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Why take out transport insurance?The transporting company / forwarder is only partially liable for damage to goods shipped by him. In some cases, he is not liable at all. For instance, in case of force majeure, or if you haven’t packaged the goods properly. Goods can also get damaged or lost during transport. By taking out transport insurance, you can cover these risks.
Agree on the liability
You and your business partner should reach an agreement on who is liable for damages, loss or theft of the goods at which point of the transporting process: when does liability transfer from the seller to the buyer? You can use the ICC Incoterms® 2010 standard international delivery conditions. Transport insurance is obligatory when you opt for the ICC Incoterms® 2010 CIF (Cost insurance and freight) or CIP (Carriage and insurance paid to) terms. You do not have that obligation when using different ICC Incoterms® 2010 terms, but it is advisable, since damage or losses might occur during the part of the transport for which you are liable.
ICC Incoterms® 2020
The ICC have released Incoterms® 2020, an update to the Incoterms® 2010. However, the Incoterms® 2010 remain valid. Find out more on the ICC website.