FOB Insurance for Manufacturer Exports — Practical Considerations

Manufacturer Transactions and FOB Insurance

Manufacturer transactions and FOB insurance concern the allocation and insurance of cargo risks from preparation at the manufacturer’s factory or warehouse through loading, domestic transportation, delivery to a CFS or CY, port storage and handling, and final loading on board the vessel.

A manufacturer must align the contractual delivery point, transfer of risk, actual logistics arrangement, commencement of insurance, insured interest, and responsibility for customer claims.

Transactions described as Ex-Go-Down, factory delivery, warehouse delivery, FCA, or FOB may create an uninsured gap where the contract, physical delivery, and insurance attachment point do not correspond.

Under FOB in Incoterms® 2020, the risk of loss of or damage to the goods transfers from the seller to the buyer when the goods are loaded on board the buyer-nominated vessel at the named port of shipment.

However, FOB does not itself require either the seller or the buyer to contract cargo insurance.

The buyer may have arranged marine cargo insurance without covering the period from the manufacturer’s factory or warehouse. Conversely, the manufacturer or freight forwarder may arrange domestic transportation without arranging cargo insurance.

Manufacturer transactions should therefore be reviewed by separating the sales term, actual transport route, risk-transfer point, insurance attachment and termination, insured interest, policy conditions, and customer-response costs.

Scope of This Article

Item	Covered in This Article	Topics Requiring Separate Analysis
Manufacturer exports	Cargo insurance for products exported from the manufacturer’s own factory or warehouse	Insured interest and document titles in trading-company, import-agent, and triangular transactions
Sales terms	Basic differences among Ex-Go-Down, factory delivery, warehouse delivery, FCA, FOB, CIF, and CIP	Complete interpretation of Incoterms® 2020 and individual contract disputes
Pre-FOB transit	Domestic transportation, storage, and handling from the factory to loading on board	Buyer’s insurance after loading and detailed destination inland transit
FOB insurance	Insurance of the seller’s interest until loading on board	Individual insurer product names, rates, underwriting, and policy interpretation
Domestic and marine cargo insurance	Separate domestic cover and continuous export-transit cover	Complete domestic transit and marine cargo policy wordings
Earthquake risk	Whether earthquake, volcanic eruption, or tsunami loss is covered	Individual endorsement names, limits, deductibles, and underwriting decisions
Cause of loss	Distinction among transit accident, insufficient packing, handling failure, and product defect	Product liability, quality warranty, and product recall
Loss and expenses	Damaged cargo, remanufacture, replacement, expedited freight, and delay	Final treatment of consequential loss, penalties, and lost profit
Freight forwarders	Difference among transport arrangement, insurance arrangement, and liability	Detailed transport terms, liability limits, and recovery procedures

Why Insurance Gaps Arise in Manufacturer Transactions

A manufacturer produces, inspects, packs, and dispatches its own goods from a factory or warehouse.

Where cargo is damaged, the following issues may arise simultaneously:

• Whether the product design or strength was adequate
• Whether the export packing could withstand ordinary transit
• Whether loading, vanning, and lashing were appropriate
• Who arranged transportation from the factory to the port
• Which party bore the risk when the accident occurred
• Whether any cargo insurance covered that location and time
• Who must provide replacement goods or remanufacture the product
• Who bears expedited freight, delay, and commercial compensation

Even after contractual risk has transferred, the manufacturer may provide replacement goods for commercial reasons.

Conversely, the goods may have been physically handed to a freight forwarder or buyer-nominated carrier while risk remains with the seller under FOB until loading on board.

Contractual risk transfer, physical custody, transport arrangement, and insurance attachment must therefore be reviewed separately.

