Insurable interest

From Supply Chain Management Encyclopedia

Russian: Страхуемый интерес

Insurable interest, in the context of international logistics, is understood as an interest in the preservation of a thing, recognized by law. So, they can have an insurable interest only when they would stand to benefit financial by the continuance of the object insured otherwise financial loss would result. A person/entity has an insurable interest in a marine venture when he/it stands to benefit from the safe arrival of the goods or be prejudiced by their loss. Unlike other insurance, however, this interest needs not to exist at the time a policy is written. Most cargo policies are written on an open basis that will cover all future shipments of an insured when it is his responsibility to provide cargo insurance. Although the most common form of insurable interest is ownership, the point at which title passes from seller to buyer can be complex. In order to determine insurable interest, it is necessary to look at the terms of sale or Incoterms governing the contract. From the point of view of the parties involved in an international marketing transaction – the seller and the buyer – a deciding factor in the question of who needs transportation insurance, and then to insure, is insurable interest. Generally speaking, insurable interest depends upon whether a company will benefit from the safe arrival of the carrier and its cargo or whether the firm will be injured by its loss, damage, or detention. This covers a wide range of situations in that not only do the owners of the carrier and cargo have such an interest, but so may certain no owners.^[1] For instance, in some situations the seller can have an insurable interest as a nonowner even though the buyer already has become the legal owner of the goods.

References

1. ↑ Sales Contract and International Logistics | http://www.contabilizat.ro/file/cursuri_de_perfectionare/management_si_marketing/international_business/cap6.pdf