Commercial dimension-need for cargo insurance, Marketing Research

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Commercial Dimension : From the point of view of an exporter, a transaction is complete as soon as the importer either pays for the bill of exchange on its presentation or he undertakes to make payment at a future date by accepting the Bill. Sometimes even before the bill of exchange is presented to the importer, he gets to know about the loss of goods in transit and does not accept the Bill when presented. In such a situation, the exporter is compelled to bear the loss. Prudent exporters, when dealing with unknown customers on DP or DA payment terms, prefer to get cargo insured. Further, as a commercial practice, cargo insurance makes it possible for the exporter to get post-shipment finance from the negotiating bank because the insurance policy is one of the required documentation under a c.i.f. contract. If on the other hand, the contract is on f.0.b. terms with payment on DP or DA basis, the negotiating bank may advance money immediately after shipment (provided the shipping documents are in order and the bank is favoured with an appropriate insurance policy.)

 

 


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