MARINE CARGO INSURANCE
Chapter 4
Introduction:
It is customary to insure goods to be carried from one country to another
against loss or damage
... [Show More] occurring during their transit.
Not only may the liability of the carrier for the loss of or damage to the goods
be limited, but many losses occur for which the carrier or any other party
cannot be held liable
• For this reason the owner of goods to be carried by sea will be
prepared to pay a premium in exchange for the security provided
by an insurance contract
Depending on the mode of carriage involved, marine cargo, air cargo or
goods in transit insurance is effected.
The only standard-form and generally used contract for the
international sale of goods which imposes a duty on one of the parties
to insure the goods sold and to be conveyed is the CIF contract,
although its variants, the CFR and CIP contract, may also impose an
insurance obligation
• The CIF seller not only has to arrange for the carriage of the
goods and their delivery to the buyer, but also for their insurance
• The seller has to conclude a valid and effective contract of insurance
on the goods, with a reputable insurer, on terms current in the trade,
and covering the goods for their whole transit and for their reasonable
value
• Under the CIF sale the seller has to effect this insurance at its
own expense and that cost is then included in the price of the
goods
Apart from the CIF contract and its variants, though, no other standard
form contract for the international sale of goods imposes any insurance
obligation on either the seller or the buyer
• The goods sold may still be insured, but that will be done
voluntarily and not in compliance with any provision in the
contract of sale
• Much will depend on which of the parties bears the risk of the
goods during their conveyance
o With FOB, the buyer carries the risk during their conveyance
and may wish to take out insurance
o With DES where the seller has to deliver the goods from a ship
at the port of destination and where they are conveyed at the
seller’s risk, the seller may wish to take out insurance [Show Less]