Insights to Help Your Business
Understand what terms you are agreeing to before finalizing a contract.
What’s the story: Incoterms define a clear agreement between the buyer and seller. They state who bears what responsibilities, costs and risks relating to the purchase, transport and delivery of goods.
Why it matters: Confusion over these terms and not enough insurance can result in a lost sale.
Where Did Incoterms Come From?
“Incoterms” stands for International Commercial Terms. This set of contract terms was first created and published by the International Chamber of Commerce (ICC) in Paris in 1936. They have been revised now and then to account for changing modes of transport and document delivery.
What You Should Know
Critical terms of sale in a purchase order are often reduced to a three-letter acronym, such as EXW, FOB, CIP, DEQ and others. Incoterms…
Are Incoterms Insurance?
Nope. Only two Incoterms refer to cargo insurance, which is to be arranged and paid for by the seller (CIF, CIP). For the other nine terms, the buyer and seller decide to insure for the part of the voyage for which they are “on risk.” Both parties should determine if, and when, they have insurable interest in the goods, and risk mitigation best-practices should include the purchase of insurance coverage. Don’t assume your trading partner bears the risk and/or has the goods insured for your benefit.
What Kind of Insurance Do I Need?
An all-risk cargo insurance policy from UPS Capital® Insurance Agency, Inc. and its affiliates provides a superior risk-mitigation alternative to carrier liability and your business commercial policy. Talk to a UPS Capital® representative in your area to better understand your risks.