How Does Sales Contract Affect Marine Transit Insurance?

The term of sale contract in marine transit insurance generally revolves around the loss and compensation. The terms state what shall affect and who shall be entitled to compensation. Two parties are involved in the sale contract. One is a buyer, and the other is the seller. The sales contract can affect the marine transit insurance on several factors when the two parties enter under a contract.

Read more

Get right expert advice

Hassle free policy

Speedy Claims

Top Insurers

Get ₹10 lakh cover
starting at ₹591/transit+

Step 1/2

Get ₹10 lakh cover starting at ₹591/transit+

secure-icon We don't spam
Get Updates on WhatsApp
By clicking on "" you agree to our Privacy Policy and Terms Of Use

Get ₹10 lakh cover
starting at ₹591/transit+

Step 2/2
Get Updates on WhatsApp
Top Insurers
Expert advice

Buy right

Instant policy

Quick & Hassle free

Dedicated team

Speedy Claims

*Premium varies on the basis of Occupancy, Business Activity & Coverage Type

How Sales Contract Can Affect Marine Transit Insurance?

The seller enters the selling contract with the buyer. Both parties enter the contract on the basis of FOB (Free on Board). It means that the buyer shall be responsible for arranging marine policy for the goods. As a result, the buyer shall be entitled to receive compensation from the insurer if a loss or damages are caused to the goods.

However, if a contract is based on CIF (Cost, Insurance, and Freight), the seller shall be duty-bound to purchase the insurance policy. Under such circumstances, the seller shall be entitled to receive compensation for the loss or damage caused to the goods. This sale contract can affect marine transit insurance.

Let us understand how the sale contract can affect the marine transit insurance policy.

The sales contract can affect marine transit insurance on the following basis.

  1. Free on Board

    FOB or Free on Board states that the seller's duty of safeguarding goods will be over once he loaded the goods on the vessel. The buyer shall be responsible after the on boarding. He shall make sure that the goods are insured.

  2. Free on Rail

    The Free on Rail or ROR contract states that the buyer shall be responsible to purchase the insurance policy for the goods. Therefore, the buyer shall receive compensation in case of a loss or damage caused to the ship.

  3. Cost and Freight

    Cost and Freight or C & F states that the buyer shall be responsible to purchase the insurance for the goods once it is loaded on the ship by the sellers. However, it is at the discretion of the buyer to buy the insurance policy whenever he wants.

  4. Cost, Insurance, and Freight

    The Cost, Insurance, and Freight or CIF states that the seller shall be responsible to ensure the safety of the goods. He shall purchase the insurance for the goods loaded on the vessel. Later, he may transfer the insurance premium cost he incurred to the buyer.

Case Study

Let us discuss a case study in order to understand the sales contract can affect marine transit insurance.

  • ABC Enterprises is a leading textile company. The company exports garments from India to Africa. Most of the transaction of goods takes place via waterways. The ABC enterprise enters into a contract on a FOB (Free on Board) basis. It means that the buyer is responsible for the insurance of the goods.
  • In March 2022, ABC Enterprises exported clothes to Africa. The company enters into a sales agreement on a FOB basis. Therefore, the buyer shall be responsible for the safety of the goods.
  • Due to heavy rainfall, the thunder damages the consignment. Moreover, the goods reached one day late to the destination.
  • The buyer approached the insurance company and the company appointed a surveyor. The surveyor evaluated the loss and damage caused to the consignment. He inspected the goods and made a detailed report about the loss of the consignment. Later, the insurance company settled the claim.


The sales contract may affect the marine insurance policy. If the parties enter into an agreement on the CIF basis, the seller shall bear the cost of the premium. He shall ensure the marine insurance for the consignment. However, he may send the bill of the premium to the buyer or may add it to the sales contract.