Trading-Company and Manufacturer Transactions

Item	Trading-Company Transaction	Manufacturer Transaction	Insurance Review
Central issue	Names, B/L, policy, L/C, insured interest, and recovery rights	Factory dispatch, domestic transit, packing, product strength, and delivery responsibility	Separate the commercial title from the physical dispatch process.
Relationship with goods	Often involved as commercial seller or buyer	Manufactures, inspects, packs, and dispatches the goods	Preserve production and packing evidence.
Cause of loss	Transit accident, title issue, or contractual liability	Transit accident, packing failure, product defect, or handling failure	Do not assume a single cause prematurely.
Insurance gap	Often caused by inconsistency in names, insured interest, or policy	Often arises from factory or warehouse to loading on board	Confirm insurance attachment and termination.
Post-loss expense	Cargo loss, payment, and recovery issues	Remanufacture, replacement, expedited freight, delay, and customer compensation	Separate insured cargo loss from commercial expense.
Primary evidence	Sales contract, Invoice, B/L, policy, and L/C	Packing specification, dispatch photographs, inspection, stowage, and product data	Standardize pre-shipment evidence.

Meaning of the Term FOB Insurance

FOB insurance is not an Incoterms® rule or a single internationally standardized insurance product.

In Japanese export practice, the term may be used for cargo insurance covering the seller’s interest from the factory or warehouse until loading on board under an FOB or similar sale.

The actual transit, insured risks, storage period, earthquake cover, handling cover, and termination point depend on the policy, schedule, open cover, endorsements, and underwriting agreement.

Do not rely only on the label “FOB insurance.” Confirm:

• Attachment point
• Termination point
• Meaning of completion of loading on board
• Storage period after entry into a CFS or CY
• Vanning, devanning, and cargo-handling risks
• Earthquake, volcanic eruption, and tsunami
• Theft, rainwater, breakage, and temperature variation
• Insufficient packing and other exclusions

Insurance Arrangements by Sales Term

Term or Expression	Basic Delivery and Risk Position	Insurance Caution	Manufacturer Review
Ex-Go-Down or warehouse delivery	A commercial expression for warehouse delivery, not an official Incoterms® rule.	Loading, removal, inland transit, and port delivery may be unclear.	Define place, loading, risk transfer, and insurance attachment contractually.
Factory delivery	May be intended as EXW or FCA, but the expression alone is insufficient.	Loading at the factory and transit after removal may be unclear.	State the Incoterms® rule, named place, and version.
FCA	Risk transfers when the seller delivers the goods to the buyer-nominated carrier or person at the named place.	The transit depends on whether the named place is a factory, warehouse, forwarder facility, or port terminal.	State “FCA + exact named place + Incoterms® 2020.”
FOB	Risk transfers when the goods are loaded on board at the named port of shipment.	The seller remains at risk from the factory or warehouse until loading on board.	Arrange pre-FOB cover through completion of loading.
CIF	Risk transfers on board, while the seller contracts carriage and the prescribed insurance.	Incoterms® 2020 generally requires minimum-level insurance unless otherwise agreed.	Confirm whether the cargo requires wider insurance than the minimum.
CIP	Risk transfers upon delivery to the first carrier, while the seller contracts carriage and insurance to the named destination.	The risk-transfer point and insurance destination are different.	Confirm the named delivery place, destination, insurance conditions, and full route.

Ex-Go-Down, warehouse delivery, and factory delivery may have different meanings among contracting parties.

Where Incoterms® is intended, specify the rule, exact named place, and version, such as “FCA Seller's Factory, Tokyo, Japan, Incoterms® 2020.”

