15A.3
- Document type
- Manual
- Dated
- Category
- Exchange Management Manual
Protection against Transit Risks
Sometimes in case of exports contracted on f.o.b., c.& f., etc. terms, exporters ship cargo without verifying that the goods have been adequately insured against transit risks by overseas buyers. Unless the cargo is insured for the entire duration of transit and insurance is available for protection of exporter until ownership in the goods passes to buyer, the exporter will be liable to suffer financial losses apart from loss of foreign exchange caused by damage/loss to the goods, except where the export is covered by an irrevocable letter of credit opened by buyer. It is, therefore, necessary for the exporter to verify even before goods are shipped out of India that they are insured against all risks of loss or damage during the entire course of transit and that such insurance is available to him by virtue of incorporation of sellers interest clause in the policy. In cases where exporter is not assured that his interests are protected fully through insurance, he may also avail of contingency insurance cover from Indian insurers on the analogy of the provisions in the Note under paragraph 15A.2