Insurance Coverage

Insurance Coverage is a core term in foreign trade contracts and letters of credit, referring to the specific scope of risks, losses, and expenses covered by the insurer. It is usually linked to trade terms (such as CIF, CIP), specifying whether the seller or buyer is responsible for insurance, and stipulating the types of coverage (e.g., FPA, WA, All Risks) and additional risks. Usage scenarios include: contract insurance clauses, letter of credit insurance requirements, and issuance of insurance policies. Precautions: 1) Insurance coverage must be consistent with the trade term; for example, under CIF, the seller must insure against the minimum coverage (usually FPA), but the buyer and seller may agree on higher coverage; 2) The letter of credit may specify particular risks and insured amount (e.g., 110% of invoice value); if not specified, banks will accept the presented insurance policy; 3) Insurance coverage is different from 'insured amount'; the former is the type of risk coverage, the latter is the compensation limit; 4) Pay attention to exclusions, such as war risk and strike risk, which require additional coverage. Difference from 'insurance certificate': An insurance certificate is a proof document, while insurance coverage is the substantive content. Accurately defining insurance coverage can avoid claim disputes and ensure safe receipt of payment.