Insurance Journal (4th Quarter 2018)

Guest Contribution
time period, or on expiration of the
specified time period. Unless
specifically agreed to, the seller is not
responsible for loading the goods
onto the conveyance at his premises.
Ocean cargo insurance
Because the buyer is responsible for
loss or damage during the "main
carriage" EXW shipments would be
insured under the buyer's ocean cargo
policy.
Since most ocean cargo policies
attach on individual shipments when
they leave the warehouse of origin
(i.e. The Warehouse To Warehouse
provisions of the Open Policy), the
buyer may not have insurance for the
period of time the goods may be on
the premises of the seller, or during
loading onto the conveyance, or after
loading while awaiting transit even
though he is responsible for loss or
damage. Therefore, when purchasing
goods EXW the buyer should seek an
insurer that will provide coverage
during these situations.
Free Carrier, named place (FCA)
This term can be used with any mode
of transportation.
The seller agrees to deliver the goods
into the custody of the carrier selected
by the buyer at a named point or place,
or to a party acting on the carrier's
behalf (a freight forwarder or freight
terminal, for example). The actual
point of delivery can be anywhere in
the country of origin, including at the
seller's premises. The contract of sale
must clearly state to where and to
whom the goods are to be delivered.
Responsibility for loss or damage
The seller is responsible for loss or
damage until the goods are delivered
to the carrier at the named point or
p l a c e . T h e b u y e r b e c o m i n g
responsible thereafter.
Ocean cargo insurance
Because the buyer is responsible for
loss or damage during the "main
carriage" FCA shipments would be
insured under his ocean cargo policy.
Insurance would attach at the time the
goods are delivered to the carrier as
agreed.
When buying goods FCA it is
important for the buyer to understand
that in allowing delivery at a place
other than the port or airport of
shipment he is extending his exposure
to loss or damage to additional
hazards of transportation which may
be unique to the country of origin,
such as: additional storage, additional
handling exposures, exposure to the
elements and exposure to theft, hijack
or pilferage. Depending upon the
country the goods are being shipped
from these additional hazards can be
severe and loss or damage can
adversely affect the placement and
costs of insurance. Before agreeing to
FCA terms it may be in a buyer's
interest to review the country
exposures with their insurer.
One advantage to a buyer in using
FCA terms is when he uses FCA
Seller's Warehouse versus EXW. As
commented on in EXW, the buyer is
responsible for loss or damage during
loading of the goods onto the
conveyance at the place of origin, an
exposure not usually covered by
ocean cargo policies. By selecting
F C A S e l l e r ' s Wa r e h o u s e t h e
responsibility for loading is placed on
the seller.
Carriage Paid To, named place of
destination (CPT)
This term can be used with any mode
of transportation.
Although the seller agrees to pay
freight costs to the destination, his
responsibility for delivery ends when
he has delivered the goods into the
custody of the carrier, or party acting
on the carrier's behalf, at a named
point in the country of shipment. The
actual place of delivery could be
anywhere in the country of shipment,
including the premises of the seller, or
at the port of shipment, or anywhere
in between.
Delivered At Frontier, named place
(DAF)
This term is usually used for overland
shipments, but can be used with any
mode of transportation.
The seller agrees to deliver the goods
at a named point or place, cleared for
export, at a frontier or border. This
place could be at the country of origin,
destination or somewhere in between.
The actual place of delivery should be
precisely named in the sales contract.
Responsibility for loss or damage
The seller is responsible for loss or
damage until delivered to the named
place. The buyer being responsible
from that point on.
Ocean cargo insurance
Many ocean cargo policies do not
provide automatic coverage for
overland shipments, or when the
assured is responsible for loss or
damage solely within the country or
origin, or solely within the country of
destination. However, extensions can
usually be added to provide the
necessary coverage. If selling or
buying on DAF terms you should
review your specific insurance needs
with your insurer.
In general terms, the seller will want
to arrange coverage which will cover
his interest until he has delivered the
goods to the place named in the sale
contract. The buyer will want to
arrange coverage from that point
forward, including during any storage
awaiting pickup by the carrier.
Depending upon the actual extent of
exposure, insurance on DAF
shipments may be added to domestic
transit or property insurance policies.
Carriage and Insurance Paid To,
named place of destination (CIP)
This term can be used with any mode
Insurance Journal October, November, December 2018
39
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