The amount of insurance coverage the seller must receive — there are differences between incoterms 2010 and Incoterms 2020. You will find more information about this in freight insurance. If necessary, different levels of coverage may be included in the trade agreement. All freight insurance generally excludes consecutive damages, for example. B the consequences of the buyer who misses a contractual deadline or a sales season. This risk can sometimes be taken into account in agreement with the insurer. That is why the risks to be considered should be discussed and then incorporated into the trade agreement. Incoterms 2020 The level of coverage imposed by the CIF rule is minimal – Institute Cargo Clauses (C). However, the CIP rule has higher coverage – Institute Cargo Clauses (A). This is because industrial products generally require insurance coverage that is higher than that of goods. In all cases, the parties may define alternative insurance coverage as part of their commercial contract. The only difference between CPT and CIP is that the CIP seller must take out insurance against the buyer`s risk.
The level of coverage has been changed to Incoterms® 2020, for 110% of the CIP or similar value, is referred to as the maximum of The Cargo Clauses (A), (Air) or other establishments, what is sometimes referred to as „all risks”. . This rule also dates back to the beginnings of international shipping and has remained largely unchanged since then. The Carriage and Insurance Paid To (CIP) Incoterms® 2020 is similar to CPT with a very significant difference. This rule requires the seller to purchase maximum insurance coverage for the buyer`s risk, in accordance with the Cargo Clauses Establishment (A) or (Air) or other. The seller must provide the buyer with all the insurance documents that the buyer needs if he has to assert his rights under this insurance. The PIC can be used for all modes of transport, while the Incoterm CIF should only be used for sea freight. Things to watch out for. Terminal Handling Charges (THC) are fees collected by the terminal operator. These fees may or may not be included by the carrier in their freight rates – the buyer should inquire to find out if the CPT price contains THC to avoid any surprises. . With the publication of the Incoterms 2020 rules, the volume of insurance required by the IPC has increased to at least 110% of the value of the products, as described in Article A of the Institute Cargo Clauses, and not to the lower level required by the IPC in the 2010 rules and still necessary for CIF.
