Order Insurance is an insurance arrangement in foreign trade that covers cargo transportation, credit risks, etc., for a specific order or contract. It is usually taken out by the seller or buyer to cover loss or damage to goods during transit, or credit risks such as buyer rejection or payment default. Use cases include: when using credit terms such as Open Account (O/A) or Documents against Acceptance (D/A), exporters insure to mitigate buyer credit risk; or importers insure to protect cargo security. Precautions: clarify the start and end of insurance liability, deductible, and claims time limit; credit insurance differs from cargo transportation insurance—the former covers buyer credit, the latter covers the goods themselves. The difference from 'Open Cover' is that order insurance is for a single order, while open cover is automatic coverage under a long-term agreement. Unlike 'All Risks', order insurance can have customized coverage.
📝 Examples
1. For this USD 500,000 O/A order, we recommend the exporter take out order insurance to guard against buyer default or rejection risk. (Note: Under open account terms, use order insurance to mitigate buyer credit risk.)
2. According to the contract, the buyer shall insure the order against All Risks and War Risks before shipment, and the policy beneficiary must be the seller. (Note: Clarify the insurance responsibility and coverage of order insurance to protect cargo transportation security.)
💡 Foreign Trade Tips
Foreign trade terms are the foundation of international business communication
Trade practices may vary slightly by country; pay attention when using them
When using terms in contracts, specify the applicable version (e.g., Incoterms 2020)
For unfamiliar terms, use GlobalSync's multilingual email helper to confirm with your partner