Types of Insurance Documents.
Friday, January 06, 2017     Category : Export

 

The information provided here is part of Export import business Course online


How many types of Insurance documents are there? When to insure export import cargo? What are the reasons to insure import export cargo? How to insure export cargo?

 

 

There are three types of insurance documents:

Types of Insurance Documents copy(a) Insurance Policy: The insurance policy sets out all the terms and conditions of the contract between the insurer and insured.

(b) Certificate of Insurance: It is an evidence of insurance but does not set out the terms and conditions of insurance. It is also known as ‘Cover Note’.

(c) Insurance Broker’s Note: It indicates insurance has been made pending issuance of policy or certificate. However, it is not considered to be evidence of contract of insurance.

WHEN AND WHY TO INSURE

Before shipment of goods, exporter has to insure to goods. Date of coverage in insurance policy should always be earlier o the date of shipment of goods, then only insurance covers totally. Banks insist the date of insurance to be earlier to the date of shipment of goods, at the time of negotiation of documents. Any person who has ‘insurable interest’ in the goods only can insure. Exporter is said to have interest in the safe arrival of goods. Equally, its loss, damage or detention will prejudice exporter. When the cargo is sent on CIF basis, exporter invariably takes marine insurance, as it is his duty to cover the risk. Till ownership in goods is transferred, in his own interest, exporter has to take the coverage. There is no obligation to the exporter to take insurance, after transfer of ownership. Still, it will be wise for the exporter to take adequate insurance policy till the goods reach the end of voyage. Here are the reasons:

 

 

(A) Importers insurance may be inadequate.

(B) In case of insolvency of the importer, claim amount may go to the benefit of the importers creditors and exporter would not receive the payment.

(C) Foreign exchange problems could complicate the remittance of insurance claim amount to the exporter.

HOW TO INSURE

There are two ways to insure. First, take insurance policy as and when shipment is made. Those exporters, who make shipment now and then, do this. The second and common mode is to take open policy. Under open policy, the exporter does not have to take insurance contract , every time, as and when shipment is made. He pays insurance premium, in advance, one year. The insurance company undertakes to indemnify the insured up to the amount of the policy. Shipment of goods to the extent of the policy amount is covered. A brief declaration by the exporter about the basic facts of shipment would do. A great volume in exports business prefers this method for the following obvious advantages:

(a) Exporter enjoys automatic and continuous protection. Even if there is delay in declaration or exporter has overlooked to submit declaration, the shipment is covered provided the delay and oversight are not intentional.

(b) Trouble of taking insurance policy, each time, is avoided.

(c) Exporter will have prior knowledge of the premium amount and so exporter can quote competitive rate for this exports.

(d) Better relationship between the exporter and insurance company will be developed, so better advice would be available. As the insurance company understands the requirements in a better way, the insurance company can develop tailor-made protection to the exporter.

 

The above information is a part of Online international business guide course


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Comments

 
Yatin Sawant Says :
Friday, October 25, 2013
Thanks! I have lot of information from this site, which I don't know. I am very new Export Field. Will use major information in future.
kamlesh Says :
Sunday, November 10, 2013
my party is asking for insurance in the name of importer. I.E. insured should be the buyer. Is that possible as the policy is transferable and payable in importers country.
Surendran Kollerath Says :
Saturday, March 08, 2014
Hi Kamlesh, As per my knowledge, it is possible depends up on terms of delivery of goods.
Pankaj Kumawat Says :
Sunday, July 27, 2014
Hole information regarding insurance and other is very importent for me as a new exporter keep sending this type of articals.
prashant kulkarni Says :
Wednesday, August 20, 2014
Thanks for all this information. its very important to me for my job profile.
Dhiraj Says :
Friday, November 21, 2014
Dear Expert, Thanks very much great information on insurance. My question is when the importer has to file Bill of Entry how to calculate the insurance amount under term CIF, when there is a open global marine policy in place. Invariably each shipment cost will vary so with open global marine policy in place how to calculate the insurance. Secondly, what document of insurance to attach before submitting to customs, should it be open global marine policy or any other document also will customs check the amount on the insurance policy when doing the assessment of duty under CIF term where will they get this information from. Can you kindly help to expedite the response, thanks Best Regards Dhiraj
Admin Says :
Tuesday, November 25, 2014
Please read : my article baout 'HOW TO CALCULATE ASSESSABLE VALUE'
Admin Says :
Tuesday, November 25, 2014
Please read : my article baout 'HOW TO CALCULATE ASSESSABLE VALUE'
Nasir Says :
Tuesday, February 10, 2015
who will bear insurance if terms is FOB,CFR,FAS?
syamala Says :
Tuesday, December 15, 2015
Excellent article Useful for beginners.
 

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