Incoterms
Risk Transfer Under FOB
When risk passes under FOB — loading point, evidence, insurance timing, and dispute prevention for exporters.
Under FOB, loss or damage risk passes to the buyer when goods are on board the vessel at the named port of shipment.
Transfer Point
Incoterms® 2020 FOB: risk passes when goods are on board the buyer's nominated vessel at the port of shipment. Not when goods arrive at port yard unless loaded.
Documentary Evidence
On-board bill of lading timestamp, mate's receipt, and photos before loading support claims. Sellers retain records until payment secured.
Insurance Timing
Buyer should insure from loading onward under FOB. Gap coverage during inland pre-carriage may need separate policy.
Preventing Disputes
Define clean B/L requirements, inspection before loading, and force majeure in sales contract beyond Incoterms scope.
Examples
Example — Damage before loading
Carton crushed at port yard before loading — seller bears risk; must replace or renegotiate.
Example — Damage after loading
Container wet damage at sea — buyer claims under their marine policy post loading.
FAQ
- Does risk pass at factory under FOB?
- No — at port when on board the vessel unless parties agree a different contract term.
- Who pays if goods stolen at port before loading?
- Seller — risk not yet transferred.
- Does FOB risk affect insurance claims?
- Yes — policy must be effective from risk transfer point.
- FOB vs FCA risk point?
- FOB on board vessel; FCA when delivered to carrier at named place.
- Can we change risk point in contract?
- Parties can add terms but should not confuse with stated Incoterm without clarity.
Conclusion
Pinpoint loading in contracts and documents. Read What is FOB? and use the FOB Calculator for pricing context.