Do I need extra insurance to carry goods?
Posted by Aleks Mladenovic on 13 August 2008 11:48 AM
The insurance requirements for the industry are complex. When you speak to any Insurer, they will ask you exactly what type of work you intend to do – this will affect which Courier Insurance policy is right for you. There are a substantial number of ‘grey’ areas, not least because the insurance companies themselves do not have any agreed common standards and regularly change their terminology. We have highlighted some key points which you should consider.
As a guideline, we expect Exchange members to have:
• Valid Third Party or Comprehensive vehicle insurance cover, showing that they are permitted to carry 3rd party goods for hire or reward, including an indemnity in respect of loss or damage to property of at least £1,000,000 – your insurer must be aware of the nature of your business
• Goods in Transit (‘GIT’) to a minimum value of £5,000, and/or CMR/ marine cover.
*freight forwarders – special conditions apply In addition
• Public Liability to a minimum of £1,000,000 (especially if your organisation is not a limited company)
• Employers Liability insurance (note: this is required if you are a Limited company and whenever you have a ‘Duty of Care’ to an employee, whether they are regular full/part time or an occasional worker) In broad terms, insurers class your risk according to whether the work is:
(i) a planned / regular delivery
(ii) an unplanned, ‘panic’ delivery It is worth noting that what you may consider to be a ‘planned’ (ie., pre-booked) delivery to an unknown or irregular location would normally still be classed as an unplanned delivery by insurers.
Comments on policies
We strongly recommend that you purchase your insurance through a specialist broker. Most problems for couriers seem to arise when a policy has been purchased through a non-specialist broker or off the Internet. Unfortunately, many non-specialist brokers do not understand the subtle differences between the different classes of insurance available to transport operators, and may therefore sell an inappropriate policy. Also, we have found that although some insurance companies will state verbally that a policy is satisfactory, they are often unwilling to confirm that in writing. Therefore, we will always recommend using an Insurance specialist to find the best policy for your needs.
How is ‘courier’ defined by the insurance industry?
Unfortunately, insurance companies have never satisfactorily agreed a definition over what they consider to be a courier, they will generally consider an operator in this category if:
• there is a high level of multi-drop work in vehicles with a GVW less than 3.5T
• the work is not pre-planned
• you are working directly for another courier company How is ‘haulage’ defined by the insurance industry? ONE Business Insurance has advised that generally speaking, the term covers single drops (up to 3 per day), and the work must be carried out for:
i) a direct customer
ii) a 3rd party freight or transportation company (but not a courier) Anything over 3 drops per day (in a vehicle less than 3.5T GVW) would be considered as multi-drop. CMR v. GIT CMR is a specific type of goods in transit policy, mainly used by freight forwarders.
There are two types of CMR – international & domestic UK. As an example of how it applies, a full trailer load from Hamburg to Oxford could be covered by international CMR, but the onwards delivery of part of this load from Oxford to Glasgow would need to be separately covered by either domestic CMR or a GIT All Risks policy, RHA etc etc.
Note that a standard All Risks GIT policy may not cover you adequately for a continental delivery (as the maximum insurance for this is set by European law at £8/kg). If you are doing a delivery to the European mainland, the onus for insuring the goods fully should either be with the freight forwarder (under their ‘Marine Policy’) or with the owner of the goods (who should add you to their own policy as a registered carrier).