The Indian Insurer, insuring the importer, can insure the cargo from the supplier's plant or post-loading onto the vessel, till the cargo is delivered to the importers warehouse in India, whereas here, the exporter can be protected by attaching Seller’s Contingency Clause, which will cover the cargo during overseas journey as an unpaid vendor.
Where Incoterms are CIF Indian Port i.e. the supplier/exporter has taken insurance till the discharge port, the insurance will come to an end once the cargo is discharged since it is also the destination. However, there is a major GAP as the cargo is lying at the port for customs clearance and the supplier’s cover has ended. The Indian Insurer may grant the cover to the cargo once a satisfactory pre-dispatch inspection is done by a third-party surveyor and that too once the cargo is moving from port location to the importer's warehouse/plant. In case a pre-dispatch inspection is not carried out or is not possible (which happens in most of the cases), the cover drops down to Road Risks only, which means any loss or damage to the cargo is covered only if there is accident to the carriage vehicle. Such kind of risks are known at Tail-End Risks where Indian insurers are asked to cover the final leg of transit.
In this case, the supplier’s insurer will cover the cargo till the destination. Cargo moving into Customs Bond which used to be covered under Marine Insurance till 31.3.2019, can now be covered by a Fire & Burglary policy.
Buyer's Interest Cover is an important cover which supports the importer in case the supplier has failed to buy an insurance or has bought an inferior cover. Customs Duty Cover is also an important part which needs to be added to the sum insured.
Where Incoterms are CIF discharge port, the Indian Insurer will also cover the overseas leg and the cover will terminate at the discharge port; here the insurer can extend the cover till such time the importer takes delivery. After that, the importer will have to insure the cargo till his warehouse. Where Incoterms are CIP destination, the coverage will be on a warehouse-to-warehouse basis.
In case of Merchant Exports, the same is covered as per FEMA Rules i.e., Purchase and Sales should be routed out of India and only then, can the shipments be insured by an Indian Insurer.
At Prudent, we have a deep understanding of International Trade and Insurance which helps us fine-tune the Marine Policy of the client by attaching clauses which will help protect client's interest and also remove grey areas from the coverage.
India’s overall exports (Merchandise and Services combined) in 2020
Any possible damage to the cargo either onshore or offshore