Customs Value: Insurance Costs

Learn how to calculate insurance costs for customs valuation and understand what can and cannot be included.

Understanding Insurance Costs in Customs Valuation: A Guide to Included and Excluded Expenses in International Trade.

Insurance costs are a crucial part of customs valuation. When determining the customs value of goods, certain insurance premiums must be considered, while others can be excluded. Whether you are an importer, customs professional, or compliance officer, understanding how to handle these costs is essential to ensure compliance with customs regulations. In this blog, we'll explain what insurance costs should be included in the customs value and which can be excluded, offering practical advice to help you navigate this often-complex area of trade compliance.

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Key Questions Covered in This Blog

• Which insurance costs must be included in the customs value?

• Can some insurance costs be excluded from the customs value?

• How to handle insurance premiums covering multiple shipments?

• What’s the process for apportioning an annual insurance premium?

  
  

“Customs valuation is about precision and clarity; ensuring insurance costs are handled correctly is critical to avoiding costly mistakes.”Arne Mielken, Managing Director, Customs Manager

Which Insurance Costs Must Be Included in Customs Valuation?

In customs valuation, the key principle is that insurance costs related to the transport of goods must be included in the customs value if the insurance covers the journey up until the goods arrive at the designated customs border or port of entry. This ensures that the value of your goods is accurately reflected and in line with regulations.

If you are paying an insurance premium that covers the entire journey, you will need to include the portion of the premium that covers the goods until they reach the customs border. For instance, if the insurance policy covers the cost of the goods from the manufacturer to the destination country, only the portion related to the transit until arrival should be included in the customs value.

Which Insurance Costs Can Be Excluded from Customs Valuation?

On the flip side, insurance costs incurred after the goods pass through the customs border can be excluded from the customs value. If you have purchased separate insurance for the part of the journey after the customs border, this premium can be excluded. Essentially, only the portion of insurance covering the transit risk up until the customs border is required for valuation.

For example, if your goods arrive at a port and then are transported to a final destination within the country, the insurance that covers that internal transport could be excluded, provided you can separate the costs associated with the international transport.

How to Handle Insurance Premiums for Multiple Shipments

In situations where you have an insurance policy that covers multiple shipments, or if it covers both insured and non-insured goods, you must apportion the cost of the premium. This is to ensure that you are only including the proportionate insurance cost that corresponds to the value of the goods being imported.

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