Foreign trade insurance premium calculation formula

Foreign trade insurance premium calculation formula

According to different situations, the handling methods and calculation methods of import and export cargo transportation insurance are also different.

In the import and export cargo transportation insurance, the insured has two main methods: one by one and the signing of the general insurance contract.

Case-by-case insurance means that each specific batch of goods is insured separately, which is suitable for frequent transactions but small quantities of goods, and the premium is calculated according to the value of the goods and the mode of transportation of each transaction.

Open cover master contract refers to a long-term insurance contract between the insured and the insurance company, covering multiple shipments of goods over a period of time. This method is suitable for large and frequent transactions, and can simplify the insurance operation process and reduce the procedure cost.

In export cargo Insurance, the amount of insurance and the premium are usually calculated based on the CIF price of the goods (Cost, Insurance, Freight, cost and freight). The insurance company will use this price to determine the amount of insurance and the premium.

Insurance amount = CIF price × 110% (insurance premium)

Insurance premium = CIF price × 110% × premium rate

Among them, the insurance rate is determined by the insurance company according to the nature of the goods and the degree of risk.

For imported goods insurance, the calculation method of insurance amount and premium is also different according to the different transaction terms of the goods.

For goods traded On FOB (Free On Board, FOB) :

Insurance amount = FOB price × (1 + average freight rate + average premium rate)

Premium = Amount insured x average premium rate

For goods traded at C&F price (Cost and Freight) :

Insured Amount = C&F Price × (1 + average premium rate)

Premium = Amount insured x average premium rate

Average freight rates and average insurance rates are based on insurance company regulations and they reflect the general cost of transporting goods.