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The Standard Policy is a whole turnover policy designed to provide a continuing insurance for the regular flow of an exporter’s shipments for which credit period does not exceed 180 days.
Specific Policy for Supply Contract
The Standard Policy is a whole turnover policy designed to provide a continuing insurance for the regular flow of an exporter's shipments for which credit period does not exceed 180 days. Contracts for export of capital goods or turnkey projects or construction works or rendering services abroad are not of a repetitive nature and they involve medium/long-term credits. Such transactions are, therefore, insured by ECGC on a case-to-case basis under Specific Contract Policies.
What are the formalities to be completed before applying for specific policies for contracts?
All contracts for export on deferred payment terms and contracts for turnkey projects and construction works abroad require prior clearance of Authorized Dealers, EXIM Bank or the Working Group in terms of powers delegated to them as per exchange control regulations (Kindly refer to Projects Exports Manual of Reserve Bank of India. For further details go to www.rbi.org.in Applications for the purpose are to be submitted to the Authorized Dealer (the financing bank), which will forward applications beyond its delegated powers to the EXIM Bank. Proposals for Specific Policy are to be made to ECGC after the contract has been cleared by the Authorized Dealer, EXIM Bank or the Working Group, as the case may be.
Risk Covered
Commercial
Insolvency of buyer
Protracted default of buyer
Buyer's failure to accept goods
Political
War, Civil War, Revolutions in buyer's country
New Import restrictions
Transfer delays
LC Opening Bank Risks
Insolvency
Default
Loss Coverage:
90%
Important Obligations:
Obtain indicative premium rate at bid stage
Seek post awarded approval from AD/WG on award of contract
Obtain in-principle approval
Seek cover after payment of premium
Advise progress of project in accordance with PEM guidelines
Declaration of overdue payments
Filing of claim within 12 months from due date
Sharing of recovery
Highlights:
Cover can be either for political or comprehensive risks
Add on pre-shipment risk cover can also be obtained
Cover for full insurable value including retention portion
Cover for third country exports as well
Premium can be paid in installments
Reduced premium for projects funded by Multi-lateral agencies.
