Seller's interest cover
A seller's fallback when the buyer was supposed to insure and did not.
Definition
Contingent cover taken by a seller who has sold on terms where the buyer carries the risk — FOB, CFR, FCA, CPT — protecting the seller where the buyer fails to insure, insures inadequately, or rejects the goods and leaves the seller unpaid and exposed. It responds only where the seller has an insurable interest at the time of the loss, which is typically where payment has not been received.
Why it decides money
It is cheap, because it rarely responds. It exists for the case where the contract said the buyer would insure and nobody checked.
Related terms
- Incoterms
- The ICC rules that set where risk passes and who, if anyone, must insure.
- Insurable interest
- You can only insure goods you stand to lose something by.
More in what is covered
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