Additional Premium

Additional Premium is a common term in foreign trade insurance, referring to an extra premium charged on top of the basic premium rate due to factors such as the nature of the goods, shipping route, packaging method, or special risks. It typically appears when insuring against All Risks or With Particular Average (WPA) and is separately charged for specific additional risks (e.g., War Risk, Strikes Risk, Theft, Pilferage and Non-Delivery) or special agreements (e.g., over-age vessel, deck cargo). Usage scenarios include: the insured requests extended coverage, the goods are fragile or high-risk, or the route passes through war-torn or pirate-infested areas. Precautions: It must be clearly agreed whether the buyer or seller bears the additional premium, and it should be specified in the letter of credit or contract; its calculation is usually based on the basic premium, either proportionally or as a fixed amount, and rates vary significantly among insurers, so confirmation in advance is necessary. The difference from the basic premium is that the basic premium covers the main risk liabilities, while the additional premium corresponds to additional risks or special risks; it differs from a deductible, which is the portion borne by the insured after a loss occurs and does not involve premium adjustments. Foreign trade practitioners should carefully review the insurance policy to ensure that the additional premium clauses match the insurance obligations under trade terms (e.g., CIF, CIP) to avoid losses caused by underinsurance or duplicate insurance.