Do you know a haulier’s marine insurance policy from goods in transit cover and the specialist risks involved in both?
Understanding the distinct risks faced by cargo owners and transporters can ensure that brokers provide the best possible advice to their clients.
Understanding the terminology
‘Cargo’ – the traditional insurance term referring to goods being moved internationally.
‘Goods in transit’ – the traditional insurance term referring to loads moved around South Africa.
Cargo owners
An ongoing risk for cargo owners is that most transporters limit their liability for loss or damage to the cargo while it is in their custody, through printed standard trading conditions forming part of the conditions of carriage.
This cover is usually insufficient for the cargo owner and will not cover the commercial value of the goods transported. Owners of goods need to cover the full value of their loads.
Brokers should never assume that a client understands the full extent of the risks. From driver fatigue, overturning, collision, hijackings, impact damage and pilferage to a lack of temperature control in a freezer truck or failure to set the temperature to the correct setting – these daily realities in the goods in transit sector must be explained in full to each client.
Many cargo owners discover too late that their coverage is inadequate leaving them with little or no compensation. The key is to know what the risks are – and how to avoid them. And this is where brokers can add significant value.
Risk management for goods owners
- When selecting transport companies, consider their level of liability and any exclusions from liability. Read the fine print on the Standard Trading Conditions and ensure the voids are covered.
- Select a reputable transporter with a well-maintained fleet of roadworthy vehicles and an excellent driver management programme.
- The “cheap” haulage fee usually accompanies a “higher price penalty” when losses occur in the form of “lost market” due to non-delivery, as well as an unplanned expense of between 10-15% of loss value, which is the standard excess or deductible level on a cargo policy.
- Put everything in writing. Hold the transporter liable for losses in writing as soon as a loss is discovered. This will speed up settlement.
Tips for transporters
It is common for road transport companies to arrange the insurance for goods in transit on behalf of their clients.
For the transporter who insures on behalf of the owner of the goods, problems with insurers often arise in the following circumstances:
- if the transporter does not get a written request for insurance to be arranged from the cargo owner;
- if the transporter causes the loss – carriers legal liability is required to reimburse the cargo owner for the full value of the cargo if the transporter’s printed limitation of liability is overruled by a court due to gross negligence in causing the loss.
Driver risks
Responsible companies recognise that driver fatigue is a huge problem and introduce strict driver management programmes. Tachographs allow transporters to monitor “stop–times”, “motion-times” and adherence to speed limits. Some companies who transport high target goods will dispatch two drivers per trip to ensure uninterrupted transportation. Drivers need to be specifically licensed to transport hazardous materials, livestock, fresh or frozen goods in refrigerated trucks or reefer containers. They also must be familiar with national roads and safe alternate routes.
Smart cargo owners and reputable transporters will implement sound risk management measures, and brokers who align themselves with the right insurer can grow their businesses by offering added value.