2025 CAIB Two Practice Exam – Complete Prep Guide

The determination of who should purchase insurance on property in transit is primarily based on the extent of responsibility for loss. In logistics and transport, various parties—such as the seller, buyer, and shipping companies—may have different levels of responsibility concerning the goods while they are being transported.

Typically, the party that holds the greatest risk for loss during transit will be responsible for purchasing insurance coverage. This could be the seller, the buyer, or even a third party, depending on the terms of sale and shipping arrangements. By emphasizing responsibility for loss, this approach ensures that the entity most affected by any potential loss or damage is financially protected.

While ownership rights of the seller, market value of the property, and contractual agreements with shippers can certainly influence insurance decisions, they are not the primary factors. Ownership rights may determine who has claim over the goods, but it is the risk associated with loss that ultimately drives the decision on who should take out the insurance to mitigate that risk effectively.