As with any commercial transactions, there are risks associated with trading internationally. This page explains the likely risks you may encounter and the factors to consider.
For insurance cover to be valid, you have to be able to show that you have an 'insurable interest' in the insured goods. This means showing that the goods are yours and that you bear the risks associated with them.
The three main risks that arise in international trade are:
delay (including detention at customs)
How risks are shared between buyers and sellers is a contractual matter. The point at which the insurable interest passes from supplier to buyer is determined by the sale of contract used. You should be aware that Incoterms - a standardised set of trading terms - do not cover insurance unless specifically chosen to do so. For more information, see our guide to International commercial contracts - Incoterms.
Under a CMR contract the carrier bears some limited liability (although this is determined on a case-by-case basis and sometimes the liability can be total), so traders should arrange the appropriate insurance cover. For more information, download a copy of the CMR Convention from the UNECE website (PDF, 60K).
Traders often tend to under-insure themselves, so it's recommended that you add 10 per cent to the amount of cover you think you need. You can also arrange cover for contingencies, such as the buyer refusing to accept your goods when they arrive.
For more information about arranging insurance for your international trade, see our guide on transport insurance.