Page 78 - Export and Trade

Insurance

Businesses are exposed to a wide range of risks every DOOHYLDWLQJ FRPPHUFLDO WUDGLQJ ULVNV VXFK DV ¿QDQFLDO
daytheytrade.Forexportersand importerstheserisks failure of logistics operators, imported goods that reach
DUHPDJQL¿HGGXHWRWKHGLVWDQFHEHWZHHQWUDGLQJSDUWLHV their destination devalued due to unforeseen delays or
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and costly when something goes wrong. instance, in the US containerised chocolates were sent
For exporters, there is the risk of non-payment for goods E\ UDLO LQ VXPPHU ZLWK QR WHPSHUDWXUH VSHFL¿FDWLRQV DQG
exported. For importers, there is the risk of payment for thereforenorefrigeration.The chocolatesmeltedduring
goods that are not delivered to contract requirements. transportation and were therefore spoiled and unacceptable
Some common reasons for payment disputes include: to the purchaser.
• Shipments lost in transit. Cargopoliciescan becomplicatedfortheuninitiated;
•Goods deliveredinadamagedstate. thereforetraderswouldbewell-advisedtoseektheservices
‡6LJQL¿FDQWWUDQVSRUWGHOD\VDIIHFWLQJVDOHSULFH of an experienced insurance broker. It is important for
• Goods purchaser unable or unwilling to pay. traders to obtain advice from a broker who understands the
hazards encountered by their particular business, so that
Tohelp mitigatetheserisks,NewZealandexportersand theycanadviseofthebestcoverage,tailoraplanto suit
importers can secure insurance to protect them and their DQG ¿QG WKH EHVW UDWHV DYDLODEOH
balancesheetsfromsomeoftheuncertaintiesoftrade.
There are four key areas relevant to trade where The advantages of Marine Cargo insurance may include:
insurance can play a critical role: •Tailored cover to include exactly what you need. Policy
1. Marine Cargo insurance protects businesses from wordings designed to suit your goods, Terms of Sale,
thediverserisksthatproductsareexposedtoduring method of transportation and any other risks which are
transportation. inherent to your product or business.
2. Product Liability insurance protects businesses • Guaranteed cover at pre-arranged rates and conditions.
againstlegalliabilityfromthirdpartyinjuryorproperty •Noneedtoarrangeseparatepoliciesforeachindividual
damage. shipment.
3. Trade Credit insurance insures businesses against • Insurance cover normally starts the moment the goods
bad debts; a necessity when dealing with business areintransitandattheriskoftheimporterorexporter.
partners, particularly in foreign transactions. • Losses are covered regardless of whether they occur
4. Business Travel insurance covers your business for before the importer or exporter has given details of the
¿QDQFLDO GLVUXSWLRQ FDXVHG E\ D VHULRXV DFFLGHQW LOOQHVV shipment to the insurer.
ordelaywhentravellingtoothercountriesforbusiness.
The following sections outline the insurance areas of What your insurance will cover
particular importance to traders, highlighting certain issues Marine Cargo insurance will generally provide cover from
thattradersshouldbeawareofwhen purchasinginsurance. the time the goods are removed from their pallet racking
in the warehouse, until they reach their pallet rack in the
1. Marine Cargo Insurance receiving warehouse. Provided that the goods remain in
Marine Cargo insurance is primarily concerned with loss or the ‘ordinary course of transit’, cover is continuous. This
damage of goods from physical risks during transportation. means that the shipment will still be covered for normal
While the method of transport may not involve a ship, it stoppages in the journey, such as waiting for the arrival
isoftenreferredtoas‘marine’–atraditionwhichgoes of a ship or completion of Customs inspections. Anything
back to the days when the only way to transport goods outside of the ‘ordinary course of transit’ will need to
internationally was by ship. For the price of an insurance be separately agreed with the cargo insurer or insured
premium, importers and exporters can largely avoid elsewhere.
the business risk involved in the transportation of their An often overlooked component of all marine insurance
JRRGV DV WKH ¿QDQFLDO ULVN LV HLWKHU SDUWLDOO\ RU FRPSOHWHO\ is the cover provided for what are known as ‘General
transferred to the insurer. Average and Salvage expenses’. General Average and
Comprehensivepolicywordingswillalsoassistwith 6DOYDJH H[SHQVHV LV ZKHUH WKH VKLS RZQHUV VDFUL¿FH VRPH

76 NZ Export & Trade Handbook 2018