CIF or FOB? The Strategic Difference in Risk and Cargo Insurance
In import-export activities, choosing between CIF and FOB Incoterms does not only affect logistics costs but also determines who bears the risk and who controls the cargo insurance. Many businesses only realize the critical difference when a loss occurs…
Join PJICO as we analyze why leading enterprises are shifting toward FOB terms and choosing domestic insurance providers.
- The “Convenience” Trap of CIF Terms
Many Vietnamese importers prefer CIF (Cost, Insurance, and Freight) because the foreign seller handles everything from shipping to insurance. However, when an incident occurs (damage, breakage, or loss), you may face:
- Language and Time Zone Barriers: Dealing with a foreign insurance company is often time-consuming and inefficient.
- Complex Claims Process: You must send original documents abroad, and the adjustment process can drag on for months.
- Restricted Coverage: To optimize their costs, sellers often purchase the cheapest insurance plan (Institute Cargo Clauses (C)), which offers very limited protection and excludes many common risks.
- Why You Should Switch to FOB and Choose PJICO Insurance
By proactively purchasing under FOB (Free On Board) terms and choosing PJICO for your cargo insurance, your business takes the “driver’s seat”:
- Rapid On-site Survey: PJICO boasts an extensive network across all major ports and airports. Our surveyors can be on-site within 12 hours to record losses.
- Fast Claims Settlement in VND: Local payment helps your business maintain cash flow for reproduction or replacement without waiting for international bank transfers.
- Professional Risk Consulting: PJICO doesn’t just sell a policy; we design coverage tailored to your specific cargo, from high-value production lines to agricultural products.
- Case Study: Lessons from a $200,000 High-Tech Component Shipment
- Scenario A (CIF): Company A imported electronic components under CIF terms. During unloading at the port, a crate was dropped, causing severe damage. The foreign insurer’s surveyor announced that the loss was not covered because the seller had only purchased the minimum Condition (C) coverage to save costs, which excludes handling accidents during discharge.
- Scenario B (FOB + PJICO Insurance): For high-value electronics, PJICO always advises clients to use Institute Cargo Clauses (A) with competitive premiums, ensuring “All Risks” coverage. Upon discovering damage, the business calls our Hotline at 0936063066. A PJICO surveyor arrives the same day to coordinate with port authorities. PJICO then guides the claim process and provides a fast-track settlement so the business can proceed with its project on schedule.
Conclusion: With FOB and PJICO, you aren’t just buying an insurance certificate; you are purchasing Peace of Mind and Immediate Support.
- Comparison Table: CIF vs. FOB
|
Agreement |
CIF Terms |
FOB Terms |
|
Who buys insurance? |
The Seller |
The Buyer |
|
Control over Insurance |
Low |
High (Absolute) |
|
Claims Handling |
Complex/Remote |
Proactive/Local |
|
Financial Risk |
Hidden/Potential |
Controlled |
Don’t leave your valuable cargo at risk!
Contact us now for the most optimal import-export cargo insurance solutions from PJICO:
- Hotline 24/7: 0936063066 / 1900545455
- Email: phudv.pjico@petrolimex.com.vn
- Address: PJICO Digital – 1st floor, No. 9, Lane 84, Ngoc Khanh Street, Giang Vo Ward, Hanoi City
PJICO – Serving with dedication, accompanying our customers on their journey to greater heights!