Seller and Buyer Risk Under FOB

Transit Stage	Typical Accident	FOB Caution	Insurance Review
Factory or warehouse	Drop, forklift impact, fire, theft, or earthquake damage	The loss may occur before commencement of transit.	Review inventory, property, premises, and cargo attachment.
Truck loading	Drop, collapse, forklift collision, or rainwater	Responsibility may depend on who performs loading.	Confirm that loading operations are covered.
Domestic truck transit	Collision, overturning, theft, wet damage, or shifting	The seller generally remains at risk before loading on board.	Review FOB, domestic transit, or continuous export insurance.
Forwarder warehouse or CFS	Theft, rainwater, handling damage, or shortage	Delivery to a forwarder does not complete FOB risk transfer.	Confirm intermediate storage and CFS handling.
After CY entry	Container impact, overturning, flooding, theft, earthquake, or tsunami	The seller remains at risk but has limited physical control.	Review the period and risks after CY entry.
Pre-loading handling	Crane drop, contact, container overturning, or lifting damage	The exact accident time may determine the risk allocation.	Expressly cover through completion of loading on board.
After loading on board	Heavy weather, grounding, collision, fire, general average, or seawater	Risk generally transfers to the buyer under FOB.	Confirm buyer insurance attachment and seller cover termination.

Risk transfer under FOB and the attachment or termination of cargo insurance are separate issues.

The buyer’s policy may attach at the factory, but it may also attach only after loading on board. The seller must confirm whether separate pre-FOB insurance is required.

Consider FCA for Containerized Cargo

For containerized cargo, the seller often delivers the container to the carrier or terminal before the container is physically loaded on board.

Under FOB, risk nevertheless remains with the seller until loading on board, even though the seller no longer controls the container physically.

FCA may therefore correspond more closely to the actual logistics process because risk transfers when the goods are delivered to the carrier at the named place.

Commercial requirements, including an L/C requiring an On Board B/L, may still cause the parties to use FOB.

Where FOB is retained, confirm:

• Who performs vanning
• Where the container is delivered to the carrier
• Who bears the risk from CY entry to loading
• Whether buyer insurance attaches at CY entry
• Whether seller FOB insurance continues through loading
• Which records establish the loading date and accident time

Ex-Go-Down, Factory Delivery, and Warehouse Delivery

These expressions are used in practice but do not always establish a uniform risk-transfer rule.

A contract stating only “Ex-Go-Down” may leave the following unclear:

• The precise point of delivery within the warehouse
• Who loads the collecting vehicle
• Who bears loading damage
• Who completes export clearance
• Who arranges domestic transportation
• Who arranges insurance and from what point

Where possible, use a formal Incoterms® rule with an exact named place and expressly define loading, risk transfer, and insurance.

Misalignment Between FOB and Insurance

Type of Misalignment	Common Situation	Resulting Problem	Response
Sales term and insurance attachment	FOB is used, but buyer insurance attaches only after loading.	The factory-to-vessel transit is uninsured.	Arrange seller FOB insurance or earlier buyer attachment.
Physical delivery and risk transfer	The container enters the CY, but FOB risk remains with the seller.	The seller bears risk while lacking physical control.	Consider FCA or ensure CY-to-vessel cover.
Transport and insurance arrangement	The manufacturer or forwarder arranges inland transport, while insurance is left to the buyer.	The insurance responsible for a domestic accident is unclear.	Identify the transport arranger and insurance arranger separately.
Insurance termination and attachment	Seller insurance ends at port entry and buyer insurance starts after loading.	Port storage and pre-loading handling are uninsured.	Confirm geographical and temporal continuity.
Policy and cargo characteristics	General cover is used for precision, heavy, or temperature-controlled cargo.	Special loss may be excluded or difficult to prove.	Review conditions, packing, and survey requirements.
Sum insured and cargo value	Insurance is based only on manufacturing cost.	Recovery may be insufficient compared with actual cargo value.	Review sale value, freight, premium, and agreed uplift.

