Insurance for exporting and importing

As an exporter of goods or services you will need to be aware of and consider insuring against the risks of:

• loss of or damage to goods in transit
• non-payment for your goods or services
• the cost of returning to your premises any goods that a buyer abroad refuses to accept
• political or economic instability in the buyer's country
• a new customer's credit worthiness
• currency fluctuations
• a fault that causes an end-customer to sue

If you are an importer, you may need to take into account:

• possible loss of or damage to goods in transit
• supplier problems, including failure to supply
• transport delays and potential hold-ups at ports
• the risk of performance or health and safety problems
• import duties
• storage of goods in bonded warehouses
• currency fluctuations

The responsibility for organising insurance can be shared between the importer and exporter, or be taken on by just one of them. When you agree the terms of a contract, it is advisable to use International Commercial Terms - see International Commercial Contracts - Incoterms.

Foreign currency and exchange risks

When you trade internationally, you should also take steps to protect your business against changes in the exchange rate. You will also need to consider when and how best to make or receive payments in currencies other than sterling - see foreign currency and exchange rate risks.

Loss or damage of goods

The goods you export or import must have insurance cover from the beginning of their journey until their arrival with either yourself or the buyer. In some cases you will absorb the cost of cover, in others the cost is passed on to the buyer.

Product faults

In exceptional circumstances, a fault with the product supplied may result in an end user taking legal action against your business. Depending on the nature of your product or service, you may need to take out insurance to cover this risk. Search for an insurance broker with the British Insurance Brokers Association (BIBA).

Non-payment

You might not be paid in full for the goods or services that you export because:

• your customer can't or won't pay
• war or a natural disaster prevents your goods from reaching the customer, or you from completing your contract
• political reasons prevent you from completing your contract, such as an export licence ban in the UK, or import restrictions or a change in the law in the buyer's country
• currency problems prevent your buyer from getting the cash they need to pay you