WHEN AND WHY TO INSURE IN IMORT EXPORT TRADE
Before shipment of goods, exporter has to insure the goods. Date of coverage in insurance policy should always be earlier to 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 insurable 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) Importer’s insurance may be adequate.
(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.
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