Marine cargo insurance is strongly recommended on every new BYD export order, and it is already built into the standard landed cost calculation at 1.1% of the vehicle's FOB value. While certain Incoterms do not strictly require the buyer to carry cargo insurance, going without it leaves the buyer financially exposed to the full replacement cost of the vehicle in the event of loss or serious damage during ocean transit.

What the 1.1% FOB Insurance Line Covers

The insurance line item in the landed cost formula covers the vehicle against major transit risks between the port of loading and the port of destination, including:

  • Total loss (vessel incidents, sinking, jettison)
  • Damage from rough handling during loading and unloading
  • Damage from adverse weather during ocean transit
  • Theft or pilferage while the cargo is in the custody of the carrier

Because the premium is calculated as a small percentage of FOB value (1.1%), it represents a modest add-on cost relative to the total exposure it protects against, especially compared to the cost of replacing a vehicle lost or badly damaged in transit with no coverage.

Why It's Recommended Even When "Optional"

Under certain Incoterms (such as FOB or CFR), the seller's insurance obligation ends once the goods are loaded onto the vessel or does not extend to cargo insurance at all, meaning the buyer bears the risk of loss during the ocean leg unless they arrange their own coverage. This is different from Incoterms like CIF, where the seller is obligated to provide minimum insurance coverage as part of the sale. Regardless of which Incoterm structure applies to a given order, the practical reality is the same: ocean freight carries inherent risk, and a buyer with no cargo insurance in place is fully self-insured against that risk by default, whether they intended to be or not.

Given that vehicle export orders often represent a significant capital outlay, especially for multi-unit dealer or fleet orders, carrying marine cargo insurance is a low-cost way to remove a large, unpredictable risk from the transaction.

How Insurance Fits Into the Full Landed Cost

The 1.1% FOB insurance premium is one line within the full landed cost formula used for every quote:

  • FOB price
  • + $1,450 fixed international freight
  • + insurance (1.1% of FOB)
  • + import duty (destination country's duty rate x CIF value, where CIF = FOB + freight + insurance)
  • + VAT (destination country's VAT rate x (CIF + duty))
  • + $650 fixed customs clearance and handling fee
  • = Total Landed Cost

Note that insurance is also part of the CIF value used to calculate import duty and VAT in most jurisdictions, so it is not simply an added cost, it is a standard, expected component of how landed cost is calculated for any properly insured shipment.

Filing a Claim

In the event of transit damage or loss, a claim is filed with supporting documentation (bill of lading, packing list, photos or a damage report at destination, and the insurance certificate) through the marine cargo policy. Buyers should inspect vehicles promptly upon arrival and document any visible damage before or at the point of destuffing, since timely documentation is typically required to support a claim.

BYD Global Export is an independent export trading company and is not an authorized dealer or representative of BYD Auto Co., Ltd.

To get a full landed cost quote including marine cargo insurance for your order, reach out via WhatsApp.