Domestic Transit Insurance and Marine Cargo Insurance

Item	Domestic Transit Insurance	Marine Cargo Insurance	Review Point
Basic design	Covers specified or continuing domestic transportation.	May be structured as continuous export transit from factory to overseas destination.	Review the actual policy route.
Pre-FOB transit	May separately cover domestic truck transportation.	May include transit through loading on board as export cargo.	Confirm port storage and pre-loading handling.
Intermediate storage	Location and duration may be restricted.	May include storage incidental to the ordinary course of transit.	Review forwarder warehouse, CFS, CY, and duration.
Handling	Loading and unloading cover depends on the contract.	Attachment, termination, and handling cover depend on the wording.	Review truck loading, vanning, and vessel loading.
Earthquake	Earthquake, eruption, or tsunami may be excluded or require an extension.	Domestic land exposure may require separate confirmation.	Review endorsements, exclusions, limits, and deductibles.
Termination	Terminates at the specified domestic location.	May terminate on loading, at an overseas warehouse, or at the buyer’s premises.	Review the policy termination rather than assuming the sales risk point.

The appropriate arrangement depends on the route, cargo, open cover, port storage, earthquake exposure, and claims-management structure.

Where two policies divide the transit, confirm that no temporal or geographical gap exists between termination of the first and attachment of the second.

Earthquake, Volcanic Eruption, and Tsunami

Cargo at a factory, warehouse, on a truck, or in a CFS or CY may be exposed to earthquake, volcanic eruption, or tsunami.

These risks are not automatically insured under every cargo or transit policy.

Depending on the insurer and wording, they may be excluded unless expressly covered by endorsement or agreement.

Endorsement names differ. The insured should review the actual policy rather than relying on a general label such as “all risks” or “earthquake extension.”

Location	Potential Loss	Review Point	Response if Unclear
Factory or warehouse	Rack collapse, drop, fire, flooding, or building collapse	Whether inventory, property, or cargo insurance applies	Define treatment of goods prepared for export.
Domestic transit	Road failure, vehicle overturning, bridge collapse, or tsunami	Whether earthquake-related transit loss is covered	Arrange an appropriate extension where available.
Port storage	Container overturning, subsidence, tsunami loss, or flooding	Whether earthquake exposure at a CFS or CY is insured	State location, period, and limit expressly.
Before loading	Handling interruption, drop, contact, or prolonged storage	Difference between direct physical loss and delay expense	Review cargo damage and additional expense separately.

Common Misunderstandings

Misunderstanding	Practical Position	Caution
All insurance is the buyer’s responsibility under FOB.	The seller remains at risk until loading on board.	Confirm buyer attachment and seller FOB insurance.
FOB requires the buyer to arrange insurance.	FOB does not impose an insurance-contract obligation under Incoterms®.	Review the sales contract and actual insurance separately.
The seller’s risk ends when cargo is handed to the forwarder.	Under FOB, risk continues until loading on board.	Consider FCA for containerized cargo.
Insurance from loading on board is sufficient.	Accidents occur at the factory, during inland transit, at CFS or CY, and before loading.	Ensure continuous cover from dispatch to loading.
Forwarder transport automatically includes cargo insurance.	Transport arrangement and cargo insurance arrangement are separate services.	Confirm the application, policy, and premium.
Carrier liability makes cargo insurance unnecessary.	Liability limits, exclusions, and proof issues may restrict recovery.	Separate liability from first-party cargo insurance.
Insufficient packing is always covered.	Loss caused by insufficient packing may be excluded.	Review specifications, photographs, and suitability for ordinary transit.
All-risks cover automatically includes earthquake.	Earthquake, volcanic eruption, or tsunami during domestic land transit may require separate confirmation.	Review the policy and endorsements.
Expedited freight for replacement goods is fully insured.	Physical cargo damage and replacement-expediting costs are different losses.	Obtain insurer approval and review special cover.
Manufacturing cost is always an adequate sum insured.	It may be lower than the sale value or agreed insurance value.	Review the valuation basis and underinsurance treatment.

Distinguishing Transit Accident from Insufficient Packing

In manufacturer transactions, it is important to determine whether damage was caused by an external transit accident, insufficient packing, improper handling or stowage, or insufficient product strength.

Visible impact, tearing, crushing, wetting, or abrasion on the outer packing may indicate an external transit event.

