Export insurance is a necessity if you want to delve into import-export business. Of course, for any business transaction there’s always a risk involved, though the rate is far greater when you’re dealing with a person from another country (what more a continent). That’s where an insurance for this matter, comes into play.

An insurance is merely to be on the safe side, and for peace of mind.

Just like it’s name, an insurance is merely to give you a peace of mind, so you can be comfortable and grow your ventures internationally without any worries. Like a prenup, you might say; an export insurance, done correctly will ensure that each party follows accordingly for a fruitful business relationship, with integrity.

Popular Types Of Export Insurance Available

Credit Insurance

One of the most popular form of export insurance; this type is suitable for any business that provides credit extension to their buyer by covering the risk that your buyer might unable to pay for the money owed and agreed upon, with the coverage usually 80-90% of the total owed.

Credit insurance can be extremely handy for new and potential clients, where insurers will obtain credit reports, financial histories, and other related documents to create a suitable recommendations.

Political Risk Insurance

A type of insurance that can be beneficial especially in emerging countries, defined by the risk of government that might intervene your business investments (goods, assets, change of policy etc), or the potential climate that might happen in the country (civil wars, coup d’etat).

Because with emerging countries, the government is likely to be weaker, with loopholes in the system, and less transparency which can put a significant risk on your business. Hence political risk insurance can serve as a safety measure, should your ventures gone awry.

Hopefully not.

Product Liability Insurance

This type of insurance is similar to domestic ones – the policy covers most risks relating the product, ranging from cost of recall for faulty products, failure to comply with appropriate rules, and etc.

Hence, exporters need to be sure that their product follows regulations set by the importer’s country before dealing with the said buyer/importer, as the insurance isn’t likely to cover for uninformed exporter.

Currency Insurance

Fluctuating currency may prompt you to take this insurance for safety measure, to minimize conversion loss. This policy is handy if you are dealing with long term projects, where currency movement can be hard to predict.

Marine Insurance

Marine insurance is one of the insurances that you  are encourage to take: this policy covers all modes of transport, to ensure that the goods arrived safe and sound, as paid by the buyer.

Generally speaking, take a marine insurance that covers from the time your product leaves your premise, up until your customer receive the product.

What To Consider For My Export Insurance

Before purchasing your export insurance, take these considerations at hand:

• Take account every detail and cost necessary to estimate the total coverage (in most cases 110% of the total transaction), as precise as possible. At best, prepare for the worst case scenario. Do not leave it to chance as you’ll be putting a lot of risk (we’re exporting products in metric tonnes here).
• Be clear between exporters and importers about the risks involved, responsibility for each party, and to minimize it as much as possible. Plus, there’s always a possibility that your buyer may be happy to share the cost of the total insurance, for both peace of mind.
• Each documents for the transaction should be kept safely until it’s completed. A thorough paper trail is useful, in case you need to file a claim. Read here to know if unfortunate incident does happen.

Where To Buy Insurance For My Country

Depending on your country. These policies can be purchased either through your export-import banks or financial institutions, trade government agencies, or even your own personal insurance, where the company also provide policy covering export/import.

Read here: General info about insurance for your export/import business.

For more info relating with insurance, click here.

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