Premium Adjustment

Premium Adjustment is a term in foreign trade insurance that refers to the modification of an established insurance rate or premium amount in cargo transportation insurance due to changes in actual circumstances (such as changes in cargo value, voyage, coverage, etc.). It is commonly seen in CIF or CIP trade. After the seller insures the goods, if the buyer requests additional coverage such as war risk or strike risk, or if the invoice amount changes, a premium adjustment is required. Usage scenarios include: the letter of credit requires the insured amount to be 110% of the invoice value, but the actual invoice amount increases; or the original coverage was All Risks, later changed to WPA. Precautions: The insurance company must be notified promptly of the premium adjustment and the policy must be endorsed, otherwise claims may be affected; the premium difference after adjustment is usually borne by the buyer (if stipulated in the contract). Unlike 'premium refund', premium adjustment can increase or decrease; unlike 'additional premium', the adjustment may decrease due to reduced risk. Foreign trade practitioners should clarify the insurance clauses in the contract to avoid losses caused by untimely adjustments.