Where the outer packing shows little damage but the internal product is broken, the fixation, cushioning, centre of gravity, vibration control, and product strength should be reviewed.

Suspected Cause	Typical Condition	Evidence	Insurance and Liability Caution
Transit handling accident	Impact, tearing, wetting, crushing, or abrasion on the exterior	Photographs, receipt, Survey Report, and carrier notice	Establish the time, transit stage, and accidental external cause.
Insufficient packing	Little external damage but internal movement or breakage	Packing specification, photographs, fixation, cushioning, and tests	Determine whether packing could withstand ordinary transit.
Insufficient product strength	Repeated damage at the same part or to the same product type	Design, strength test, quality inspection, and past losses	The issue may be design or quality rather than transit.
Improper stowage or lashing	Uneven load, collapse, loose securing, or movement within the container	Vanning photographs, stowage plan, lashing record, and instructions	Identify who performed stowage and securing.
Temperature or humidity failure	Condensation, mould, deterioration, freezing, or temperature excursion	Temperature record, data logger, ventilation, and packing record	Separate equipment failure, setting error, inherent vice, and packing.

Replacement and Remanufacturing Expenses

A manufacturer may need to produce replacement goods, conduct new inspections, repack, or use air freight after cargo damage.

However, insured physical cargo loss and additional commercial expenses are not necessarily the same.

Expense	Basic Insurance Treatment	Evidence	Practical Caution
Value of damaged cargo	Considered according to the policy and insured value.	Invoice, cost data, loss statement, and salvage value	Review repairability and salvage.
Repair cost	May be considered where reasonable repair restores the cargo.	Estimate, technical report, and insurer approval	Repair cost exceeding cargo value may not be fully accepted.
Remanufacturing cost	Assessed in relation to the insured cargo value.	Manufacturing cost, production order, and technical necessity	Internal remanufacturing cost is not automatically the insured loss.
Air freight for replacement	May be treated as additional expense separate from cargo damage.	Freight quotation, urgency, mitigation effect, and approval	Consult the insurer before shipment.
Delay damages	May constitute consequential loss rather than physical cargo damage.	Sales contract, penalty clause, and buyer claim	Do not assume that cargo insurance covers it.
Commercial discount or compensation	May reflect a commercial decision rather than insured loss.	Settlement, basis of discount, and internal approval	Record the insurance claim and customer settlement separately.

Setting the Sum Insured

The manufacturer should determine whether insurance is based on manufacturing cost, Invoice value, CIF value, replacement value, or an agreed uplift.

The correct basis depends on the policy valuation provisions and underwriting agreement, not only on the sales term.

Valuation Method	Feature	Potential Problem	Review Point
Manufacturing cost	Corresponds closely to the manufacturer’s internal cost.	May be lower than the sale or insured value.	Determine whether the expected loss can be recovered.
Invoice value	Aligns with the sale and export documents.	May exclude freight or additional expenses.	Review freight, premium, and incidental costs.
CIF value	Includes cargo value, freight, and insurance.	May not correspond to the actual sale or transit.	Confirm the included freight and premium.
Agreed uplift	Allows for a specified expected profit or additional expense.	May require insurer agreement and be subject to limits.	Confirm the uplift percentage and evidence.
Replacement value	Reflects remanufacture or replacement cost.	May differ from the policy definition of insured value.	Confirm that the insurer accepts the basis.

The consequences of a sum insured below the insured value depend on the policy terms.

Where only manufacturing cost is insured, the manufacturer should understand the potential gap in sale value, remanufacturing expense, freight, and customer-response costs.

Relationship with Freight Forwarder Operations

A freight forwarder handling manufacturer cargo must distinguish transport arrangement from cargo insurance arrangement.

Arranging inland transportation from the factory to the port does not itself mean that the forwarder has arranged cargo insurance.

