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International Cargo Transportation Insurance Guide

As a Chinese freight forwarder, Basenton provides freight from China to the world, including sea, air and rail transportation. We are well aware of the difficulties and dangers of transporting goods across borders. Therefore, we strongly recommend that you purchase international cargo insurance when shipping your goods. In this article, we will introduce in detail the types, protection and purchase process of international cargo transportation insurance.

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What is international cargo transportation insurance

International cargo insurance is a type of commercial insurance that will provide compensation if the cargo is lost, damaged or stolen while in transit from one location to another. Due to the unique nature of cargo transportation, including long distances, long transportation times, transit by multiple means of transportation, weather changes and many other risk factors, cargo transportation insurance is crucial when transporting goods internationally.

Cargo transportation insurance business scope

Whether it is natural disasters such as lightning, tsunamis, earthquakes, or accidents such as ship grounding, collision, and sinking, as well as external dangerous accidents such as fire, theft, damage, and malicious behavior of people on board, all are covered. Import and export cargo transportation insurance provided by Jike Logistics; transportation insurance geographical coverage covers the world; it provides full insurance for import and export businesses such as sea transportation, land transportation, air transportation, railway, express delivery, etc., with low deductibles.

Insurance Types for Internationally Shipped Products

The following insurance categories are typical classifications for international shipments of goods:

CIF insurance
In international trade, CIF insurance is a typical type of insurance. Cargo, insurance and freight are all covered by CIF insurance. In this type of insurance, the seller is responsible for the price of the insurance and the risks associated with transporting the product from the port of origin to the port of destination. In this case, the buyer does not need to purchase additional shipping insurance.

FOB insurance
In international trade, FOB insurance is a popular type of insurance that only covers the cost and insurance of the goods; the buyer is responsible for shipping costs. In this type of insurance, the seller only needs to purchase insurance for the item; the buyer must purchase additional shipping insurance.

All risks insurance
The most comprehensive cargo transportation insurance is called “all risk” and covers risks such as theft, natural disasters, war, and transportation-related dangers. Cargo owners can obtain adequate insurance protection through all risks.

Partial insurance
By selecting the insurance coverage for cargo loss risk, cargo owners can choose partial insurance for risks such as cargo loss, damage, and loss.

International Cargo Transportation Insurance Guide

About CIF value, insurance amount, insurance rate and insurance premium

Insurance amount = CIF price × (1 + insurance bonus rate)

Premium = insured amount × rate

Since the insurance amount is calculated based on the CIF (or CIP) price, when making an external quotation, or when the buyer makes a request to the seller, the CFR (or CPT) price needs to be changed to the CIF (CIP) price to insure CFR (CFR) on behalf of the seller. The CFR (or CPT) price under the contract should not be calculated directly based on the CFR price, but should be converted into the CIF (or CIP) price to calculate the amount and insurance premium before purchasing the corresponding insurance.

When importing by CIF: insurance amount = CIF price × (1 + insurance markup rate)

When importing according to CFR: Insurance amount = CFR price × 1.1/(1-(1+insurance markup rate) × r), where r is the insurance rate. Please find my city on the relevant website of “Insurance News” ( city center) and add the insurance rates for investment insurance objects.

When FOB is imported: Insurance amount = (FOB freight + sea freight) × 1.1/(1-(1+insurance bonus rate) × r).

Note: According to insurance company regulations, if war insurance and strike insurance are insured at the same time, the rates will not be cumulative and will still be calculated based on the rate of only one of the insurance types. That is, regardless of whether one person is insured or two persons are insured, the insurance rate is 0.8‰.

How to buy international cargo transportation insurance

Purchasing with a global freight forwarder
International freight forwarders usually provide cargo transportation insurance services to cargo owners. International freight forwarders can purchase cargo transportation insurance for cargo owners, saving the cargo owners the time-consuming work of handling it themselves. They can also provide professional advice and assistance.

Buy insurance directly
In order to interact and bargain directly with insurance companies on insurance terms and compensation requirements, cargo owners can also choose to purchase cargo transportation insurance directly from insurance companies. However, compared to entrusting an international freight forwarder to purchase insurance, the cargo owner must bear more risks and responsibilities on his own.

Cargo transportation insurance operation process

  • Entrust the client to fill in the insurance information form and provide the name of the insured, description of the goods, insurance amount, purpose, ship information, etc.
  • Pre-insurance According to the insurance company designated by the customer, the agent will issue an insurance pre-insurance information form for the customer to check and confirm the relevant information.
  • After the formal policy is generated and confirmed by the customer, the formal policy and freight insurance will take effect, and the agent will issue the original policy and mail it to the customer.
  • Expense settlement: The client and trustee settle the insurance premium according to the insurance amount stated in the insurance policy and the pre-agreed rate.
International Cargo Transportation Insurance Guide

International cargo transportation insurance considerations

Please check the goods carefully before purchasing insurance
Before purchasing international cargo transportation insurance, cargo owners should carefully check the quantity, quality, packaging and marking of the cargo to ensure that the cargo meets the transportation requirements to avoid difficulties in insurance claims due to problems with the cargo itself.

Choose a regular insurance company when purchasing insurance
When choosing an insurance company, cargo owners should choose those with good reputation and strong strength to ensure that they can receive timely compensation in the event of loss.

Please read the policy terms and conditions carefully when purchasing insurance
Cargo owners should carefully read the insurance terms before purchasing insurance to understand the insurance coverage, premium, deductible, compensation standards, etc. If you have any questions about the insurance terms, you should consult the insurance company or international freight forwarder in time.

In summary
International cargo transportation insurance is one of the important insurances that cargo owners must purchase during the transportation of goods. Purchasing insurance not only reduces the risks and obligations of the cargo owner during the transportation of goods, but also ensures the safety and integrity of the goods during transportation, giving them full protection and guarantee. In order to protect the safety and integrity of the goods during transportation and reduce the risk and liability of the cargo owner, we recommend that you purchase appropriate cargo transportation insurance.

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