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How to Calculate International Freight Transportation Insurance


International Transportation Insurance is based on a C.I.F.+10% value formula. It is done this way to
cover the costs of transport in the policy. Especially important if the damage occurs at the final
delivery point.
Example. Your freight may be worth $ 100,000.00, but you pay $ 12,000.00 for crating and air
freight to the foreign destination. If you insure the shipment for only the $ 100,000.00 value and the
shipment is a total loss, you would also lose the $ 12,000.00 in transport costs.
….you still have to pay the crating company, origin trucker, airline, insurance cost, delivery, etc.
It is a standard international insurance industry norm to insure for CIF+10%. The 10% to cover
incidental costs like processing the claim, survey costs, possible inflation costs of replacements.

Formula for calculating Insurance is: C + I + F + 10% (CIF + 10%)
C = Cost
I = Insurance
F = Freight
Premium Cost per $ 1,000.00 for this example: $ 3.00 per $1,000.00 CIF+10% Value
C = Cost (Value) = $ 100,000.00 C+F = $ 112,000.00
+ F = Freight = $ 12,000.00 x Premium $ 3.00 per $1,000.00
-------------------------------
$ 336.00 = “I” before 10%
C+F+I = ($ 112,000 + 336.00) = $ 112,336.00 CIF
+ 10 % x 1.1 Increase 10%
----------------------------------------------
Policy = C.I.F. + 10% = $ 123,570.00 = Policy Amount
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Premium = $ 123,570.00
Div / $1,000
-----------------
$ 123.57 ($1,000’s)
x $ 3.00 per $1,000
-----------------
Actual Insurance Premium = I = $ 371.00 {Premium for $ 123,570.00 Policy Amount}

Proposed by: Jacques Guiffo On 16/07/2008 - 14h15 Last update: 16/07/2008 - 14h15  Write your TUTORIAL
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