What is transportation insurance – coverage of goods in transit?
The insurance of goods in transport secures goods that are exposed to various dangers and adverse events during various types of transport (maritime, river, rail, truck, pipe, air cargo, mail).
In international trade, goods are entrusted to third parties (freight forwarders, carriers, warehousers) who, under the CRM Convention, do not compensate for the damage to the goods or do so in part. That is why the insurance of own goods in transport (CARGO), depending on the contracted parity according to Incoterms, is the only possible protection of the interests of the owner of goods in transport. This claim is supported by years of insurance and case law. The CARGO base for transportation determines delivery parity (Incoterms), by delimiting the point and the moment of transfer of ownership risk from seller to buyer, based on the agreed purchasing parity.
What can be the subject of insurance?
The subject of insurance are goods in international and domestic transport, as well as certain interests that are exposed to transport risks. Goods in international transport are secured in the import, export and re-export, while the insurance of goods in domestic transport covers only goods that are transported with a domestic travel document and whose starting and final destinations are within the borders of the Republic of Serbia.
Cargo insurance is usually concluded for the entire duration of the trip, rather than the predetermined duration of the trip. The insurance contract usually lasts “from warehouse to warehouse” or “from loading to unloading”, which includes regular incidental storage.
What risks are covered under goods in transit insurance?
Depending on the requirements of the insured, goods in transit can be insured against the following risks:
- Traffic accident, natural disaster, fire, explosion, damage during loading, theft of part or all of the cargo
- All transportation risks (Against All Risks – AAR): basic risks + manipulation risks (breakage, tearing of packaging, hollowing, flaking, scratching and deformation of objects, odor, contact with other goods, waste of loose and bulk goods, spillage, rust, oxidation ), theft + malicious and unlawful acts by a third party
- Special risks related to the specific nature of the goods (leakage, breakage, scattering, death)
- War and political risks
There are two ways to conclude the insurance of goods in transport
Transport insurance can be concluded on the basis of an individual or general insurance contract.
- When concluding an individual contract, a single trip insurance policy is issued, and the insurance premium depends on the agreed coverage and the assessment of the risk elements that accompany the goods in transit. The policy in this case contains the necessary information about the goods, the route, the means of transport, the duration of the transport.
- When insurance is contracted under a general insurance contract, that is, through an open coverage contract, general policies are issued for an indefinite period of time (valid until canceled by one of the contracting parties). The General Policy provides for a greater number of shipments that are shipped by automaticity and are defined in the contract only in rough lines, while the insurance premium is calculated at fixed time intervals (usually monthly), based on the reported turnover of goods.