Whose Responsibility is it anyway?
It is important to be clear on this point. The accepted international guidelines are provided partly by Incoterms, the set of terms of trade for commercial transactions that are laid down by the International Chamber of Commerce (ICC). For a full explanation of Incoterms, see our article here.
Incoterms determine the split of risk in each case and clarify when ‘delivery’ (defined as the point when risk and liability pass from seller to buyer) takes place. But they only codify terms of sale, not terms of carriage.
Furthermore, only two of the 11 Incoterms actually spell out who is specifically liable for providing insurance – these are CIF and CIP. Both of these (very similar) terms place the liability with the seller. In other cases the contract of sale needs to spell out who is responsible for insurance; for example under EXW (ex works) it is not spelled out – by implication the onus lies with the buyer, as everything else is paid for by him and not the seller – but check the contract and act accordingly.
Finally, if you are liable under CIF or CIP and you are opting for a Class A or B policy, Lloyds state that you must cover 110% of the cargo’s value – this acts as a reminder that policies by no means cover every penny of your goods’ worth. There is a ‘general average’ concept whereby whoever loses out in a mixed consignment (e.g. a container vessel) is compensated collectively by the other cargo owners. There is also likely to be an excess figure in your policy.