Insurance Liability

Insurance Liability in foreign trade typically refers to the compensation liability assumed by the insurer (insurance company) under a cargo transportation insurance contract for losses to the insured goods caused by covered risks (such as natural disasters, accidents, etc.). Core usage scenarios include: under CIF or CIP terms, the seller is responsible for arranging insurance and paying the premium, but the point of risk transfer differs; when the buyer arranges insurance itself under FOB or CFR, the scope of insurance liability must be clearly defined. Notes: Insurance liability is not equal to All Risks and must be determined according to the type of coverage (such as FPA, WPA, All Risks) and exclusion clauses; the insured amount is usually 110% of the invoice value; claims require presentation of the insurance policy, bill of lading, invoice, inspection report, etc. Distinction from other terms: Insurance liability differs from 'transfer of risk' (such as the risk point in INCOTERMS), as the former is the indemnity obligation under the insurance contract, while the latter concerns the allocation of the risk of loss or damage to the goods; insurance liability is also different from 'carrier liability,' which is based on the contract of carriage and has a lower compensation limit. Foreign trade practitioners should accurately understand the scope of liability of the coverage purchased to avoid being unable to obtain compensation due to insufficient coverage or exclusions.