Safeguarding International Trade
Transportation is a big business. Every day, countless transactions are being made dealing with the delivery of goods for overseas trade; transactions that are vital to the livelihood of the parties involved.

Thus the potential for goods being lost or damaged is relatively high. When goods are lost or damaged during a shipment, the financial losses suffered are huge.

Marine cargo insurance is therefore vital in international trade as it provides protection in connection with the transportation involved. Also, most financial institutions will not finance any overseas trade if there is no guarantee that any losses incurred is fully insured, especially when a loan has been advanced on the trade transactions.

What is Marine Cargo Insurance?
While the term marine cargo insurance suggests coverage specifically for sea-based transportation, it is actually a general term for transportation insurance, as its scope covers all conveyance of goods by all modes and means of transport.

One important point to note is that Marine Cargo Insurance does NOT guarantee that the insured goods will:

• Arrive on time, or arrive at all
• Reach the destination port safely
• Receive in order without damage or loss

Marine Cargo Insurance is designed to indemnify the insured party against any physical damage or loss that occurs during transportation as the result of the risks specified in the agreed insurance policy. It is aimed at reducing or removing the financial burden that accompanies such potential damage or losses.

Who Needs Marine Cargo Insurance?
Generally, any party involved in any type of legal international trade, transportation from port to port or supplying services of this nature requires marine cargo insurance.

These include, but are not limited to:

• Importers / Exporters of any produce, goods or materials
• Logistics Companies with the legal responsibility to convey the goods of their clientele to specified destination
• Freight Forwarders involved in the arrangement of cargo movement from one country or port to another
• Manufacturers importing raw materials or machinery to manufacture products, or who need to transport their finished products to buyers and end-users
• Any businesses or organisations requiring all types of products and materials to be moved from one country to another, regardless of the mode of transport

Who is Responsible for Insurance?
Typically, there will be two parties involved in an international transaction, namely a buyer and a seller. Who is required to purchase the insurance? This depends on the terms of sales, which is a key element in international contracts for the sale of goods.

The International Chamber of Commerce (ICC) has developed INCOTERMS 2000 (International Commercial Terms), a set of uniform rules for the interpretation of international commercial terms that define, amongst others, the obligation of buyer and seller in insurance coverage.

A few of the commonly used INCOTERMS 2000 together with their respective insurance responsibilities of buyer and seller are given below: