You Sold FOB, the Buyer Demands ICC (A) Cover: When to Push Back and When to Insure Anyway

Under Incoterms 2020, FOB transfers risk to the buyer at the on-board moment at the named port of shipment, and obliges neither party to insure. Your buyer knows this. They are asking for ICC (A) cover terms in the sale contract anyway. This article is about why, and what to do.

The short answer is that the Incoterm is the default, not the contract. A sale contract can require anything the parties agree to, including insurance terms that go beyond what the Incoterm prescribes. The longer answer is that the seller's response should depend on which of three specific reasons is driving the buyer's request, because the right move differs in each case.

What FOB actually says under Incoterms 2020

Incoterms 2020 is published by the International Chamber of Commerce in Paris. The 11 rules in the 2020 edition are EXW, FCA, CPT, CIP, DAP, DPU, DDP (for any mode of transport) and FAS, FOB, CFR, CIF (for sea and inland waterway only). For the seller-buyer split on insurance specifically, see Incoterms 2020 and cargo insurance responsibility.

FOB obliges the seller to deliver the goods on board the vessel nominated by the buyer at the named port of shipment, cleared for export. Risk transfers at the on-board moment. Cost transfers at the same moment. Neither the seller nor the buyer is contractually obliged to insure under FOB. In practice, the buyer arranges insurance for the on-board voyage because they bear the risk from on-board to discharge, and many sale contracts default to that division.

The CIP change in Incoterms 2020 (upgrading the seller's insurance obligation from ICC (C) to ICC (A) minimum) is widely missed by traders still operating to pre-2020 mental models. CIF, by contrast, still requires only ICC (C) minimum, which is named-perils cover and considerably narrower than ICC (A). Many CIF buyers contractually require ICC (A) regardless, because the (C) minimum does not match what they actually want.

Resource: LC Insurance Certificate Compliance Checklist

Use the LC Insurance Certificate Compliance Checklist to confirm your certificate meets ICC (A) and UCP 600 Article 28 simultaneously. Pair it with Why Banks Reject LC Insurance Certificates for the lender's view. Free, no signup wall.

The pre-loading risk window most FOB sellers underestimate

The on-board moment is the formal risk transfer under FOB. Before it, the seller carries risk: warehouse to dock, dock to terminal, terminal to vessel side, vessel side to lift, lift to on-board. Each of those steps has its own loss patterns and its own claim history.

The seller's exposure in this window is real and frequently uninsured. A trader who treats FOB as "the buyer's insurance covers everything" has confused risk-transfer point with insurance attachment point. They are not the same. A buyer's cover may attach at the on-board moment, leaving the pre-loading window outside both parties' insurance unless one of them buys it.

This matters for a working trader because the cargo is most exposed in the pre-loading window: handling damage, theft from container yards, weather damage during waiting at terminal, mishandling on lift to vessel. The seller's insurable interest in this window is clear (the cargo is at the seller's risk), and most cargo policies will respond if a policy is in force, subject to policy terms and conditions.

Why your buyer is asking for ICC (A) anyway

If FOB does not oblige insurance, why is the buyer writing ICC (A) into the contract? Three patterns are common.

Reason 1: The buyer wants placement in their preferred jurisdiction

The buyer's compliance team, treasury, or risk function may prefer cover placed in a specific market (their home market, a Lloyd's placement, a market with established claims handling for their commodity). Asking the seller to procure ICC (A) is a way to push the placement choice to the seller without taking responsibility for the placement themselves.

The right response is usually to push back on the contract wording. The seller can offer to procure cover at the buyer's request and at the buyer's cost, with the buyer named as the assured. This addresses the buyer's placement preference without restructuring the seller's own programme.

Reason 2: The buyer's bank or LC drives the requirement

Letters of credit issued under UCP 600 commonly require an insurance certificate as part of the document presentation, and the LC may specify cover terms (often "all risks" or "ICC (A) 2009 with war and strikes"). If the LC issuing bank is the buyer's bank, the buyer's compliance with the LC effectively requires the seller to deliver the certificate.

The right response here is to comply, but to factor the cost into the unit price. UCP 600 Article 28(f)(ii) requires a minimum of 110 percent of the CIF value if no specific minimum is stated, and the certificate must be in the LC currency. Our piece on when your bank rejects your cargo insurance certificate covers the certificate-level mechanics.

Reason 3: The buyer is shifting cost via the contract

The buyer knows that under FOB, they typically arrange and pay for insurance. Writing ICC (A) into the sale contract shifts that cost back to the seller without renegotiating the price. The buyer gets cover, the seller absorbs the premium, and the headline FOB price has not moved.

The right response here is either to push back firmly (with the redline language below) or to absorb the cost into a re-quoted price. The cleanest commercial answer is often to switch the sale to CIF, which formalises the seller's insurance obligation and the price-inclusive cost.

Decision framework: push back, insure, or switch

Redline language for pushing back: "The Incoterm for this transaction is FOB [Named Port] under Incoterms 2020. Insurance for the on-board voyage is the buyer's responsibility. The seller's responsibility for the cargo terminates at the on-board moment, save for the seller's own pre-loading exposure which the seller may insure at its discretion." This wording can be agreed to bilaterally without altering the headline FOB structure.

