Do I Need Transit Insurance Coverage?
Transit insurance coverage covers inventory or other merchandise shipped by the seller, which has not yet been received and accepted by the purchaser. In its most basic sense, it is intended to protect both parties during the exchange of goods and is becoming increasingly important for effective ecommerce business models where items are sold in large volumes across borders, increasing the risk of damage and loss impacting business operations.
What Does It Cover?
Goods in transit cover is intended to protect buyers and sellers who are exposed to financial loss if property is lost, damaged, or destroyed during the transportation of goods from one location to another. This phase is unique in that the items have not completely passed over in terms of ownership and liability.
When Is It Needed?
The sales contract between a seller and purchaser may require a seller to provide insurance to protect the buyer’s interest while it is in transit. In other situations, even if you are not legally obligated, you may want to purchase insurance to ensure you are offering a reliable service to your customers, whereby all items purchased from you are 100% covered in the event of unforeseen circumstances during delivery.
Who Should Take Out Goods in Transit Cover?
Understanding the terms and conditions of the insurance coverage is crucial. It is usually included in the contract between two parties who will be responsible for the loss or damage of goods in transit. It may be the case that you are legally obligated to provide insurance.
Types of Goods in Transit and Commercial Shipping Insurance
Generally speaking, the world of transporting goods from point A to point B requires a number of different stages. Equally, there are many different reasons why goods are transported. However, whether it’s personal items or commercial goods for sales, all cargo should typically be protected with insurance to cover all parties who are liable to suffer financial, reputational or emotional damage as a result of unforeseen circumstances.
As such, there are many different types of insurance packages and policy providers on the market. In some cases, a moving or delivery company will handle the insurance with their own standard policies, while other circumstances will require more specialised insurance providers.
In some cases, relying on either the buyer’s or seller’s insurance can be sufficient. However, don’t make any assumptions in this regard and always perform sufficient due diligence in terms of the exact policy. You must be certain that the cargo is covered for the full duration necessary, and all items are effectively valued and covered within the limits of the insurance cover.
Is Standard Insurance with My Goods Carrier Sufficient?
Simply relying on the insurance of common carriers for reimbursement may be fine, but these policies are not generally designed to handle more complicated or unique situations.
A carrier (professional shipping company) is typically responsible only for loss or damage when it is due to its own negligence. Beyond this point, their liability will be limited to protect their business. This means that any legal or financial consequences of transporting your goods between different countries and jurisdictions is not their responsibility.
Choosing the Right Policy
Deciding on the amount of insurance you need is an important first step when choosing the right goods in transit cover. Generally, the policy Sum Insured (total amount payable in the event of unforeseen circumstances) should reflect the maximum value of the items you are shipping. Otherwise, you could end up losing money if the full value of your lost items is not reimbursed.
Factors Impacting Transit Insurance Cover
- The mode of transport involved
- The duration of the contract
- The nature of the goods
- The route or journey taken
- Shipment dates
- The insured party’s claims history
How Do I File A Claim
Despite what some people think, an insurance policy is not automatically activated when loss or damage occurs. The first thing to do is to give immediate notice, both in writing and by telephone, to your insurance provider that there is reason to assume loss or damage has taken place.
Following this, there will typically be a set procedure for how the claim is processed and you will be required to send a number of documents to prove that your items were affected during the delivery process. A few standard documents required during this stage include:
- Insurance policy and claim letter
- Commercial invoice, packing list and a copy of the transport documents (Airwat Bill of Lading, Bill of Lading or Consignment note)
- Letters of formal complaint to those potentially responsible for the damage and/or loss Through these letters, the beneficiary will hold third parties who have been involved in the operation responsible
- Photographs of the damaged cargo