FOB — Free on Board
When the goods are on board the ship at the named port of shipment.
The insurance position
Nobody is obliged to insure under FOB. The rule allocates cost and risk, and stops there. Whoever bears the risk over a leg of the journey is the party with something to lose on it.
The buyer carries the sea leg and everything after. The seller carries the run to the port and the loading.
Where risk passes
When the goods are on board the ship at the named port of shipment.
Where cost passes
Same point.
What a broker would tell you
The most used and most misused rule in world trade. For anything in a container, FCA is the correct rule — under FOB the seller keeps risk through a terminal period they do not control, after the container has left their hands.
The mistake that gets made
Writing FOB on a container shipment out of habit. It creates a period where the seller bears risk for goods already surrendered to the terminal, and letters of credit often force the mismatch to stay.
Who is exposed
The buyer carries the sea leg and everything after. The seller carries the run to the port and the loading.
Where a seller has sold on terms that put the risk on the buyer and payment has not been received, seller's interest cover is the usual fallback — it responds when the buyer turns out not to have insured.
Seller's interest cover →Other rules for sea and inland waterway
Sources
Incoterms® is a registered trademark of the International Chamber of Commerce. This page summarises the insurance consequences of the rule; the ICC publication is the rule.
This page summarises the instruments above. It is not the wording, and it is not legal advice. Where a summary conflicts with a convention text, a policy wording or a certificate, that document governs.
InsuranceScanner is an insurance intermediary, not an insurer — see the Terms for our role. Nothing here is a personal recommendation that a particular cover, sum insured or deductible is suitable for you. Where anything on this page conflicts with the certificate, policy schedule or wording issued by an insurer, that document governs.