Under Incoterms 2020, a CIF seller only has to buy the minimum cover, Institute Cargo Clauses (C), for at least 110% of the contract value, and that is the narrowest of the three standard levels. Under FOB and CFR nobody is obliged to insure for the buyer at all. If you import cars, decide the cover level before the car is loaded, write it into the contract, and know the notice deadlines before anything goes wrong.
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This guide is general information about published rules. It quotes no premium rates and no claim amounts, which the insurer sets. Your policy wording always overrides what is written here.
Who is responsible for a car damaged at sea?
The buyer carries the risk once the car is loaded on the ship under FOB, CFR and CIF, so insurance is how the buyer recovers a loss. Under these terms risk passes to the buyer at loading in China, as explained in our guide to forwarder quotes. Two routes then exist: a claim under the cargo policy, and a claim against the carrier. They are not alternatives. An insurer that pays normally recovers from a liable carrier, so the buyer must not lose rights against the carrier.
What insurance does each Incoterm require?
Only CIF and CIP oblige the seller to insure. Other terms such as EXW, FOB and CFR impose no insurance duty, so the buyer decides whether to buy cover.
| Term | Who must insure | Minimum level (Incoterms 2020) |
|---|---|---|
| FOB, CFR | Nobody is obliged | Buyer’s choice |
| CIF | Seller, for the buyer’s benefit | Institute Cargo Clauses (C) |
| CIP | Seller, for the buyer’s benefit | Institute Cargo Clauses (A) |
The sum insured is at least 110% of the contract value in the contract currency, and the parties may agree a different level. ICC Academy and several law-firm summaries describe CIF as unchanged at Clause (C) and CIP as raised to Clause (A) in the 2020 edition. We checked secondary commentary, not the ICC rulebook itself. See also RoRo versus container shipping for how the shipping method changes the exposure.
What is the difference between ICC (A), (B) and (C) for a car?
ICC (A) covers all risks of loss or damage except those the clauses exclude, while (B) and (C) cover only the perils they list. The 2009 wording is the version in common use, and your policy states which edition applies.
| Level | How cover works | What it means for a car |
|---|---|---|
| (A) | All risks, minus exclusions | Broadest; theft and non-delivery are normally covered here, subject to exclusions |
| (B) | Named perils | Adds sea water entering the vessel, washing overboard, earthquake, volcanic eruption and lightning |
| (C) | Named perils, narrowest | Major casualties such as fire, explosion, stranding, sinking, capsizing, collision, jettison and general average sacrifice |
Clause (C) is not a cheaper version of (A). It responds to serious casualties. Scratches from loose lashing or a minor knock during handling are the kind of loss you must check against the wording rather than assume. Insurer and broker summaries (ICICI Lombard, Group ACTIVA, DBS) agree on the (B) versus (C) split, though the lists vary slightly, so confirm with the clause text.
Should I upgrade CIF cover to Clause (A) for cars?
For new vehicles, asking for Clause (A) is a sensible commercial request, because (A) is the only level that is not limited to listed perils. A car is high in value and easy to scratch, and the ordinary damage in handling is what most buyers worry about. Ask your seller or your own insurer for a quote at (A), and have the level and the 110% sum written into the contract or proforma invoice. The cost is set by the insurer and depends on route, cargo and claims record, so this guide does not give figures.
If you buy under FOB, you arrange the policy yourself. A broker or a local insurer can issue a policy for the whole voyage, and that gives you control over the wording. Compare this choice with payment risk in letter of credit versus T/T: a bank under a letter of credit often asks for an insurance document, and the required cover level is then part of the credit terms.
What do marine cargo policies usually not pay for?
All three levels share a group of exclusions, including wilful misconduct of the insured, ordinary leakage and wear, inadequate packing or stowage, inherent vice and loss caused by delay. In the 2009 wording these sit in Clause 4.
For a car the practical meaning is simple: a defect present before loading is not a transit loss. A scratch, a paint fault or a battery problem that existed at the loading port will be argued over by the insurer and the carrier. Take dated photos at loading and keep the inspection report, as described in our export documents checklist.
When does the cover start and when does it end?
The 2009 transit clause is warehouse to warehouse. Cover begins when the cargo is first moved in the warehouse or place of storage for loading, continues through the normal course of transit and ends on the earliest of several events. One of them is 60 days after discharge from the ship at the final port of discharge. If the car is sent on to another destination after discharge, cover ends when it is first moved for that onward journey, and the 60-day limit still applies.
The point for importers is that a car sitting in a port yard may fall outside the cover. Unclaimed cars also accumulate charges, covered in demurrage and storage charges on imported cars. Cover can usually be extended by agreement with the insurer, but only if you ask before it expires. The 60-day wording appears in copies of the 2009 clauses published by insurers; check your own policy.
What should I do first when I find a damaged car at the port?
Preserve the evidence and give written notice quickly. These steps come from carriage-law summaries and insurer guidance, and your policy may add its own steps.
- Do not move the car if you can avoid it. Photograph and film the damage, the VIN, the location and the date.
- Note the damage on the delivery receipt or port document at the time of collection.
- Notify the insurer, or the agent named on the certificate, in writing and as early as possible. Give the nature, date and place of the loss and ask for a survey.
