Cost, Insurance and Freight and the cover the seller buys

The minimum the rule requires

The seller must obtain cargo insurance covering the buyer's risk during the voyage, for the price of the goods plus an uplift, in the currency of the contract, and running from the point of delivery to the named destination port. The default level of cover under this maritime rule is the restricted set of clauses rather than the widest available, so a range of perils is simply not covered unless the parties agree otherwise. The seller must provide the buyer with the policy or other evidence so a claim can be made.

Restricted cover and what it leaves out

Cover written on the narrower clauses responds to listed perils rather than to loss from any cause not excluded. Damage from handling, from water entering a container, from theft or from many ordinary transit incidents can fall outside it. For manufactured goods, high-value cargo or anything sensitive to handling, that default is usually inadequate, and the answer is to specify the wider clauses in the sale contract and accept the higher premium in the price.

Claiming on a policy you did not arrange

The buyer holds the exposure and therefore makes the claim, on a policy negotiated by a seller whose interest ended at loading. Practical difficulties follow: the buyer needs the policy document or certificate in time, needs to know the insurer's survey requirements, and needs the sum insured and currency to match its own position. Chasing these after a loss is far harder than agreeing them when the contract is signed.

Where the rule earns its place

It suits trades where the seller has better access to competitive cover, where cargo is sold afloat and a transferable policy travels with the documents, and where a documentary credit expects an insurance document in the presentation. It is much less appropriate where the buyer has an open cover policy of its own at better terms, in which case a freight-paid rule without the insurance obligation avoids paying twice for the same risk.

Frequently asked questions

Does the seller's insurance mean the seller carries the voyage risk?

No. Delivery and the transfer of exposure happen at loading, and the seller is buying cover on the buyer's behalf. The seller has no interest in the cargo once it is on board, which is exactly why the adequacy of the policy has to be agreed in advance rather than assumed.

Can the buyer insist on wider cover?

Yes, by agreeing it in the sale contract. The rule sets a minimum, not a ceiling, and it is normal to specify broader clauses, additional perils such as war and strikes where relevant, and a higher insured amount, with the cost reflected in the price.

Is this rule appropriate for containerised cargo?

It belongs to the maritime family, so it carries the same mismatch as other port-based rules when applied to boxes handed over at a terminal. The any-mode equivalent with an insurance obligation is the better fit for containers, and it also defaults to a wider level of cover.