Deductible Clause

The deductible rate clause is a common clause in international trade insurance, meaning that the insurer is not liable for the portion of loss to the insured subject within the agreed deductible rate, and is only responsible for the portion exceeding the deductible rate. This clause usually applies to fragile, easily damaged, or bulk cargo (such as glass, ceramics, grain, etc.), with the purpose of reducing small claims and lowering insurance costs. Usage scenarios include when insuring against All Risks or Free from Particular Average, where the buyer and seller or the insurer and the insured agree on a deductible percentage (e.g., 3%). Notes: Deductible rates are divided into absolute deductible rate and relative deductible rate; the former only pays the excess portion, while the latter pays in full when the loss reaches the deductible rate. The basis for calculating the deductible rate should be clearly agreed upon (e.g., based on the entire shipment or individual packages). Difference from deductible amount: A deductible amount is a fixed sum, while a deductible rate is a percentage. Foreign trade contracts should clearly specify the deductible rate clause to avoid claims disputes.