Where the forwarder uses a domestic carrier, warehouse, CFS, or NVOCC, the following may arise after a loss:

• Liability of the actual operator that caused the loss
• Liability of the freight forwarder as contracting carrier or transportation service provider
• Liability limits and exclusions under standard trading or transport terms
• Cargo insurance arranged by the shipper
• Cargo insurance expressly arranged by the forwarder
• Insurer recovery against the responsible party

Freight forwarder liability does not automatically provide compensation for the full cargo value.

Liability may be limited by contractual status, limitation provisions, exclusions, notice deadlines, and available evidence.

Before shipment, confirm:

• The sales term and risk-transfer point
• Existing manufacturer or buyer cargo insurance
• Whether the forwarder is requested to arrange insurance
• The transit from factory or warehouse through loading on board
• Cargo value, packing, weight, temperature requirements, and special risks
• Need for earthquake, eruption, or tsunami cover

Cases Commonly Encountered in Practice

Case	Main Cause	Documents to Review	Decision Point	Initial Response
FOB cargo is damaged in a truck overturning accident before reaching the port.	No seller cover or mistaken assumption about buyer attachment	Sales contract, policy, transport contract, and accident report	Risk and insurance at the time of the accident	Notify the insurer, carrier, and forwarder.
A container is flooded after CY entry but before loading.	Gap in port-storage cover or policy termination	CY record, loading record, insurance schedule, and photographs	Whether FOB insurance continued through loading	Establish accident time and loading status.
Cargo is dropped during truck loading under Ex-Go-Down terms.	Unclear delivery and loading responsibility	Order, contract, work instructions, and video	Who was responsible for loading	Review the contract, operator, and insurance attachment.
The seller bears a container loss after CY entry under FOB.	Mismatch between physical logistics and FOB risk transfer	Booking, CY Receipt, B/L, and sales contract	Whether FCA would have been more appropriate	Revise future sales terms and insurance.
Precision machinery is internally damaged without exterior impact.	Packing, fixation, vibration, or product-strength issue	Packing data, dispatch photographs, logger, and survey	Whether accidental external transit damage can be shown	Preserve unpacking evidence and appoint a specialist surveyor.
FOB cargo in a port is overturned by an earthquake.	Earthquake risk was not insured.	Policy, endorsements, CY record, and photographs	Whether earthquake, eruption, or tsunami is covered	Review policy cover and port liability.
Replacement goods are sent by air after cargo damage.	Commercial action to maintain delivery	Insurer approval, air freight, contract, and deadline	Whether the expense is insured or mitigates loss	Seek insurer approval before shipment.
The policy is based only on manufacturing cost.	Incorrect valuation basis	Invoice, cost data, policy schedule, and loss calculation	Insured value and underinsurance treatment	Discuss the claim and revise future valuation.
The manufacturer assumes that forwarder transport includes insurance.	Confusion between transportation and insurance arrangement	Quotation, instructions, insurance application, and Invoice	Whether insurance was expressly requested and accepted	Confirm cover immediately and preserve communications.
Recovery against the carrier is considered after an insurance claim.	Insufficient notice or liability evidence	Receipt, carrier notice, transport terms, and Survey Report	Responsible party and applicable liability limit	Give timely notice and preserve evidence.

Example 1: Truck Accident Before Port Delivery Under FOB

Assume that a manufacturer exports machinery parts under FOB and asks a freight forwarder to arrange domestic transportation from its factory to the loading port.

The truck overturns and damages the cargo before it reaches the port.

The buyer has marine cargo insurance, but the policy attaches only when the goods are loaded on board. The manufacturer arranged no pre-FOB insurance because it assumed that insurance was the buyer’s responsibility under FOB.

Under FOB in Incoterms® 2020, the seller remains at risk until the goods are loaded on board.

The manufacturer therefore suffers the cargo loss while no seller cargo insurance covers the accident.

The manufacturer may pursue the carrier or freight forwarder, but liability limitations, exclusions, and evidentiary issues remain.

