Purchase transport insurance for machinery and equipment in three steps: ① Select the coverage type (for machinery, All Risks/ICC A is recommended: covers theft, collision damage, and moisture damage; rates are approximately 0.15%–0.3% of the cargo value); ② Determine the insured amount (CIF × 110%—covering cargo price + freight + insurance + 10% profit; up to a maximum of 130%); ③ Find a channel (freight forwarder, insurance broker, or insurance company; insure before shipment and provide the invoice, bill of lading, product name, value, and route)—premiums are only a fraction of a percent, making this a must-buy for large machinery.
I.
Selecting Coverage
FPA (Free from Particular Average): Covers total loss and General Average (suitable for low-value cargo); WPA (With Particular Average): Adds coverage for partial loss due to natural disasters (rate approx. 0.1%); All Risks: Adds coverage for external risks such as theft, collision damage, moisture damage, and rust (rate 0.15%–0.3%; recommended for machinery/precision instruments); ICC A: The internationally standard “All Risks” equivalent (war and strike risks can be added based on the shipping route)—machinery and equipment face high risks of damage during loading/unloading, shifting, and moisture exposure, making “All Risks” the best value choice.
II. Determining the Insured Amount
Formula: Insured Amount = (Value of Goods + Freight + Insurance Cost)—i.e., CIF value—× 110% (includes 10% expected profit, an industry standard); Upper Limit: Generally not to exceed CIF × 130%; Rationale: Ensures no financial loss in the event of a total loss by covering the value of goods, freight, and profit—Under-insurance results in proportional compensation for partial losses (lower coverage leads to lower payouts).
III.
Purchasing Channels
Freight Forwarder (most convenient; arranged alongside booking); Insurance Broker (price comparison + claims assistance); Direct Purchase from Insurance Company (e.g., PICC, Ping An, or CPIC marine cargo insurance); Note: Do not purchase the shipping line’s “carrier liability insurance” (coverage is extremely limited)—all three channels are viable options; while premium rates vary little, claims service quality differs significantly (choose major companies).
IV.
Insurance Obligations under Incoterms
CIF/CIP: Seller arranges insurance (CIF requires minimum ICC Clause C; CIP 2020 requires ICC Clause A); FOB/CFR/EXW: Buyer arranges insurance (mandatory for the buyer under FOB); Buyer Verification: For CIF transactions, request the insurance policy and check the ICC clause level (do not simply assume the seller’s coverage is sufficient)—insurance obligations are determined by the trade term, with the buyer and seller each responsible for their respective duties.
V. Key Points for Claims
1. Prompt notification (contact the insurance company immediately upon discovering damage; most policies require notification as soon as possible); 2. Do not sign a “clean” bill of lading (annotate the bill of lading or receipt with “damaged” if damage is present); 3. Retain evidence (photos, inspection reports, unloading records); 4. Inspection (notify the inspector for large losses); 5. Complete documentation (insurance policy, invoice, bill of lading, claim letter)—Machinery Transport Insurance: All Risks coverage (0.15%–0.3%); insured value at CIF × 110%; purchasable by freight forwarders/brokers; buyer insures under FOB terms;
ensure timely claims and evidence preservation.
