Is Buyer responsible for Insurance under CFR terms of delivery?
If an exporter and importer agreed the contract of carriage as CFR, the exporter takes care of the cost involved to reach the goods at the named destination port of importer. The on carriage from the named destination port to final destination of importer is taken care by importer. However, under CFR terms (Inco Terms 2020), the risk is transferred from exporter to importer immediately up on the goods gone onboard the first main carrier. Here under CFR terms of delivery, whose responsibility to arrange insurance – whether the importer or the exporter? According to incterms rules, the exporter or importer is not liable for arranging insurance under CFR terms. Because, Inco Terms rules does not talk about the insurance under CFR terms of delivery on movement of goods. As I have written in other posts, if the letter ‘I’ includes in three letter Incoterms, the seller arranges Insurance for movement of goods. So Inco terms 2020 states about Insurance only under CIP terms and CIF terms. So, neither the exporter nor the importer is liable to arrange insurance under CFR terms. Insurance on movement of goods under CFR may be arranged either exporter or importer as per the contract of carriage in sale contract mutually agreed and written.
In short, under CFR terms of delivery under Incoterms 2020, the Seller or the Buyer is not responsible for arranging insurance.
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