Foreign-trade Glossary + Calculators
Charges
Marine Cargo Insurance
Cargo insurance covering loss or damage to goods in transit by sea (and connecting carriage), conventionally insured at 110% of CIF value.
Marine Cargo Insurance provides financial indemnity for loss or damage to goods in transit by sea and connecting carriage caused by insured perils (natural disasters, accidents, loss or damage in carriage). In international trade, whether the seller insures is determined by the Incoterms rule.
- Who insures: under CIF and CIP the seller must insure for the buyer's benefit. Incoterms 2020 raised the minimum cover for CIP, CIP requires Institute Cargo Clauses ICC(A) (near all-risks), while CIF keeps the minimum at ICC(C). Other terms (e.g. FOB, CFR) impose no insurance duty on the seller; the buyer decides whether to insure.
- Insured amount: the market convention is insured value = (C+F) × 110%, adding 10% over cost-and-freight for anticipated profit, then multiplied by the rate to get the premium.
- Watch-out: when deriving the premium from a CIF price, use the closed-form CIF = (C+F) / (1 − 1.1 × rate) to avoid a circular calculation; ICC(C) cover is narrow, so for high-value or fragile goods consider ICC(A) or additional clauses, and check the cover runs warehouse-to-warehouse to the destination.
Marine Insurance Premium
Insured = value × markup; premium = insured × rate.
Insured amount0
Premium0
Calculations follow common industry rules and are for reference only; actual billing/liability is governed by your carrier, forwarder and contract.
FAQ
- Is the insurance cover the same under CIF and CIP?
- No. Under Incoterms 2020, CIF only requires the seller to take minimum ICC(C) cover, while CIP requires ICC(A) (near all-risks). If the buyer wants more protection, agree on a higher level in the contract.
- Why is the insured amount multiplied by 110%?
- The market convention adds 10% over the CIF value as the buyer's anticipated profit and incidental costs, so insured value = (C+F) × 110%. Premium = insured value × rate; if you start from a known CIF price, back it out with CIF = (C+F) / (1 − 1.1 × rate).
Related terms
Sources: https://www.iccwbo.org/business-solutions/incoterms-rules/incoterms-2020/ · https://www.lmalloyds.com/