When sellers buy insurance after the voyage, is the insurance company liable for damaged goods
In international sales of goods, in order to reduce risk and ensure that the loss for both parties will not be too serious after the goods are damaged, it is necessary to insure the goods. Under the CIF of the Incoterms Rules 2020, the seller must arrange a contract of insurance at its own cost to cover the buyer’s risks. If the seller arranges the insurance after the beginning of the voyage, and the insurance company signs an anti-dated contract of marine insurance, will the seller, or the insurance company, or both of them be liable after an accident?
Firstly, the seller is not liable. According to the CIF term, the seller’s obligation is to arrange insurance. It doesn’t matter whether the seller arranges the insurance before or after the beginning of the voyage. Therefore, even if the seller purchases insurance after the beginning of the voyage, he/she still fulfills the obligations required by the CIF term, and is not liable for the accident.
Secondly, the insurance company should indemnify the loss to the subject matter insured and the liability of the insured caused by perils covered by the insurance. It’s not uncommon for an insurer to sign an anti-dated contract of marine insurance on the grounds that the insurance contract has to accord with a letter of credit, or the seller doesn’t remember to arrange insurance until the ship sails. An anti-dated insurance contract is based on the consent of both the insurer and the insured. Therefore, the insurer cannot terminate the contract or refuse to indemnify the loss with an excuse that the contract is anti-dated. Such conclusion has strong legal basis reflected in the judgments and rulings of Chinese courts, such as （2008）鲁民四终字第95号 and （2009）绍商初字1294号.
In addition, under the circumstance regarding an anti-dated contract of marine insurance, the courts usually pose a stricter requirement on evidence, demanding notarized evidence.
If you have any legal dispute related to a contract of marine insurance, please feel free to contact our professional and experienced team.
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