Types of goods insurance
Most modes of transport offer limited liability, which means that some basic - although extremely low - cover is provided. Some traders may find this adequate. If, as is usually the case, greater cover than that offered by limited liability is required, you should take out your own insurance.
The insurance cover type you choose for your goods will depend on how comprehensive you want the cover to be and how much you want to pay.
If you are considering insuring your goods through your freight forwarder, you should check that they are registered with and regulated by the Financial Services Authority.
General cargo insurance
This is available in three varieties - A, B or C. Clause A provides the most comprehensive cover and clause C the least.
Goods-in-transit insurance is very important. Which insurance you have will depend on the agreements with your customers or suppliers. For example, road haulage falls under the Convention des Marchandises Routiers (CMR). This gives basic insurance cover, but it's advisable that you also take out extra insurance yourself or via your freight forwarder.
Basic shipping insurance cover
Under the transport modal conventions, you automatically have basic insurance cover (limited liability) as laid out in the Hague-Visby and Hamburg rules, which cover transportation by sea. It's advisable, though, to have additional insurance with a third-party broker or via your freight forwarder.
Marine cargo insurance
There are four types of marine cargo insurance.
- Open cover - the most flexible if you move goods regularly. You pay an annual premium plus a final adjustment based on the actual amount of goods shipped throughout the year.
- Annual policies - less flexible than open cover. You declare the details of each consignment before it's shipped.
- A single-voyage policy - cost-effective if you ship irregularly. You pay a one-off premium.
- A forwarder's open policy - similar to open cover, but is linked to a specific freight forwarder.
It's also advisable to take out contingency (seller's interest) insurance. This will protect you from your customer refusing to accept the goods if they're damaged in transit, which may not have been adequately insured by the buyer.
The Convention Internationale des Marchandises par Chemin de Fer (CIM) consignment note sets the conditions for international movement by rail. These rules mean that your carrier only takes responsibility for insuring your consignments against loss or damage from the time they take possession up until delivery. Talk to your insurance broker, legal adviser or freight forwarder about additional insurance cover.
The Warsaw and Montreal Conventions govern the international carriage of goods by air. For more information about airfreight insurance, see moving goods by air.