Insurance in International Trade
Insurance against perils is an important aspect of international commercial transactions. In the event of loss or damage to cargo due to hazards during voyage, an insured party will be able to recover losses from the insurer. The type of insurance required depends on the mode of transport agreed between parties to transport the cargo. Such insurance forms include marine, aviation and land.
The type of insurance contract depends on the Incoterm adopted by the parties in a sale contract. A CIF sale contract requires the seller to obtain insurance cover for the voyage. An FOB contract however places no obligation on the buyer or seller to obtain insurance, although it is prudent for the buyer to protect against potential losses. It is not uncommon for the buyer in a FOB contract to request the seller to arrange insurance on an understanding that they will reimburse the insurance costs incurred.
Insurance obtained must cover only those goods that are being sold and stipulated in shipping documents. The insurance must also cover the entire voyage of the sale contract. Where it covers only party of the transit, the buyer will be able to reject the documents upon tender.
Marine insurance contracts may be divided into hull insurance or cargo insurance. There is no uniform law or convention for international marine insurance. However commercial customs, usage and practices in international marine insurance have played a significant role in regulating marine insurance internationally. Thus the marine insurance contract is subject to both general principles of contract law and relevant domestic marine insurance law.
Aviation Insurance contracts may be divided into hull insurance; cargo insurance; airport owners and operators liability; hovercraft insurance; spacecraft insurance; and commercial aircraft insurance. International Conventions applying to the carriage of goods by air include the Warsaw Convention, Rome Convention, Hague Protocol and Montreal Protocol. These conventions together provide guidance to domestic air insurance law.
Read more about this topic: International Commercial Law
Famous quotes containing the words insurance and/or trade:
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—Gwendolyn Brooks (b. 1917)
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—George Bernard Shaw (1856–1950)