Exercise 18 a) Read the text about insurance for international rail transport

As with any commercial transaction, there are risks associated with trading internationally. Three main risks arise in international trade. These are loss, damage and delay, including detention at customs. The contracts on transportation internationally should use Incoterms (International Commercial Terms) to specify exactly how these risks are shared between buyer and seller.

Incoterms are an internationally recognised set of trading terms that spell out exactly when responsibility for the costs and risks of a transaction shift from seller to buyer. This affects the insurance needs because the greater the costs you’re responsible for, the greater the insurance cover you’ll need to arrange.

A typical cargo insurance policy covers goods in transit via road, rail, sea or air. In its simplest form it provides cover against accidental damage and other risks. The other extreme is a comprehensive all-risk policy, covering a range of specified accidents – including damage during loading, theft and negligence.

The cost of your insurance and in which circumstances you’ll receive compensation will depend on:

· the value of the goods in transit

· the expiry date of the insurance policy

· whether the journey is domestic or international

Without insurance you have only the minimum protection for your goods because freight forwarders and carriers typically have limited liability in the event of loss, or damage or delay. This comes from internationally ratified conventions and the standard trading conditions of transport associations.