INSURANCE COVER UNDER CIF INCOTERMS

QUESTION

Dear Mr. Old Man,

We have received a proforma invoice wherein the incoterms is CIF ICD Birgunj, Nepal. Nepal is a landlocked country and goods first arrive to Indian sea ports, Kolkata or Vishakhapatnam and then goods are transferred to rail/truck for transportation to final destination. In this case, the beneficiary has agreed to transport the goods till ICD Birgunj, Nepal whereas the insurance is only done till Vishakhapatnam, India.

Does the incoterms allow this? I don’t think so. On the other hand, we don’t have any alternative where the beneficiary arranges transportation upto Nepal whereas the insurance is done till Indian ports only and vice-versa.

Please suggest.
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Thanks

Person Pradhan
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ANSWER

Hi,

Under CIF the insurance shall cover the goods from the point of delivery to at least the named port of destination. That is the reason why the insurance under CIF Incoterms would not cover the goods to an inland place of destination.

Alternative solution:

The buyer and the seller may agree on CIP ICD Birgunj instead of CIF ICD Birgunj.
Under CIP the insurance shall cover the goods from the point of delivery to at least the named place of destination, i.e., ICD Birgunj.

Kind regards,

Mr. Old Man