Protection of Exporter in case of loss of Ex works/FOB/C & F consignments under Marine Insurance
As per INCO terms, the consignments can be exported on any of the most popular terms in India namely CIF or FOB or C & F or Ex-works. Under CIF, the seller is responsible to insure the goods but under C & F or ex-works or FOB, it is a responsibility of the buyer to arrange the insurance.
As stated above ,if Exporter sends the consignment on Ex-works, FOB or C & F, it is the responsibility of the buyer to arrange the insurance. But it is observed that if the goods are damaged during transit, especially sea voyage, the Buyers refuse to accept the delivery as well as does not file a claim under their operative policy. As a result, the Exporter is at loss as he neither gets payment nor coverage under marine insurance. To protect such risks, the Exporter should cover such consignment with a clause “ Seller’s Interest Contingent Insurance”. As per this clause, the consignments sent on FOB, C & F and Ex-works are covered up to the warehouse of the buyers and if any loss occurs and the Buyer refuses to take the delivery due to damage goods, the Exporter can file a claim with his Insurer who will settle the claim in Indian Currency and a certificate is to be obtained from the Buyer that the claim is not lodged under any other insurance. Undoubtedly, the Exporter has to pay the premium on such consignment also.
Next issue will be on the preparation of invoice for third country exports under FEMA Rules and Committed countries agreement will be discussed. If anyone has query may write in advance.