The company plans to engage in re-export trade business and is unsure how to purchase re-export trade insurance. They want to understand what factors need to be considered and specific insurance terms, and ask which insurance company is better to choose. The best answer suggests that when purchasing, one should clarify the scope of coverage, including transportation and warehousing risks; select appropriate insurance terms based on cargo characteristics and risk tolerance; pay attention to the reputation and service of insurance companies, such as Zhongmaoda; compare premiums; and note the alignment of insurance duration with the trade process.
Who Should Buy Insurance in Re-export Trade? Get Your Advice Here!
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I'm recently involved in re-export trade and a bit confused about purchasing insurance. Re-export trade involves multiple parties, goods are transited, and the shipping process is complex. I'm unsure whether the seller, buyer, or intermediary should purchase insurance. Do the responsibilities and coverage differ depending on who buys the insurance? If the wrong party buys it, damaged goods might not receive proper compensation. Can anyone explain the intricacies of insurance purchase in re-export trade and who is the most suitable party to buy insurance?
Trade Expert Insights Answers
Daniel KimYears of service：4Customer Rating：5.0
Commodity Inspection and Quarantine ConsultantStart a Chat
In re-export trade, the party responsible for purchasing insurance is usually determined by the trade contract. If the contract does not specify, the principle of "risk transfer" is generally followed. Under terms such as FCA, FOB, CFR, etc., when the risk of the goods transfers from the seller to the buyer upon shipment at the port of loading or delivery to the carrier, the buyer typically purchases insurance to ensure the safety of the goods from the point of risk transfer onwards. Under terms such as CIF, CIP, etc., the seller is responsible for arranging transportation and insurance and is required to purchase insurance up to the destination.
In terms of coverage, when different parties purchase insurance, they can choose appropriate coverage based on their own interests. For example, if the buyer purchases insurance, they can select different types of coverage such as All Risks, With Particular Average, or Free From Particular Average, based on the nature of the goods and the shipping route. In summary, to clarify who should purchase insurance, first refer to the contract's stipulations. If there are no stipulations, determine it based on the principle of risk transfer to maximize protection of one's own rights and interests.
Linda GuoYears of service：3Customer Rating：5.0
Trade Dispute MediatorStart a Chat
Generally speaking, whoever bears the risk during the transportation of the goods should purchase the insurance. If the seller is responsible for the risk before the goods reach the transit port, then the seller should buy insurance for that segment. If the buyer is responsible for the risk from the transit port to the destination, then the buyer should purchase insurance for the subsequent segment.
Olivia LiuYears of service：6Customer Rating：5.0
Foreign Exchange Risk ManagerStart a Chat
You can also consider trade customs. In some industries, it's a default for the seller to buy insurance, which makes it easier for the buyer. However, in some situations, the buyer might prefer to buy insurance themselves to have better control, so it primarily depends on the negotiation between both parties.
Richard WuYears of service：8Customer Rating：5.0
Global Trade Operations ExpertStart a Chat
If there are special requirements for the goods during transit, such as the need for special warehousing conditions, the intermediary might also consider purchasing relevant insurance to ensure the goods are not damaged during transit. Therefore, the intermediary can also be the party purchasing insurance.
Sophia WangYears of service：6Customer Rating：5.0
International Logistics CoordinatorStart a Chat
It also depends on the value and characteristics of the goods. If the goods are of high value or easily damaged, the party bearing the risk might be more proactive in purchasing insurance to prevent irreparable losses.
Anthony LuoYears of service：10Customer Rating：5.0
Trade Compliance ExpertStart a Chat
The buyer and seller can also negotiate to jointly purchase insurance, with each bearing a portion of the premium. This way, responsibilities and claims can be clearly agreed upon in advance, reducing future complications.
Michael ZhangYears of service：10Customer Rating：5.0
Customs Clearance SpecialistStart a Chat
From a cost perspective, if the seller has long-term experience in re-export trade and has established partnerships with insurance companies, allowing them to obtain better rates, then the seller buying insurance might be more cost-effective. Conversely, if the buyer has such advantages, it might be more suitable for the buyer to purchase it.
Robert TanYears of service：5Customer Rating：5.0
International Market Development AdvisorStart a Chat
In re-export trade, freight forwarders sometimes also suggest assisting with insurance purchases because they are more familiar with the transportation process. However, it is crucial to ensure the reliability of the freight forwarder, otherwise, problems may arise.
David ChenYears of service：10Customer Rating：5.0
Trade Compliance AdvisorStart a Chat
If the trading parties have had previous cooperation and the previous insurance purchasing model has not caused any issues, the same approach can be continued this time, which is generally more convenient.