- Notify the carrier or its agent at the discharge port in writing. Check the bill of lading for the notice period.
- Arrange an independent survey. The surveyor’s report is the main evidence of cause and extent.
- Take reasonable steps to limit further damage. Policies commonly require it.
- Collect the documents: bill of lading, the insurance certificate, commercial invoice, packing list, survey report, photos and your notice to the carrier.
If the damage is not visible at delivery, speed matters more, as the next section explains.
What are the deadlines for claiming against the carrier?
Under the Hague-Visby Rules, damage that is not apparent at delivery must be notified in writing within 3 days of delivery, and the carrier is discharged from liability unless suit is brought within 1 year of delivery or the date delivery should have occurred. The parties may agree to extend the one-year period after the cause of action arises. The Finnish insurer If publishes the same figures, 3 days for notice and 1 year for limitation at sea, and recommends sending a provisional claim that reserves the right of the claimant or its insurer to present a specified claim later.
Which regime applies depends on the bill of lading and the national law at the destination, and some countries use different periods. Check the bill of lading and take local advice before you rely on these numbers. Your policy can also set its own, shorter, claim deadline, so tell the insurer first and the carrier straight after.
Does insurance cover customs charges, demurrage or a refused shipment?
Not automatically. Cargo insurance protects the physical loss of or damage to the car. Port charges, a delay and a failure to clear customs are separate matters, and delay is generally excluded in the standard clauses. For the charges that build up if you cannot clear the car, see demurrage and storage charges. For the documents that stop a shipment being held, see the export documents checklist.
How does this fit different destination markets?
The principle is the same everywhere, but the practical details differ by port, so these guides help with the rest of the route.
- East Africa and Ethiopia via Djibouti: CIF Djibouti for Ethiopia shows how the final leg after discharge matters, and the 60-day limit is relevant if the car waits for inland transport.
- West Africa and Côte d’Ivoire: importing cars to Côte d’Ivoire.
- Central Asia: Chinese cars in Russia and Central Asia covers a route that mixes sea and rail, so check that the policy covers every leg.
- Iran: importing Chinese cars to Iran; confirm with your own insurer what it can write for this destination.
- Ethiopia electric cars: importing electric cars to Ethiopia.
- Departure from Guangzhou: Nansha car terminal and RoRo exports.
- Quantity and container loading: how many cars fit in a container.
- Supply chain background: the China car export supply chain.
FAQ
Is the insurance included in a CIF quote enough for cars?
It is the minimum. CIF requires Clause (C) at 110% of the contract value, and (C) lists only serious casualties. If you want protection against ordinary handling damage, ask for Clause (A) and write it into the contract.
Who buys marine insurance under FOB?
Nobody is obliged to. Incoterms 2020 imposes no insurance duty on the FOB seller, so the buyer decides whether to insure and with whom, and must arrange it before loading.
Why is the sum insured 110% of the contract value?
Incoterms 2020 sets 110% as the minimum for CIF and CIP so that the buyer’s cover goes beyond the invoice value. How a claim is calculated depends on the policy.
Does cargo insurance cover theft of a car?
Theft and non-delivery fall within an all-risks policy under Clause (A), subject to its exclusions. Most summaries say they are outside (B) and (C), but one insurer’s article says (B) covers them, so check the wording and any extension in your policy.
The car is damaged in the port yard. Is it still covered?
It depends on whether the damage happened inside the period of the transit clause. Cover is warehouse to warehouse but ends at the earliest of several events, including 60 days after discharge. Read your policy.
How long do I have to report damage that is not visible?
Under the Hague-Visby Rules, 3 days from delivery for written notice to the carrier, and 1 year to bring suit. Your policy and the bill of lading may set different periods, so report to both as soon as you find damage.
Do you arrange insurance for buyers?
We are not an insurer or a broker. We can tell you what cover level a quote includes so you can compare it, and you should place the insurance with a licensed insurer or broker. Ask us on WhatsApp.
Sources: ICC Academy, “Incoterms 2020: CIP or CIF?”; HFW, “Incoterms 2020 at a glance and commentary”; Reed Smith, “Incoterms 2020: what you need to know”; SeaRates CIF and CIP reference pages (insurance level and 110% sum insured, secondary commentary on Incoterms 2020; the ICC rulebook text was not checked). Institute Cargo Clauses (A) 1/1/09 as published by insurers (exclusions in Clause 4, transit clause with 60-day limit, checked through search extracts rather than the full text; the Clause (C) 2009 text itself was not retrieved); ICICI Lombard, Group ACTIVA, DBS and Digit explanations of the (A), (B), (C) perils (insurer and broker summaries); Lloyd’s cargo claims training manual (Clause (A) is not unlimited). If (Finland), “Summary of time limits for notice of loss”; Handybulk and Conventus Law summaries of the Hague-Visby notice and time-bar rules (3 days for non-apparent damage, 1 year). Checked October 2026. The (B) versus (C) peril lists are insurer and broker summaries and vary slightly; one (ICICI Lombard) says Clause (B) covers theft, the others do not. The 60-day end of cover appears in published 1982 and 2009 copies of the clauses; the clause number differs between versions. No premium rates or claim amounts are quoted because insurers set them. Photo: Farid mernissi / Wikimedia Commons, CC BY-SA 4.0.