Insurance Journal (4th Quarter 2018)

Guest Contribution
International
Commercial Terms
(INCOTERMS)
Nasir Siddique
ACII (UK), MBA (I & RM)
Team Lead (Underwriting)
IGI Insurance Limited
Incoterms falls in following four
categories:
E – Terms: where the seller makes
the goods available to the buyer at
the seller's own premises.
F – Terms: where the seller is called
upon to deliver the goods to a carrier
appointed by the buyer.
C – Terms: where the seller has to
contract for carriage, but without
assuming the risk of loss or damage
to the goods or additional costs due
to events occurring after shipment
and dispatch.
D – Terms: where the seller has to
bear all the costs and risks needed to
bring the goods to the country of
destination.
Rules for sea and inland waterway
transportation:
FOB - Free On Board
This term can only be used for vessel
shipments.
The seller agrees to deliver the goods
on board the overseas vessel at the
named port of shipment, including
during lighter age and during loading
onto the vessel.
Responsibility for loss or damage
The seller is responsible for loss or
damage until the goods "pass the
ship's rail". The buyer being
responsible from that point on.
Ocean cargo insurance
Because the buyer is responsible for
loss or damage during the "main
carriage" FOB shipments would be
insured under his ocean cargo policy.
Insurance, under INCOTERMS
definition, would attach once the
goods "pass the ship's rail". In
practice most insurance companies
use the date on which the On Board
bill of lading is issued.
C & F - Cost and Freight
This term can only be used for vessel
shipments.
Although the seller agrees to pay all
costs and freight to the named port of
destination, his responsibility for
delivery ends when the goods "pass
the ship's rail" at the port of shipment.
Responsibility for loss or damage
The seller is responsible for loss or
damage until the goods "pass the
ship's rail" at the port of shipment.
The buyer being responsible from
that point on.
Ocean cargo insurance
Because the buyer is responsible for
loss or damage during the "main
carriage" CFR shipments would be
insured under his ocean cargo policy.
Similar to FOB shipments, insurance,
under INCOTERMS definition
would attach once the goods "pass the
ship's rail". In practice most
insurance companies use the date on
Insurance Journal October, November, December 2018
37
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