by Phillip Emmanuel, Head of Logistics, +8 Partners
From a risk management perspective, this question is answered by the contractual terms that make the policy holder pay more when they have a claim compared to when standard trading conditions apply.
Standard trading contracts are often taken from other industries that are unsuited to the transportation and logistics sectors. Signing these contracts can lead to significant financial losses, the possibility of no insurance coverage, and even bankruptcy.
The following scenarios found within standard contracts are important to pay attention to, as they can have very high-risk outcomes for the policy holder:
“You are responsible for all claims.” What it means: Strict liability regardless of any fault or negligence.
“You are responsible for the full value of the cargo.” What it means: No weight or package limitation, including high value cargoes.
“You are responsible for delays and consequential losses.” What it means: No limit to freight charges and time crucial delivery.
“You have no defenses to claims.”What it means:No reference to protection for matters beyond your control.
“You have no recovery against responsible carriers.” What it means: Certain clauses make you fully responsible for all carriers in the chain.
“You agree to a claimant supportive legal system.” What it means: Certain legal regimes are less favorable to logistics providers.
One of the benefits of doing business with World Insurance and WCA is they have a nominated legal adviser who carries out contract review and can provide customized insurance at competitive rates. For questions, please contact a World Insurance specialist at info@worldinsuranceagency.com.