Covers goods in transit to/from points and and/or places outside the U.S. and Canada. For international transportation risks, liability limitations are not regulated by the Interstate Commerce Commission ("ICC") as is domestic U.S. transportation, but are adjudicated by international maritime law. International maritime law determines how these risks are shared and apportioned between the shipper, the carrier and the consignee. In general, under international maritime law, the shipper or the consignee (depending on the terms of sale), not the carrier, bears the ultimate liability for the loss or damage to goods in transit, unless the carrier is "grossly negligent".

As a general practice, (you) the shipper can pass this exposure along to your consignee by selling on terms of "F.O. B. U.S. Plant", "C. & F.", or "F.A.S. U.S. Port". Title passage occurs under each of these terms within the U.S. and insurance responsibility for these export sales rests with the consignee after title to the goods has passed. This practice is effective so long as you have been fully paid for the goods and are not an "unpaid vendor", i.e. the customer has not fully paid for the goods.

In the case of an "unpaid vendor", ultimate payment may be withheld, not because of credit or political risks (such as are covered by your export credit/political risks insurance), but because there occurred either loss or damage to all, or a portion, of the goods shipped. Not only do you suffer a potential financial loss in these situations, but a serious loss of customer "goodwill" can result from the buyer-seller disputes. (Note: Unresolved product or contract disputes, including those involving marine insurance coverage, are not covered by export credit/political risks insurance.)

You should consider taking out your own Open Marine (Cargo) Insurance Policy for any of the following reasons:

1. When you sell on credit terms, i.e. other than "Confirmed Irrevocable Letters of Credit";

2. "Contingency" coverage is available where local foreign laws prohibit the use of U.S. marine insurance (your consignee is required to carry the insurance), and your "money is at risk"; and

3. Savings in marine insurance costs are passed along in the form of lower prices, ultimately resulting in increased sales.

More Information on Marine Insurance:
Detailed Description
INCOTERMS
Avoiding the Pitfalls of International Shipments and
    Marine Insurance
Shipwreck in the Atlantic
Marine Insurance Questionnaire in Adobe pdf

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