• THE-COFFEE-GUIDE.gif 
  • Insurance

     
     

    The vast majority of the trade in coffee today is on FOB terms. In this regard the relevant ECC clause contains three extremely important stipulations.

    In the case of CFR and FOB contracts the buyers have to cover the insurance ahead of the contractual shipment period. Without this stipulation the coffee might be loaded without any insurance cover in place, leaving the exporter at risk. In case of doubt an exporter should insist on proof of insurance.

    The insurance shall commence from the time the coffee leaves the ultimate warehouse or other place of storage at the port of shipment. This is because it can be extremely difficult to determine at what point the marine insurer became liable for any damage or loss incurred once the goods have left the ultimate place of storage. If after leaving the ultimate place of storage but before crossing the ships rail the goods were destroyed by fire, or fell into the water, then the seller might receive no bill of lading at all and would be unable to submit shipping documents for the buyer to pay. This is why ECC also states that the sellers have the right to the benefit of the policy until the documents are paid for.

    In the above example the buyer would have to claim the loss or damage under their insurance cover on the sellers behalf. But even if a vessel sinks immediately after loading the seller will receive a bill of lading and the buyer will have to pay for it. Until payment is made, the benefit of the insurance cover remains contractually vested in the sellers.

    GCA on the other hand relies instead on the transfer of risk stipulation that applies for each contract: shippers and buyers must cover insurance accordingly.

    E.FCA.CC stipulates that insurance shall be covered prior to the contractual delivery period, that sellers shall have the right to the policy until the documents are paid for, and that insurance shall extend from the time the coffee is delivered to the carrier for an amount 5% above the contract price. (Prior to delivery insurance is of course sellers' responsibility).

    See also 05.05.00 and 05.06.00 - Logistics and Insurance

search
  • Region:
    Country:
    Type:
    Date from:
    Date to:
  • contentblockheader