Written By: PolicyBazaar - Updated: 28 April 2023
Marine Insurance Articles
Transit of goods through waterways involves high risks. Marine insurance plays a significant role in safeguarding...Read more
23 Nov 2022 by Policybazaar 4027 Views
Marine insurance is an important aspect of the shipping industry. It provides protection against the financial...Read more
31 Mar 2023 by Policybazaar 1550 Views
Warranties in marine insurance are referred to as assurances or promises by the policyholder about a certain act...Read more
20 Jul 2023 by Policybazaar 546 Views
Marine insurance coverage is divided into two types. One is International Cargo Clause (ICC) and the second is the...Read more
13 Aug 2022 by Policybazaar 4229 Views
Marine insurance and its advantages cannot be ignored if you are in a shipping business or your business needs...Read more
19 Aug 2022 by Policybazaar 3273 Views
When it comes to safeguarding your marine shipments, having a...Read more
15 Sep 2023 by Policybazaar 49 Views
When it comes to shipping, meticulous product packing is a...Read more
15 Sep 2023 by Policybazaar 45 Views
In the world of shipping, the proper documentation is paramount...Read more
15 Sep 2023 by Policybazaar 42 Views
In the shipping industry, efficient execution is vital at every...Read more
15 Sep 2023 by Policybazaar 58 Views
The touch and stay clause within marine insurance policies is a...Read more
15 Sep 2023 by Policybazaar 49 Views
Policybazaar for Business - Marine Insurance - Customer Reviews
View all
Based on 114 reviews
out of 5
Based on 114 reviews
14 users
87 users
13 users
0 users
0 users
3.8 April 20, 2023
Great Experience
I recently purchased Marine insurance from Policybazaar for my shipping business and I must say I am thoroughly impressed with their service and coverage. From start to finish, the experience has been smooth and hassle-free.Thankyou.
4.3 April 03, 2023
Provides Comprehensive Protection
When it comes to coverage, Marine insurance that i bought from PolicyBazaar has exceeded my expectations. It provides comprehensive protection for my cargo and vessels during transit, ensuring I can focus on my business operations with peace of mind. Thankyou.
4.3 March 17, 2023
Excellent Services
I highly recommend Marine insurance from PolicyBazaar website to anyone in the shipping or logistics industry. Their user-friendly website, comprehensive coverage, and excellent customer service make them stand out from the competition. With Policybazaar, I feel confident in navigating the high seas, knowing that my business is well-protected. Thank you, Policybazaar.
4.3 February 28, 2023
User Friendly Interface
The website's user-friendly interface made it easy to compare different plans and find the perfect fit for my business needs.Thanks
4.3 February 11, 2023
Prompt Services
I appreciate the transparency and honesty with which Policybazaar handled my claims. They were prompt in processing my claim and their claim settlement process was hassle-free.Thanks PolicyBazaar.
3.8 February 10, 2023
Exceeds Expectations
I recently had the pleasure of purchsing marine insurance from Policy bazaar website and I must say it has been an outstnding experience from start to finish. I am thrilled to share my positive customer review, as this truly exceeded my expectations. Thanks PB.
3.8 January 31, 2023
Easy Navigation
The ease of navigating the Policy bazaar website and finding the right marine insurance policy was impressive. The website's user-friendly interface and intuitive design made it incredibly simple to compare various options, understand the coverage details and make an informed decision. I appreciated the transparency provided throughout the process. Thanks.
3.8 January 21, 2023
Excellent Support
The customer service provided by Policy bazaar was decent. Their team was responsive, knowledgeable and went above and beyond to assist me at every step. Their professionalism and commitment to customer satisfaction were truly commendable.Thankyou.
4.3 January 11, 2023
Sanjeev Rathor
Efficient Process
When it came to claims processing, Policy bazaar demonstrated remarkable eficiency and effectivenes. I had an unfortunate incident during the coverage period and filing a claim was a breeze. The entire process was streamlined and their team guided me throuugh every necssary step, making it hassle-free. The promptness with which my claim was setled reflected their commitment to their customers' well-being and peace of mind. Thankyou.
3.8 January 01, 2023
Comprehensive Coverage
I must mention the comprehensive coverage provided by the marine insurance policy I purchasd through Policy bazaar. It offered me the necesary protection and peace of mind. Thankyou PolicyBazaar.