The gap could have been prevented by aligning the sales term, transport arrangement, and insurance attachment before shipment.

Example 2: Internal Damage Without Exterior Impact

Assume that precision machinery is found damaged internally when unpacked at destination.

The outer case has no material impact marks, and the container has no recorded accident.

The manufacturer claims a transit accident, but the insurer requests evidence concerning fixation, cushioning, and product strength.

The investigation shows that the internal securing did not adequately address vibration ordinarily expected during transit and that the machinery moved continuously within the case.

The cause may therefore be insufficient packing or securing rather than a sudden external transit accident.

Pre-shipment packing specifications, fixation calculations, photographs, and vibration tests are critical to the analysis.

Example 3: Insufficient Recovery After Insuring Manufacturing Cost

Assume that the manufacturer insures goods for JPY 10 million because that is the manufacturing cost.

The buyer’s Invoice price is JPY 15 million, and domestic freight, export packing, and incidental costs are also incurred.

After a total loss, the manufacturer seeks recovery based on sale value and remanufacturing cost, but the sum insured and policy valuation become central issues.

The manufacturer’s internal cost and the insured value under the policy are not necessarily the same.

Where manufacturing cost alone is insured, sale profit, additional freight, packing expense, and replacement costs may remain outside the expected recovery.

The valuation basis should be agreed with the insurer or insurance intermediary before shipment.

Example 4: Earthquake Damage After CY Entry

Assume that FOB export cargo has entered the port CY and is awaiting loading.

An earthquake causes the container to overturn and damages the cargo.

Because loading on board has not occurred, the seller generally remains at risk under FOB.

The manufacturer arranged FOB insurance, but the policy does not expressly cover earthquake, volcanic eruption, or tsunami during domestic land transit.

The labels “all risks” and “FOB insurance” do not necessarily establish earthquake cover.

Where cargo may remain in a CFS or CY, the storage period and earthquake-related risks should be confirmed before dispatch.

Review Flow by Stage

Stage	Party to Consult	Items to Confirm	Next Action
1. Sales term	Manufacturer sales, trade personnel, and buyer	EXW, FCA, FOB, CIF, or CIP rule, place, and version	Replace vague factory or warehouse expressions.
2. Risk transfer	Manufacturer, legal, and trade personnel	The physical point at which cargo risk transfers	Reflect it in the contract and logistics process.
3. Logistics	Manufacturer, forwarder, and buyer	Who arranges each stage through loading on board	List carriers, warehouses, CFS, CY, and loading.
4. Insurance route	Manufacturer, buyer, and insurance intermediary	Seller termination and buyer attachment	Eliminate geographical and temporal gaps.
5. Cargo characteristics	Production, quality, logistics, and insurance personnel	Precision, weight, temperature, humidity, theft, and earthquake	Set policy conditions, packing, and survey requirements.
6. Pre-shipment evidence	Manufacturer, packer, and forwarder	Inspection, packing, stowage, photographs, and weight	Record and preserve the dispatch condition.
7. Accident	Manufacturer, forwarder, insurer, and surveyor	Location, time, exterior, packing, cargo, and responsible party	Give notice, protect cargo, and arrange survey.
8. Loss and customer response	Sales, quality, insurance, and management	Insured loss, remanufacture, expedited freight, delay, and discount	Handle the insurance claim and commercial settlement separately.

When Specialist Review Is Required

• The risk-transfer point under Ex-Go-Down, factory delivery, or warehouse delivery is unclear.
• It is unclear whether FCA or FOB should be used for containerized cargo.
• A gap exists between seller insurance termination and buyer insurance attachment.
• CFS, CY, or pre-loading handling cover is uncertain.
• Earthquake, volcanic eruption, or tsunami during domestic transit is involved.
• Transit accident, insufficient packing, improper stowage, and product defect compete as causes.
• Remanufacture, replacement, expedited air freight, or delay damages are claimed.
• The sum insured differs materially from manufacturing cost, Invoice value, or replacement value.
• Carrier or freight forwarder liability and limitation are disputed.

