Answer
Under a CIF (Cost, Insurance, and Freight) Incoterm contract, the seller (shipper) is legally obligated to arrange and pay for the carriage and procure marine cargo insurance for the voyage.
However, the risk of loss or damage to the cargo transfers from the seller to the buyer (consignee) the moment the goods are loaded on board the vessel at the port of shipment.
Therefore, even though the seller paid for the insurance policy, the policy is held for the benefit of the buyer. The buyer (cargo owner) is the party that must initiate the claim process upon arrival at the discharge port.
Step-by-Step Procedure at the Discharge Port
Step 1: Issue Immediate Written Notice of Claim
The buyer/consignee (or their port agent) must issue a formal, written Notice of Loss/Damage immediately:
To the Vessel's Master & Local Port Agent: Inform them in writing before taking delivery (or within 3 days if the damage is hidden/non-apparent).
To the Stevedores / Terminal Operator: If the damage occurred during discharge.
Step 2: Conduct an Independent Joint Cargo Survey
Step 3: Mitigate Further Loss ("Duty to Mitigate")
Step 4: Compile and Submit the Insurance Claim Dossier
The buyer (or their bank if under a Letter of Credit) submits a formal insurance claim directly to the marine underwriter using the following essential documents:
Original Certificate of Insurance / Policy (Endorsed over by the seller/shipper).
Original Bill of Lading (B/L) (Proving title to the goods).
Commercial Invoice & Packing List (Proving cargo value and weight/volume).
Official Cargo Survey Report & Discharge Photographs.
Copy of the Written Notice of Claim sent to the carrier/port agent.
Master’s Sea Protest / Logbook Extract (if available, showing weather or incident mid-sea).
Landing Remarks / Warehouse Receipts.
Step 5: Claim Payout & Subrogation
Insurance Payout: The cargo insurer processes the claim and pays the financial compensation directly to the buyer/consignee.
Subrogation: The buyer signs a Letter of Subrogation, transferring their rights to the cargo insurer. The insurer then sues the shipowner/carrier (backed by their P&I Club) under Hague-Visby Rules to recover what they paid out if the carrier was at fault (e.g., due to unseaworthiness or improper stowage).