loss or damage is caused by risks specified in the insurance contract. To be covered, the insured must pay a fee known as the insurance premium.
Cargo insurance helps protect against and minimize damage caused by risks during the transportation of goods, such as damage, fire, floods, storms, collisions, and other unexpected events.
Cargo insurance must be purchased before any risks occur, typically before the goods are shipped.
What is international cargo insurance? International cargo insurance, or insurance for goods in international trade, is a type of insurance where the insurance provider commits to compensating for losses to the insured goods during international transport.
These losses are typically caused by one or more agreed-upon and confirmed risks. The insured party is obligated to pay a premium to the insurer.
The insured object of international cargo insurance is a tangible product. The modes of transport covered by international cargo insurance include:
- Railway transport
- Road transport
- Sea transport
- Air transport
3. What Are the Conditions for International Cargo Insurance?
Cargo insurance comes in various types, depending on the condition of the goods, their destination, and the mode of transport.
The basic conditions for international cargo insurance are:
Standard Conditions:
- Institute Cargo Clauses (ICC) A
- Institute Cargo Clauses (ICC) B
- Institute Cargo Clauses (ICC) C
Special Conditions:
- War Risks
- Strikes, Riots, and Civil Commotions
4. The Role of International Cargo Insurance
International cargo insurance is an indispensable part of import and export activities, playing a significant role in several ways:
A Companion for Your Cargo: International goods must travel a long way from origin to destination. The owner cannot always accompany the goods to supervise and ensure their safety. Therefore, a “companion” is needed for the crates and containers throughout the journey to share the burden and risk of unforeseen incidents.
Sharing the Burden of Risk: The risk of loss or damage to goods due to natural disasters or accidents—such as stranding, collision, sinking, fire, theft, piracy, storms, cyclones, and tsunamis—is unpredictable. Therefore, to share the burden and limit damage when risks occur, goods should be insured throughout their journey.
Peace of Mind for the Shipper: Transport carriers are only responsible for protecting goods within a limited scope. To minimize all potential damage to goods in unexpected situations, the cargo owner should have cargo insurance.
A Global Trend: Cargo insurance has a long history. Participating in cargo insurance has also become an unwritten rule in foreign trade activities worldwide.
5. What Is the Claim Process for Sea Freight Loss?
Some Basic Concepts:
- The policyholder is the seller of the goods.
- The beneficiary is the buyer at the port of destination.
- The relevant Incoterms for sea transport insurance are CIP and CIF.
- The insurance conditions are ICC A, B, or C.
- The insurance premium is approximately 0.06% to 0.075% of the insured value.
- The insured value can be the FOB or CIF price.
- All regulations related to liability and exemption clauses are specified in the Institute Cargo Clauses (ICC) 2009.
The Claim Process:
- The insured party notifies the policyholder of the cargo loss.
- The policyholder sends a notice of loss to the insurer.
- The insurer proceeds with a survey and determines the extent of the loss if necessary. The survey is conducted immediately after the consignee reports the cargo loss. The survey is carried out independently but is supervised by the insured party.
- The insured party signs a Power of Attorney (POA) for the policyholder to initiate the claim procedures.
- The policyholder (the authorized person) submits the required documents to claim for the cargo insurance loss. These documents include:
- Power of Attorney from the insured to the policyholder.
- Notice of cargo insurance loss (using the insurer’s form).
- Cargo insurance claim form (using the insurer’s form), accompanied by a detailed list of the lost or damaged items.
- The invoice and packing list for the shipment with the damaged items.
- The ocean Bill of Lading for the shipment with the damaged items.
After the cargo has been surveyed and the amount to be compensated has been determined, the insurance company sends a notice of compensation and release of liability to the policyholder. This notice specifies the amount of compensation. The insurance company also sends other accompanying documents, such as:
- VAT invoice
- Debit note
- Endorsement note
- Declaration for export
For any business engaged in import and export, cargo insurance is a top priority. At Truong Thanh Logistics, we provide cargo insurance for both export and import shipments, ensuring all of your business requirements are met.
For more detailed information on international cargo insurance, please contact Truong Thanh Logistics at the following address:
Trường Thành Logistics – Professional & Dedicated
Hotline: +84 915 36 38 39
Head Office: 5th Floor, Tower A, Song Da Building, Pham Hung Street, Tu Liem Ward, Hanoi, Vietnam.
Email: sale@truongthanhjsc.com
info@truongthanhlogistics.com
Website: https://truongthanhlogistics.com
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Address: Room C103, TTC Building, 630 Le Thanh Tong Street, Hai An Ward, Hai Phong City, Vietnam.
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