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General Business TRANSIT INSURANCE GOODS IN TRANSIT Introduction It is frequently thought that goods can be covered under a commercial vehicle Motor policy, this is wrong. Goods carried upon a vehicle can only be covered under the goods in transit policy, but some marine policies may be extended to provide this cover. The company does not write marine insurance. Events Insured Against These events must be typed on the face of the policy and on the reverse of the policy schedule. The wordings will be shown in the endorsement section as G.I.T 8, G.I.T 10 but a summary of the 3 alternatives is given below: Underwriting Considerations (a) As the previously mentioned goods may be carried by the owner or by a carrier who may have special arrangements with the owner to carry all his goods or a professional carrier may require to cover his own liability. Whilst these risks may differ in degree of hazard, many underwriting consideration supply to G.I.T business. (b) A properly completed proposal must be obtained and all questions must be fully answered. The standard of care, which the proposer exercises in his choice of drivers and other staff and the standard of maintenance of the vehicle, is crucial for G.I.T. (c) G.I.T risks should not be accepted from docks/airport unless there has been a prior inspection of the goods by the owner or the agent first. If no such inspection had taken place, damage could have occurred during sea/ air transit, which should be covered under a marine insurance. In the absence of such an inspection the GIT insurers would be asked to deal with claims. It would be extremely difficult to prove any damage due to marine transit. (d) If the insurance is to be on a declaration basis, make absolutely sure that the proposer keeps proper books and records so that he is able to provide a full and accurate declaration at the end of each year. Consider the estimated value of the annual carryings, in relation to the indemnity limit and the frequency of the transit. (e) If for example, the indemnity limit was N20, 000 and there were 4 carryings each week the annual carryings would be in the order of N4,160,000. The moral hazard is very important here. What is the area of the operations, local delivery, medium distance or long distance. (f) Do we handle the motor insurance, if not why not, if we do handle the motor insurance, we may well be able to check the accident record and the standard of vehicle. Always check the loss experience if claims or losses are shown. The value of goods should not include any profit element. The theft hazard is greater in open vehicles than in closed vehicles. Consider whether a single load policy would be more appropriate for certain carryings. (g) Considerations whom the Owner will carry his own goods Only full cover should be given to well-established firms of good reputation. What types of goods are to be transported? What is the limit of indemnity, which is required for each vehicle, and is this adequate? Review limit of indemnity annually to keep in step with inflation. Security is this adequate and reasonable taking into consideration whether the goods are attractive to thieves. If the vehicle is parked overnight, add a warranty regarding locking and guarding when left unattended. (h) Considerations when owner uses The Services of A Carrier The hazard is greater because of a lack of control by the owner of the goods will be transported? Will the goods be low, medium or high hazard? Does the Owner deal only with one carrier or several? If several carriers, how are these chosen? See if they have several claim including vehicles hired from lorry parks on a per day basis. Such risks should be avoided. The owner should deal only with established carriers and take up references before entrusting his property to a new carrier. Is there any contract between owner and the carrier? If so, what are the terms? Does the carrier have any insurance of his own? High value loads should not be accepted unless carried by reputable carriers. Only provide restricted cover unless the owner can supply. (i) Professional Carrier’s Risk This is the most hazardous class of transit risk. Does the carrier sub-contract business to other carrier? Is the insurance only for specific goods of a specified costumer and is the carrier acting as agent for the owner? Can the owner’s interest be endorsed on the policy nature of the specified goods? All risks cover can be granted in these circumstances if the carrier is reputable. Does the carrier have a contract of carriage? If so, provide details? Is the carrier reputable for packaging goods? If so, he will bear a greater responsibility for damage. Is carrier liability only to be covered? Only restricted cover will be available unless the carrier can provide satisfactory details of his contract terms and value of goods transported declaration by owner or at affixed price per kilo of weight. GOODS IN TRANSIT INSURANCE This covers loss of or damage to the insured goods arising from theft, fire, impact or overturning of the conveying vehicle whilst in transit or in the course of loading or unloading or whilst temporarily housed in course of transit. The policy may be arranged on per consignment basis or on an annual basis. (Single Annual Basis). Under the annual form of arrangement the insured needs to specify the limit carrying (limit of compensation per accident) and also make a good estimate of the total annual carryings. As a guide the limit per carriage must not be more than 10% of the Estimated Annual Carriage. The insured is also expected to keep record of all carryings within the policy period and to declare it at the end of period for the adjustment of the provisional premium. A minimum premium retention of 75% of the provisional premium must be retained by the company (see Annual Declaration Clause). Goods in transit policy can be taken up by the owner of the goods, or by the transporter. Though the standard cover is All Risks” the cover may be restricted at the request of the insured in order to save premium or by the company, where the goods in transit is susceptible to loss. UNDERWRITING CONSIDERATIONS · Security of the vehicle · Loading/packaging of goods · Maintenance of vehicles · Discipline and control of drivers · Drivers · Moral hazard · Transit limits · Estimated Annual Carryings POLICY EXCLUSIONS · Loss or damage from vehicles left overnight except vehicle is in a securely locked or attended garage · Livestock · Explosives · Fraud or dishonesty on the part of the driver or other person in the service of the insured · Bullion cash, bank notes, etc · Petroleum products · GSM Handsets RATING
(j) General Considerations i. Types of goods to be carried ii. Mode of conveyance, whether own or hire vehicle iii. Limit per carrying iv. Estimated annual carriage v. Method of packing vi. Distance involved vii. Security of the vehicles RATING 1. Own Goods in Own Vehicle
Note: a) For vehicles involved mainly on long distances (overnight) load rates by 100% b) Allow 10% of Discount for more than 5 vehicles c) A 5% excess for each claim (Minimum N25) to apply to all loses d) Limited higher than N10, 000 – refer to Head office 2. Own Goods Carrier By Professional Carrier Proposals must be submitted to head office for rating. Rating will be based on the rate for professional carriers (see the following section) Depending on the degree of selection and control exercised by the owner of the goods, either the basic rates for professional carriers, or a loaded rate may be used. Provided carryings are limited to named carriers meeting our normal underwriting requirements for professional carriers the basic professional carriers rates will apply. If not, the terms of employment and method of selection of carriers must be carefully investigated before the risk is accepted and or rate loading calculated. 3. Rates for Professional Carriers Rating will be done at head office. The under noted rates are to be used as a guide and may be modified for individual proposal. In particular if it is suspected that declarations are too low the rates quoted will be increased. We prefer to rate on a premium per vehicle basis unless we can be absolutely certain the carrier maintains proper books of record. |
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