Transport and Logistics Insurance
Transport and logistics insurance is becoming an ever more critical issue for businesses. With the globalisation of world trade, the risk of damage to goods in transit is increasing. It is essential to be fully insured whenever you transport anything, whether moving cargo across the country or the world. This includes purchasing new products, selling products, purchasing raw materials, and moving goods around the world. It’s essential to think about transport and logistics insurance no matter how you move goods and resources.
What is Transport and Logistics Insurance
If you transport goods, whether it be via air, sea, road or rail, you need to know what your transport and logistics insurance cover is. This will vary according to the means of your transport. The more expensive the means of transport, the more you will need to insure. Your company must know what it is covered for, so clearly establish the specific terms of the cover you are buying. You will often be offered third party liability insurance as part of a package deal.
This will cover the cost of central liability should anyone sustain an injury while their property is in your care. Transport and logistics insurance will often cover the cost of any injuries sustained by employees of your company. Every year there are many cases of people being injured while working for a company. Transport and logistics insurance will also cover other accidents, such as vehicle fuel leaks or punctures.
Transport and logistics insurance is essential for the success of every business that moves anything, either within or outside of their own country. It can be expensive, though, so it’s vital to establish what you are covered for before buying transport and logistics insurance.
What Types of Transport and Logistics Insurance are There?
You may also want to take out additional cover, such as public liability insurance or fire risk cover etc. If you think this is something you will need, make sure you know beforehand and include this in your transport and logistics insurance. Transport and logistics insurance might cover the cost of any damage caused by a natural disaster to your property or office. If you handle dangerous goods, you must buy the correct cover. Transport and logistics insurance will also cover any cargo that is lost or damaged while under your care.
Not only do you need damage cover but also liability cover. This means that the transport insurance policy will cover your risks.
There are four forms of coverage:
- Liability cover: This will protect you from liability. If something happens to goods being transported, how will you be covered for this extra expense?
- Damage Cover: This can include loss of use, theft, broken down equipment and any other damage not mentioned above. However, to make sure that the policy covers all these things, you need to review your perils list carefully. You can increase this cover by paying an additional premium. The more extra cover you pay, the more coverage you get for even greater security.
- Public Liability: This is a type of liability coverage for those who own businesses, helping to cover any claims made against them for injuries to someone, regardless of who caused the injury.
- Fidelity: This is as its name suggests and covers anything that may happen due to theft or damage. These claims can often result in compensation that far outweighs the cost to have this cover.
Premiums are also significant. When working out the value of the goods being transported, who pays for them and how much they are worth. All this will have an impact on your premium cost. Remember that the more valuable the goods being transported, the higher insurance premiums will be. The value of the goods will also impact how much cover you need. If you are transporting high-priced goods such as diamonds or expensive artwork, your premiums will go up.
There are various ways of calculating your premiums, including:
- As a percentage of the value of the goods being transported
- As a percentage based on a percentage value of a maximum amount used per shipment
- On a per-tonne rate. There may also be an additional cost for transporting certain goods, such as dangerous materials or animals. Higher levels of insurance will have higher levels of coverage. There will be an increased cost to cover higher-risk items or items with higher replacement costs.
Consignee shipment is the process of sending goods in the care of a third party, or “Consignee”, with the understanding that the Consignee will accept delivery when it is convenient for them. This reduces the cost and risk of inventory storage and often shortens product life cycles. To mitigate risks, most companies will require a clear understanding of who is responsible for transportation and delivery before an order is processed. Insurers usually require that 25% or more of any shipment be shipped in consignment form before offering coverage for consigned shipments.
It is essential to consider precisely which type of transport insurance is adequate for your businesses unique shipping needs and risks. With so many different types of shipping risks being covered, it is essential to know whether or not your business should have all forms of shipping insurance coverage. For example, if your business delivers packages to customers, or if you are a manufacturer who operates a warehouse-to-store distribution network, then having both comprehensive general liability insurance and property insurance might be ideal for you.
However, if you are only concerned with the risk of damage to cargo while it is being shipped by air or sea, it might be more appropriate for your company to carry full transportation insurance instead.
Find out more about the importance of insurance here.
Other useful links about business insurance:
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Architect & Surveyor Insurance
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