Navigating the complexities of transport insurance can be a daunting task for businesses involved in the shipping and logistics industry.. Understanding the key elements of this type of insurance is essential to ensure that your cargo and operations are adequately protected against potential risks..
Malcolm Hartwell of Norton Rose Fulbright shares 10 critical aspects of transport insurance you should know..
1. Carrier’s Liability Insurance If you are a transporter, the risk that should be insured is the risk of your liability. This insurance covers the transporter’s contractual liability to the cargo interest and its delictual liability to non-contractual third parties (such as other road users and property owners).
2. Goods in Transit Insurance If you are a cargo interest, the main risk that you want to cover is the physical loss of or damage to your cargo whilst being transported or stored. Often referred to as GIT Insurance, this can be product-specific and can cover either a wide range of risks (so-called “all risks”) or very limited risks.
3. Bailee Insurance Where a carrier is contracted by a cargo interest to act as a bailee, then the carrier, as bailee, can insure the risk of loss or damage to the cargo, subject always to the bailee accounting to the cargo interest for any indemnity received from an insurer.
4. Duty to minimize loss Every insured must act reasonably to ensure that any potential loss or damage is averted, and any actual loss or damage is minimized.
5. Subrogation Every insured is obliged to protect the insurer’s right of recovery against any wrongdoing by a third party. Once the insured has been indemnified the underwriter can pursue a recovery against the wrongdoer. Subrogation can only take place once the insured has been indemnified in full in terms of the contract of insurance.
6. Ex gratia settlement If there has been only a partial indemnity or an ex gratia settlement, then the underwriter can only pursue rights of recovery if they are ceded to the underwriter.
7. Institute Cargo Clauses Standard cargo insurance terms are provided by Institute Cargo Clauses. These come in various forms depending on the risks to be covered; the method of carriage; and the product itself.
8. Stock Throughput Insurance Most transport insurance contracts only provide limited cover whilst goods are in storage. Only storage “in the ordinary course of transit” is covered. Stock Throughput policies usually cover extended storage risks.
9. Delay and loss of market Loss or damage to goods caused by delay or loss of market are usually excluded.
10. General average and salvage contributions Standard GIT clauses will also cover a cargo interest’s liability to contribute to General Average and Salvage claims
Whether you’re a transporter or cargo owner, a thorough grasp of these tenets will help you navigate the murky waters of transport insurance, ensuring your interests are shielded from unforeseen events..
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