Is trade insurance required for imports?

Not by law, but most lenders and many suppliers require it. Under CIF terms, the seller is responsible for arranging cargo insurance.

Does cargo insurance cover tariff-related losses?

No. Cargo insurance covers physical loss or damage during transport. Tariff overpayments are recovered through programs like CAPE.

Trade Finance

What is Trade Insurance?

Insurance covering risks in international trade, including cargo damage, payment default, and political disruption. In the context of U.S. customs and tariff recovery, understanding trade insurance is essential for navigating the CAPE refund process and ensuring accurate duty assessment.

Definition

Trade insurance (also called export credit insurance or trade credit insurance) covers financial losses arising from international trade transactions. The main types are: cargo insurance (covering physical damage or loss during transport), trade credit insurance (covering buyer default or insolvency), political risk insurance (covering government actions like expropriation, currency inconvertibility, or political violence), and marine insurance (specifically covering ocean transport risks). Major providers include private insurers (Euler Hermes, Coface, Atradius) and government agencies (Ex-Im Bank, SBA).

How Trade Insurance Relates to Tariff Refunds

Trade insurance is a risk management tool, separate from customs duties. Insurance costs are not dutiable unless they are included in the transaction value (e.g., under CIF terms where insurance is the seller's cost). For CAPE refund purposes, trade insurance has no direct impact on eligibility or refund amounts.

Example

An importer purchases trade credit insurance covering $2 million in annual purchases from a new Chinese supplier. The premium is 0.5% ($10,000/year). If the supplier defaults on a $500,000 order, the insurer pays the claim. The insurance cost does not affect the customs value or duty assessment.

Frequently Asked Questions

Is trade insurance required for imports?: Not by law, but most lenders and many suppliers require it. Under CIF terms, the seller is responsible for arranging cargo insurance.
Does cargo insurance cover tariff-related losses?: No. Cargo insurance covers physical loss or damage during transport. Tariff overpayments are recovered through programs like CAPE.

Legal References

Institute Cargo Clauses (ICC) A, B, C
Marine Insurance Act 1906 (U.K., widely adopted)

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