The way in which an export order is carried out, is determined by the agreed Incoterm. In practice this regularly causes problems between the seller and the purchaser, certainly if damage should occur to the goods during transport.

In some cases it turns out that no transport insurance has been taken out or, there is a transport insurance but, for example, there is confusion over the scope of the insurance cover because the seller and the purchaser evidently did not make satisfactory agreements with each other. Of the current eleven Incoterms, only two oblige the seller to take out insurance on behalf of a purchaser, these are CIF and CIP. The other nine Incoterms oblige neither seller nor purchaser to take out transport insurance.

According to Incoterms CIF and CIP the seller should take out a transport insurance for at least the minimum conditions listed in the Institute Cargo Clauses (C) of 1 January 2009. These cover only a very limited number of risks.

The insurance cover should commence at the moment that the risk of damage and loss transfers from the seller to the purchaser. For Incoterm CIF this is the moment that the goods are loaded on board of a ship in the port of departure and for CIP at the moment that the goods are transferred at the stated loading place to the first carrier of the entire chain.

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