Import Duty insurance

Import Duty insurance is common enough. Import Duty clause is added to policies covering imports with a separate sum insured to take care of the Duty liability over and above the CIF value of the cargo, should the cargo get lost/ damaged after payment of customs duty. At times import duty may be covered under a separate policy too.

Two basic differences between a cargo policy and a Duty policy or the sum insured representing the Duty portion — 1) Duty policy is not a Valued policy. If the actual Duty paid is less than the Duty sum insured, only the actual duty paid is admissible as a claim. 2) Duty policy is not assignable.

With most cargo policies issued these days covering all types of transits including Duty on turnover basis, how does the Duty component work ? The above two rules relating to the Duty portion would still apply. If a General Average or salvage liability is incurred before payment of Duty, the liability of the insured ( and his cargo insurer) to contribute will be limited to the CIF value of the cargo as evidenced by the commercial invoice notwithstanding Duty had also been included in the sum insured.