To make sure goods are correctly insured, they use the formula of CIF value x 110%. CIF value is the commercial invoice value + insurance costs + freight. The 10% covers any unforeseen costs. The insurance can cover the repair or replacement of goods at a location other than the consignee’s facility. An insurance claim may be prorated if part of the shipment is lost or damaged.
CIF requires Clause C (Institute of Cargo Clauses) which is a basic level of insurance suitable for bulk commodity cargoes but not manufactured goods. Incoterms 2020 requires CIP use a higher quality insurance (Clause A) as it’s often used for manufactured goods.
If a shipment is underinsured, the insurer may only pay a percentage of the shipment.
If goods arrive damaged, someone on the dock should make a note on the bill of lading at the time of arrival to help with the insurance claim.