What export cover do I need?
I’m about to start shipping my goods abroad, what ‘goods in transit’ cover do I need?
A. Barry Johnson of ACE writes:
As a new exporter you have to consider two main factors when choosing an insurance policy and provider. Firstly, how do you want to pay for cover? Most exporters of size have an annual cover, which is based on the value of their export (or import) sendings. An annual premium is assessed and charged, usually in one sum. Such policies are sold via brokers and are easy to administer. However, for the occasional exporter, or one with low-value sales these may not be cost-effective due to the fact that an insurer will charge a minimum premium, typically £500 to £1,000.
An insurance broker may be able to arrange a policy to cover single shipments only. One premium is collected at time of shipment and a policy issued for the duration of transit. This cover is rated higher than annual cover and again will be subjected to a minimum premium, typically £250
An alternative is to insure the shipment via the freight forwarder arranging the shipment. This has the advantage of a low minimum premium and is charged alongside the freight. However, many forwarders have ceased to offer this type of insurance since January 14 2005, following implementation of the Insurance Mediation Directive by the Financial Services Authority.
Secondly, you need to consider what duration of cover is required. Under CIF, CIP and DDP terms of sale, cover is required from the exporter’s warehouse to a named place, usually the customer’s premises.
An annual policy will usually offer warehouse-to-warehouse including any period in temporary storage during transit. However, whatever the type of policy, it should offer cover equivalent to International Institute Clause A and be underwritten by a financially secure company.