Declared value: Difference between revisions
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'''Declared value''' may refer to: | '''Declared value''' may refer to: | ||
* '''Value of a shipment''' as declared by the shipper to be used as the basis for computing freight charges, limiting the carrier's liability for damage, loss and delay. It usually reflects the cost of the shipment and normally is lower than the declared value for customs. | * '''Value of a shipment''' as declared by the shipper to be used as the basis for computing freight charges, limiting the carrier's liability for damage, loss and delay. It usually reflects the cost of the shipment and normally is lower than the declared value for customs. | ||
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==Footnotes== | ==Footnotes== | ||
<references /> | <references /> | ||
{{infobox5|list1={{i5link|a=[[Constructive Total Loss]]}} — {{i5link|a=[[Insurable value]]}} — {{i5link|a=[[FOB destination]]}} — {{i5link|a=[[Average clause]]}} — {{i5link|a=[[Shipping terms]]}} — {{i5link|a=[[Free carrier (FCA)]]}} — {{i5link|a=[[Output tax]]}} — {{i5link|a=[[Property inventory]]}} — {{i5link|a=[[Insured value]]}} }} | |||
==References== | ==References== | ||
Revision as of 17:35, 17 November 2023
Declared value may refer to:
- Value of a shipment as declared by the shipper to be used as the basis for computing freight charges, limiting the carrier's liability for damage, loss and delay. It usually reflects the cost of the shipment and normally is lower than the declared value for customs.
- Building declared value meaning the insured's assessment of the cost of reinstatement of the property insured at the inception of the period of insurance.
Shipping
In the shipping glossary the declared value is the value per unit of a shipment as stated by the shipper upon delivery to a carrier[1]. In other words, the declared value is the amount we inform the carrier the shipment is worth and that must be assigned to every domestic and international shipment. The declared value can be listed below the sale price or it can be at a discount from the actual amount that was paid for the item by the customer[2]. However, the amount specified by shipper is the maximum amount the carrier is liable for if damages or loss occur.
According to the information provided on shipping companies websites, if the item with the declared value lower than actual worth of item is lost or damaged, the shipping company will cover up to the amount that was specified as the value.
Customs
In the area of shipping and customs the declared value means the value of a shipment that was declared by its shipper in order to serve as the basis for computing freight charges and for limiting the carrier's liability for loss, damage or delay. The declared value usually reflects the shipping cost price, the selling or the replacement price of the shipment and is normally equal to or higher lower than the declared value for customs and carriage[3]. U.S. Code of Federal Regulations states that the declared value of imported goods should be the value at which goods are declared by the importer to the county's customs service at the date of entry into the customs territory of the country[4].
Preshipment Inspection
About 40 countries, mostly in the least-developed group, use the service of so-called preshipment inspecition (PSI) companies to support customs authorities in detecting imported goods undervaluation or overvaluation and other malpractices with the aim of reducing customs duties. Such companies inspect goods physically to make sure they conform to the contract terms[5].
Property Insurance
The building declared value is the value of the property, what means the bricks and mortar and everything else that's fixed to the property, including such things as fitted kitchens and bathrooms on the day the policy starts. The declared value of the building doesn't take into consideration the land value or the desirability of the area. It should represent the total cost of re-building including damage to car parks, outbuildings, professional fees and all costs to comply with local and European Union legislation. It should also include allowance for debris removal costs. The sum insured figure is higher than the building declared value to cover against the rise in price of building materials or inflation over the period of insurance.
Example: on the last day of the policy the price of bricks may be 15% higher (as forecasted) and the building declared value provided on day one of the policy could be much lower than the actual rebuilding costs calculated on the last day. The person insured needs to state the declared value meaning the insured's assessment of the cost of reinstatement of the property insured at the inception of the period of insurance[6].
Advantages of Declared value
Declared value is an important concept in insurance, shipping, and other industries. Declared value provides the maximum amount the insurer will cover in the event of a claim. Here are some advantages of declared value:
- It ensures that the customer will be compensated if their goods are lost or damaged in transit. The declared value provides a maximum limit of coverage, so the customer knows they will not be left with a total loss.
- It also gives customers peace of mind that their items are insured up to the declared value, so they can rest assured knowing their goods are protected.
- Declared value also allows customers to customize their coverage to fit their individual needs. This helps to ensure that the customer has the right amount of coverage for the items they are shipping.
- Additionally, declared value can help to reduce the cost of insurance, since the insurer can tailor the coverage to the customer’s specific needs. This can result in significant cost savings for the customer.
Limitations of Declared value
Declared value is an estimation of the worth of an item or shipment and is used to determine the amount of an insurance policy and the cost of shipping. However, there are several limitations to declared value and it is important to understand them before making an insurance policy or shipping declaration. The limitations of declared value include:
- Price volatility - Declared value should be closely monitored as prices can change drastically in short periods of time and the value of an item or shipment could become outdated.
- Limited coverage - Declared value coverage is often limited to only the stated value of the item or shipment and does not include any additional costs related to the loss.
- Inaccuracies - Declared value can be inaccurate due to incorrect estimates or incorrect item descriptions, resulting in inadequate coverage.
- Under-insuring - Insurers often under-insure based on the declared value and may not be sufficient to cover the full cost of the loss.
- Lack of flexibility - Declared value is often rigid and inflexible and may not be able to adapt to changing market conditions.
Declared value is a term used to refer to the value of an item or shipment that is declared for insurance or customs purposes. Other approaches related to declared value include:
- Open Insurance: This approach allows the shipper to declare their own value for a shipment, which is usually the replacement cost of the items.
- C.I.F. (Cost, Insurance, and Freight): This approach requires the shipper to declare the cost of the goods being shipped, the insurance, and the freight cost associated with the shipment.
- C.I.F. and CIF (Cost, Insurance, and Freight): This approach requires the shipper to declare the cost of the goods being shipped, the insurance, and the freight cost associated with the shipment, but also includes customs duties and taxes.
In summary, declared value is a term used to refer to the value of an item or shipment that is declared for insurance or customs purposes, and other approaches related to declared value include open insurance, C.I.F., and C.I.F. and CIF.
Footnotes
| Declared value — recommended articles |
| Constructive Total Loss — Insurable value — FOB destination — Average clause — Shipping terms — Free carrier (FCA) — Output tax — Property inventory — Insured value |
References
- Asakura H. (2003), World History of the Customs and Tariffs, World Customs Organization
- Code of Federal Regulations (1984), Office of Federal Register National Archives and Records Administration
- Das R. U. (2010), Regional Economic Engagements and the Free Trade Agreements, World Scientific Publishing Company
- Fisher S. D. (2007), The Commercial Real Estate Investor's Handbook, Atlantic Publishing Group Inc.
- Hinkelman E. G. (2010), Dictionary of International Trade, World Trade Press
- Hoekman B. M. (2002), Development, Trade, and the WTO: A Handbook, volume 1 , The World Bank Washington D. C.
- Kendall L. C. (2012), The Business of Shipping, Springer Netherlands
- Limbach K. (2015),Uniformity of Customs Administration in the European Union, Hart Publishing
- Merkin R. (2014), Insurance Law: An Introduction, Informa Law from Routledge
- Stephenson H. (2006), Shipping Finance, Euromoney Institutional Investor
Author: Aleksander Szafraniec
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