How to Buy Shipping Insurance When Shipping From China

Mar 15, 2021 Chapter 1. Sourcing

There are shipping accidents every year when import from China, and this year there are particularly many. Foreign trader, do not forget to buy Insurance when shipping from China!

A major maritime accident occurred recently: the Panamanian cargo ship MSC Zoe, one of the world’s largest cargo ships, encountered bad weather in the North Sea on the evening of January 1. At least 270 containers fell into the sea.

So at this time, do you still dare to ship from China without Insurance? After buying Insurance, how can I claim for damage? Today we will talk about some things about foreign trade shipping insurance.

 

 

 

What are the types of insurances commonly used in foreign trade?

 

 Marine Insurance

Maritime Insurance refers to the Insurance that the insurer takes the goods transported by sea as the subject of Insurance and is liable for compensation for economic losses caused by natural disasters and accidents during the goods’ transportation. The principal risks of China’s marine cargo transportation insurance are as follows :

 

Ping An Insurance (free from the particular average), referred to as FPA, is called “not including individual average insurance” internationally. The insurer shall be responsible for all losses of goods caused by natural disasters and accidents, part of the losses of goods caused by disasters and accidents of transportation, and compensation for related expenses.

 

Including Individual Marine Damage Insurance” in the world. Short for WPA or WA. In addition to Ping An Insurance’s responsibilities, the insurer is also liable for compensation for partial losses of goods caused by natural disasters.

 

All risks. In addition to Ping An Insurance and WPA’s insurance liability, the insurer also undertakes all kinds of external reasons, such as shortage, shortage, leakage, bumping, hook damage, rain, dampness, mold, odor, etc. Liability for damages or partial losses. Besides, there are additional risks, including war risk and stroke risk.

 

 

 

Under which trade terms should I buy Insurance?

Here is an explanation of the more commonly used CIF clauses:

CIF=Cost, Insurance, and Freight.

Analysis: The seller handles freight insurance for the buyer and pays the insurance premium. If the buyer and seller disagree on specific Insurance, the seller only needs to obtain the minimum insurance coverage. 

 

CIP=Carriage and Insurance Paid to

The seller delivers the goods to its designated carrier. During the period, the seller must pay the freight for transporting the goods to the destination and take out Insurance against the buyer’s risk of loss or damage to the goods in transit. That is, the buyer bears all risks and additional costs after the seller delivers.

 

 

 

How to calculate the marine insurance premium?

 

Insurance premium=insurance amount*insurance rate

 

Insurance amount = CIF invoice price (CIF price) * Invoice bonus rate (usually a 10% bonus) = CIF price * 110%

 

1. In the absence of special regulations, it is generally 110% of the CIF price, and special does not exceed 120% of the CIF price.

2. According to international practice, there are three types of maritime insurance clauses: ICC (A/B/C), which are British Insurance Association clauses; Chinese companies generally use CIC clauses, which are China’s own terms.

3. The factors of fixed insurance rates are as follows: cargo type, voyage, packaging, terms used, insurance amount, policy model, and liability limit; each item will affect the rate.

4. Generally, there are three types of insurance modes: separate orders, that is, only a single shipment of goods insured; monthly orders, according to the agreed insurance rate, monthly insurance declaration, no insurance premiums if no declaration; annual orders, based on the year At the settlement time, about 75% of the estimated premium is paid in advance, with more non-refundable and less replenishment. For the above three methods, the rates will be reduced sequentially.

 

 

 

What kind of marine Insurance should I buy?

In marine Insurance, it is the easiest to insure “all risks”. Its coverage covers all or part of the loss of Ping An Insurance, WPA, and the insured goods in transit due to external reasons. External reasons only refer to theft, failure to pick up the goods, freshwater rain, short quantity, mixing, contamination, leakage, bumps, odor, moisture, and heat, hook damage, packaging cracks, rust damage.

It should be noted that strike insurance and war risk are not included in all risks, so if it is shipped to war-torn areas or countries that love strikes (such as India, South America), you can purchase additional Insurance.

 

Export cargo insurance premium = CIF price × 110% × insurance premium rate. 

 

The rate of all risks for international shipping is generally 0.08% to 0.3% thousandths. For most cargo owners, it may be several hundred yuan($50-$100). Don’t take big risks in order to save this little money.

 

 

 

After the cargo is damaged, how to deal with the claim

1. According to the principle that cargo damage occurs at the destination port, it needs to be settled and claimed at the receiving port.

When the cargo is found to be damaged, first contact the local shipping company or agent as soon as possible, and inform them of the cargo damage information as soon as possible. The shipping company must make a written confirmation of the cargo damage, which is very important evidence for future claims to the shipping company and the insurance company.

 

2. If damage to the cargo is found, the insured will immediately notify the insurance company to inspect the damage, and then the insurance company will fill in the “loss order” based on the damage. (1) For goods that are obviously damaged, keep the scene as much as possible and obtain a certificate from the carrier or the port tally department. (2) The consignee should hire a notary agency to inspect and issue inspection prove for goods that are not obviously damaged.

 

3. Customers are requested not to pick up the goods temporarily, the shipping company will arrange container inspection. Do not consign the container back to the factory without notifying the shipping company and terminal, and return the container to the yard. This will make future investigations difficult and increase unnecessary costs.

 

 

 

Documents required for claim:

(1) Original bill of lading

The function of the receipt of the bill’s goods indicates the appearance and quantity of the goods received by the carrier. The fact that the goods cannot be submitted according to it when the goods are delivered indicates cargo damage difference.

 

(2) Discharging documents such as tally slips at the port of unloading or cargo overflow and short orders, damaged orders.

These documents are important documents to prove that cargo damage or cargo difference occurred in the course of ship transportation. Suppose these unloading documents indicate cargo damage or cargo difference and are signed by the ship’s chief mate, but the same notation is not made on the receipt. In that case, it proves that the cargo damage or cargo difference occurred in transit. .

 

(3) Re-ordering

When the ship has any doubts about the number or quantity of unloaded cargo, it is generally required to review or re-tally the cargo, and make a “re-check” or “re-arrangement” note on the document proving the excess and shortness of the cargo. In this case, when making a claim, you must also provide the proof document of the review result or the tally’s reconciliation form. And use this as a basis to prove whether there is a shortage of goods.

 

(4) Cargo damage inspection report

When the damage to the goods is not obvious or easy to distinguish, or the degree of damage to the goods cannot be determined, an inspector with notarization qualification can be applied to inspect the goods. In this case, the “inspection certificate for damage & shortage” (inspection certificate for damage & shortage) issued by the inspector after the inspection must be provided when making a claim.

 

(5) Commercial invoice

(6) Packing list

(7) Repair order

It is used to indicate the cost of repairing damaged equipment, machinery and other goods.

(8) Relevant documents prove the cause of the claim and the basis for calculating the number of claims.

 

In addition, if there are other documents that can prove the cause of the freight accident, the extent of the loss, the amount of the claim, the location of the liability, etc., it should be provided. The claim documents must be complete, accurate, consistent and consistent in content, and must not contradict themselves.

 

 

 

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