Cargo insurance for exports: which cover, and where to buy

Choosing export cargo insurance comes down to three variables: the Incoterms rule that decides who buys, the nature of the cargo that decides which cover condition applies, and the shipment value that decides how much premium is worth paying. The most common mistake is not buying too little insurance — it is buying the right amount under the wrong condition, and only discovering at the point of loss that the risk was never covered.

By the Alibaba Vietnam specialist team

Contents: 1. Four risks to cover · 2. Three main cover conditions · 3. Who buys under Incoterms · 4. Five steps to buy insurance · 5. Insured value · 6. Claims after a loss · 7. Common misunderstandings · 8. FAQ

1. Four risks that cargo insurance must handle

Total loss or severe damage from sinking, fire, capsizing, dropping or impact during handling and carriage.
Partial loss from theft, shortage and misdelivery.
Damage from damp, sea water and condensation — the risk specific to cargo moving by sea.
Losses from delay or incidental costs such as discharge at a port of refuge, survey fees and storage charges — usually covered only when an additional condition is purchased.

Cargo insurance protects the goods; it does not protect expected profit and does not replace the carrier's liability.

2. Three main cover conditions

Condition	Scope of cover	Suitable for
A (all risks)	Widest cover, including risks not specifically listed	High-value cargo, fragile cargo, electronics
B	A listed schedule of risks, including some natural perils	Ordinary industrial goods, well packed
C	Narrowest cover, mainly major perils such as sinking, fire and collision	Cheap goods, solid packing, low risk tolerance

How to choose: the cover condition must match the loss tolerance of the shipment, not the lowest premium. The A–C premium gap is usually small compared with the value of fragile goods.

3. Who buys insurance under each Incoterms rule

CIF and CIP: the seller buys insurance for the buyer. Under CIF the minimum is usually contract value plus a percentage; under CIP a higher level of cover is required.
FOB, FCA, CFR: the buyer is responsible for buying insurance. The seller has no obligation, but should check that the buyer has bought it.
DAP, DDP: the seller carries the risk to the delivery point, so must insure proactively. Under EXW the risk passes to the buyer at the seller's premises, so who buys must be agreed before signing.

If the contract is silent, settle it in the quotation: who buys, which condition, and at what value.

4. Five steps to buy export cargo insurance

Choose an insurer licensed to operate in Vietnam, with experience on your exact route and cargo type.
Provide shipment details: commodity, packing, number of packages, weight, route, mode and planned departure date.
Choose the cover condition that fits the nature of the cargo and the contract requirements.
Set the insured value and the deductible, if any — a high deductible lowers the premium but raises your own share.
Receive the insurance certificate before the cargo moves, and check it matches the bill of lading and invoice.

A certificate issued after the vessel has sailed may be treated as invalid.

5. How much insured value should you buy?

Minimum basis: goods value on the commercial invoice, plus freight and insurance where sold on CIF terms.
The common level: CIF value plus about 10% to cover incidental costs and price movements — the default in many contracts.
A higher level where the goods carry a large margin or the market price is highly volatile.

6. Five steps for a claim when cargo is damaged

Preserve the scene and the cargo until the survey, except where action is needed to limit the loss.
Notify the insurer and the carrier in writing immediately, within the deadline set by the contract.
Request an independent survey and a report signed by all parties.
Collect the documents: bill of lading, invoice, packing list, survey report and site photographs.
File the claim within the limitation period stated in the contract — file late and the right to compensation is lost.

7. Common misunderstandings

"Once insured, everything is compensated." Condition C excludes many risks; read the exclusions.
"The carrier is liable, so insurance is unnecessary." Carrier liability is capped by convention and usually far below cargo value.
"Buying through any provider is the same." Buy only through a licensed provider with clear contracts and invoices.
"Good packing means no need for wider cover." Many losses come from sea water and condensation, unrelated to packing quality.

Point 3 reflects a general verification rule: when you are worried about an Alibaba scam, or any other risk on an online channel, the handling is always the same — check the legal entity, demand a contract and an invoice, and never transfer money to an individual. The rule applies to trading partners and insurers alike.

8. Frequently asked questions

Is cargo insurance compulsory for sea freight? Not compulsory by law, but in practice close to compulsory for high-value or fragile cargo.

Is Condition A much more expensive than C? Usually small against shipment value, while the cover is considerably wider.

If the buyer buys the insurance, what risk does the seller carry? Mainly liability disputes when goods are damaged before risk transfers.

9. Conclusion

Cargo insurance is a small expense that moves a large risk to someone else. Three things to do now: settle who buys under the Incoterms rule, choose cover by cargo nature rather than premium, and always get the certificate before the cargo moves.

Talk to an advisor

ALIBABA.COM VIETNAM CO., LTD — ALIBABA VIETNAM

Head office: 19th Floor, Saigon Centre, 67 Le Loi Street, Ben Nghe Ward, District 1, Ho Chi Minh City
Branch: 10th Floor, Becamex Tower, 230 Binh Duong Boulevard, Thu Dau Mot, Binh Duong
Branch: 9th Floor, TTC Plaza, Vo Thi Sau Street, Thong Nhat Ward, Bien Hoa, Dong Nai

Call 0987258510 — Mr. Dân for a free consultation on cargo insurance and risk reduction for each export route. Call 0987258510 — Mr. Dân