If you do agree to insure, structure it cleanly

If the seller agrees to procure ICC (A) cover for the buyer (whether for placement, LC, or cost reasons), the cleanest structure is a separate single-shipment certificate or an open cover declaration with the buyer named as assured. The seller's existing open cover (typically structured for the seller's own benefit) does not automatically transfer to the buyer.

Key clauses to specify: ICC (A) 2009 base cover, Institute War Clauses (Cargo) CL385 dated 01.01.2009 and Institute Strikes Clauses (Cargo) CL386 dated 01.01.2009 if war and strikes are required, sum insured at CIF + 10 percent (or higher per the LC or contract), currency matching the LC or contract, and the insurance attachment point matched to the contract risk transfer (typically warehouse-to-warehouse under Clause 8 of ICC (A)).

If the seller's existing open cover is on ICC (B), do not assume the underwriter will issue an ICC (A) certificate against it without endorsement. The two are different forms; underwriters generally will not issue a wider certificate than the master cover supports without an explicit clause endorsement, subject to policy terms and conditions.

When switching the sale to CIF makes more sense

If the buyer's request is repeated across multiple shipments, or the seller is regularly asked to satisfy LC certificate requirements, switching the sale to CIF formalises the structure. Under CIF, the seller is contractually obliged to procure ICC (C) minimum cover (most contracts require ICC (A)), and the price includes that cost transparently.

Two operational notes. The CIF price is FOB plus freight plus insurance, calculated to deliver the same net margin to the seller. Many traders find that the discipline of pricing CIF properly (including the realistic insurance cost rather than the buyer's optimistic estimate) produces a slightly higher margin than the FOB-with-insurance-bolted-on approach. And switching to CIF does not change the buyer's pre-shipment LC-related risk exposure; it changes who arranges the cover.

Frequently asked questions

Does FOB really mean I have no insurable interest after loading?

You have no risk after loading under FOB, and so your insurable interest in the cargo as a property exposure ends at on-board. You may have an insurable interest in payment risk (the buyer's obligation to pay you), but that is a different cover (trade credit insurance) and structurally separate from cargo cover, subject to policy terms and conditions.

Can my buyer claim against my insurance if they paid the freight?

Only if your insurance was structured to name the buyer as assured or as a loss payee, or if there is a transfer mechanism in the policy. Default cargo policies cover the named assured; the buyer's freight payment does not by itself create a claim right against your cover.

What's if I'm asked to insure to ICC (A) but my open cover is ICC (B)?

Speak to the underwriter or the placement specialist before agreeing in the sale contract. Issuing an ICC (A) certificate against an ICC (B) master cover is generally not permitted without endorsement; the underwriter will treat it as a coverage extension and may require additional premium or refuse the endorsement entirely, subject to policy terms and conditions.

Should I just switch the sale to CIF instead?

If you are routinely asked to insure under FOB, yes, often. CIF formalises the seller's insurance obligation, includes the cost in the price transparently, and reduces the back-and-forth on certificate wording at LC presentation time. Many trading houses standardise on CIF for European and bank-driven buyers and on FOB for ASEAN regional flows.

What's the cheapest way to satisfy the buyer's request without restructuring my whole programme?

A single-shipment certificate naming the buyer as assured, issued by your existing insurer or by Voyage as a separate placement, is usually the cheapest. The seller's open cover stays untouched; the buyer gets the certificate they need; the cost is clear and recoverable in the unit price. We cover this in what marine cargo underwriters look at when pricing your shipment.

Voyage Conclusion

FOB obliges no one to insure. The buyer's request for ICC (A) is a contract-level move, not an Incoterm requirement, and the seller's right response depends on which of three reasons is driving it. Almost always, the cleanest answer is to either push back firmly or to switch the sale to CIF and price the cover in.

Talk to Voyage about Single Shipment Marine Cargo Insurance placed on ICC (A) wording when an FOB buyer pushes the cover request back to you, or Marine Cargo Open Cover for traders running regular flows where ICC (A) is the default clause set. For high-value transit (electronics, jewellery, project cargo), Specialist High-Value Transit Insurance applies. For the corridor-specific industry view, see Electronics & Semiconductors Cargo Insurance. WhatsApp +60 19 990 2450 or use the contact form.

Download the LC Insurance Certificate Compliance Checklist

LC Insurance Certificate Compliance Checklist: confirms your certificate meets ICC (A) and UCP 600 Article 28 simultaneously. Free, no signup wall.

Related guides: when your bank rejects your cargo insurance certificate, Why Banks Reject LC Insurance Certificates, letter of credit document checklist for Malaysian exporters, how to read a marine cargo insurance certificate, Incoterms 2020 and cargo insurance responsibility.

Disclaimer: This article provides general guidance on FOB sales and cargo insurance as of April 2026. Coverage terms, conditions, and availability vary by insurer, policy, and jurisdiction. Regulatory requirements differ between countries and may change. Always review your specific policy wording and consult a qualified insurance or legal professional before making coverage decisions.