Goods transport insurance terms and duties
An overview of the basic principles which underpin the conduct of business between insurers and customers.
If you use an insurance underwriter or broker, it's important to keep in mind some of the basic insurance principles.
Contract of indemnity
This is the amount of compensation agreed by you and your insurer in case your goods are lost or damaged.
Duty of utmost good faith
This means you must supply all relevant information about your cargo and its journey at the outset. The underwriter needs this information to calculate an appropriate premium - ie the price of your policy.
This duty also applies to underwriters and brokers. They must inform you of any exclusion clauses in your policy - the circumstances whereby you won't receive compensation - so always read the small print of the policy document.
Duty to act as though uninsured
Arranging insurance for your cargo doesn't mean you can neglect your normal duty of care regarding its transportation. You should act to minimise the chance of a payout by:
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ensuring goods are packed safely and securely - you'll only be insured against risk, not certain disaster, which poor packaging makes more likely
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maintaining the upkeep of vehicles used for transportation
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having a robust selection policy for drivers of these vehicles and for contractors involved in loading and storage
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making sure the buyer of the goods provides information on any loss or damage to goods within a short period of time
Insurable interest
You must be able to demonstrate an insurable interest in your goods in order to trigger any policy you take out on them. This means you'll either benefit financially from their safe arrival or you'll lose out in the event of loss, delay or damage. The point at which the insurable interest passes from supplier to buyer is determined by the sale of contract used.