Depending on the case, the cargo insurer, insurance intermediary, freight forwarder, NVOCC, domestic carrier, packer, surveyor, quality personnel, and lawyer should be consulted.

Manufacturer Transaction and FOB Insurance Checklist

Review Stage	Party to Consult	Items to Confirm	Response if a Problem Is Identified
Setting the sales term	Manufacturer, buyer, and legal personnel	Incoterms® rule, named place, and version	Replace vague wording with a formal rule and exact place.
Using FOB	Manufacturer, buyer, and forwarder	Seller risk and domestic logistics through loading	Arrange pre-FOB insurance.
Containerized cargo	Manufacturer and forwarder	Carrier delivery point and loading-on-board point	Consider FCA or CY-to-vessel cover.
Logistics planning	Manufacturer, forwarder, and buyer	Responsibility at factory, warehouse, CFS, CY, and vessel	Identify responsibility and contact at each stage.
Insurance placement	Manufacturer, buyer, and insurance intermediary	Seller termination and buyer attachment	Adjust any gap or unnecessary overlap.
Earthquake review	Insurer and insurance intermediary	Earthquake, eruption, tsunami, port storage, and limits	Add express cover or endorsement where available.
Sum insured	Manufacturer, accounting, and insurance personnel	Manufacturing cost, Invoice, freight, premium, and uplift	Agree the valuation basis with the insurer.
Packing design	Production, quality, and packer	Weight, centre of gravity, vibration, humidity, securing, and strength	Revise and test the export packing.
Before dispatch	Manufacturer and forwarder	Exterior, internal securing, quantity, photographs, and inspection	Correct defects before removal.
Port entry	Forwarder, CFS, or CY	Condition, receipt record, storage period, and loading schedule	Record and report any abnormality immediately.
Accident	Insurer, forwarder, and carrier	Time, loss, packing, liability, and insured route	Protect cargo, survey, and give liability notice.
Replacement shipment	Manufacturer, buyer, and insurer	Remanufacture, air freight, delivery time, and cost allocation	Seek insurer approval before incurring additional expense.

Summary

Manufacturer transactions and FOB insurance must not be assessed solely by reference to the sales term.

Under FOB in Incoterms® 2020, the seller generally remains at risk until the goods are loaded on board the buyer-nominated vessel at the named port of shipment.

FOB does not itself require either party to arrange cargo insurance. The termination of seller insurance and attachment of buyer insurance must be confirmed separately.

The route from the factory or warehouse through domestic transit, forwarder warehouse, CFS, CY, and loading on board should be reviewed for an uninsured gap.

For containerized cargo, FCA may better reflect the actual logistics because the seller commonly loses physical control before loading on board.

Ex-Go-Down, factory delivery, and warehouse delivery may be ambiguous. The parties should state a formal Incoterms® rule, exact named place, and version.

Domestic transit and marine cargo policies may differ in transit, intermediate storage, handling, and earthquake, volcanic eruption, or tsunami cover.

After a loss, external transit accident, insufficient packing, improper stowage, and insufficient product strength should be distinguished through photographs, packing specifications, inspection records, and survey evidence.

The damaged cargo value, remanufacturing cost, replacement air freight, delay, and commercial discount are not necessarily treated as the same insured loss.

Before dispatch, the manufacturer, buyer, freight forwarder, and insurance intermediary should confirm risk transfer, logistics, insurance transit, cargo characteristics, sum insured, earthquake exposure, and the loss-notification process.

This article provides general practical information and does not determine contractual risk transfer, insurance coverage, claim payment, or freight forwarder liability in an individual transaction. Actual decisions must be based on the sales contract, applicable Incoterms® rule, transport contract, policy, endorsements, accident facts, and governing law.