Goods-in-transit – Are you liable for consequential losses?
How can hauliers insure themselves against consequential losses? Our underwriters shed some light on the topic.
Consequential losses can be devastating for businesses, especially when important contracts or partnerships are at risk. Under most hauliers’ liability insurance policies, consequential loss cover is limited to one or two times the amount of the carriage charges. In addition, cover is conditional on the insured contracting out of liability for such losses, or limiting their liability to the extent specified in their policy wording.
Without suitable contract conditions, hauliers can find themselves liable for consequential losses such as, those arising from production delays because a just-in-time delivery arrives late.
These are some of the key reasons why hauliers use contract conditions. For example, if an RHA member, the RHA Conditions of Carriage. Under those conditions, liability for consequential losses is limited to the amount of the carriage charges.
If an RHA member was asked by a customer to insure on a full value basis, rather than requesting full-responsibility (also known as ‘all-risks’) cover from their insurer, our advice is they should endeavour to agree with their customer to carry under RHA Conditions, but with the standard £1,300 per tonne load limit replaced with an appropriately increased per tonne load limit.
Some hauliers do assume ‘full responsibility’ and arrange goods-in-transit cover accordingly. But even if ‘full responsibility’ transit cover is not conditional on an insured using any conditions of carriage, prudence dictates that a firm arranging this type of cover should still have some sort of contract that inter alia:
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Limits liability for consequential losses to the amount of the carriage charges (to avoid unlimited and uninsured exposure to consequential losses)
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States the maximum value any one consignment (to avoid the risk of under-insurance)
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Stipulates the time limit for notifying claims in the event of alleged loss or damage (to avoid the risk of claims being reported several weeks, or even months, after the damage was alleged to have occurred)
To find our more, talk to your usual Towergate Adviser.