Transport Insurance – Requirements and Useful Options

Even in perfectly organized logistics, something can go wrong and a truck may be involved in an accident. Damage, loss, or theft of goods at rest stops cannot be completely ruled out during any transport. According to international conventions, transport service providers are only liable to a limited extent for the loss of or damage to customer goods, which is why transport insurance makes a lot of sense for consignors. But transport companies themselves should be insured too – in some countries they are even obliged to do so. An overview of the various types of transport insurance and for whom they are suitable.

What Is Transport Insurance?

Everyone involved in a transport has an interest in the shipped goods arriving at their destination undamaged and on time – or that any possible damage is covered by a transport insurance. This means that all parties have an immediate and individual need for transport insurance, regardless of whether they are the forwarder or the consignor.

“Transport insurance” is thus a generic term for different types of insurance that cover either the owners of transported goods or the service providers in transport logistics. What all types of transport insurance have in common is that they provide coverage for transported goods against risks associated with the transportation and temporary storage of goods.

Transport and Logistics Insurance: What Is Covered?

The scope of cover depends on the particular insurance. The specific industry and the individual risk situation are decisive for the respective insurance model and the scope of benefits. It is important to note that transport insurance only relates to the transported goods and not to the transport vehicles. This means that the vehicles require independent insurance or additional clauses.

While the main focus for the company placing the shipment is on (full) reimbursement of the value of the transported goods, the carrier is also concerned with liability and deductible issues. If a company transports its own goods, a special insurance coverage is required. This means that there are different insurances for own-account transport and for commercial transport by a logistics service provider on behalf of the customer.

Goods Transport Insurance

This insurance is aimed at companies that commission freight forwarders. The transport service provider is liable for damage that occurs during transportation or interim storage. However, this liability does not always cover the full value of the goods.

This is the case at an international level under the Convention for the Contract of the International Carriage of Goods by Road (CMR Convention). According to the CMR Convention, the carrier is not liable for loss of or damage to the goods if he can prove that the loss or damage was caused by, for example, force majeure or unforeseen circumstances. There is no explicit European Union regulation on this matter, but there are national regulations in line with the CMR.

No liability at all or upper liability limits – if this applies, goods transport insurance will protect you. It also covers transport damage or financial losses due to delays that are not covered by legal liability – depending on the agreed scope of cover, up to the full value of the goods. Goods transport insurance is advisable for any company that has its own goods transported by transport service providers. The more valuable or damage-prone the transported goods are, the more expedient insurance is.

Transport logistics is often a cross-border business. Therefore, insurance policies are usually designed as international transport insurance.

Carrier’s Responsibility Insurance (aka Professional Liability Insurance or Transport Business Insurance)

This is for logistics service providers. It is not required by law in every country (it is, for instance, in Germany), but it is always useful. Basic insurance covers loss of or damage to goods, as well as financial loss to the consignor or consignee due to delayed delivery or other occurrences.

Further risks and costs can be insured as an additional coverage for transport service providers, such as legal, salvage, or removal costs. The scope of cover depends on the individual risk of the transport company.

Own-account Transport Insurance

The own-account transport insurance covers a company’s own goods and items which are transported by its own vehicles and personnel (e.g. goods for branch offices, repaired equipment, company-owned work equipment, spare parts, or raw materials). In addition to production companies with their own fleet of vehicles and internal logistics, it is typically suitable for handicraft businesses or retailers.

Differing Transport Requirements, Differing Insurance Needs

Whether transporting bulk materials, delivering a highly sensitive satellite to the spaceport in space logistics, or temperature-controlled transports in pharmaceutical logistics: every transport involves an individual risk.

We at DHL Freight know this inside out, as we have expertise in the following areas:

• chemical industry
• energy sector
• technology
• mechanical and plant engineering
• life sciences & healthcare
• consumer goods and retail

We tailor our transportation services to your needs to prevent damage as much as possible. However, since even the most conscientious transportation service provider cannot eliminate the possibility of damage, delay, or loss in transit, it is recommended that our client companies take out goods transport insurance appropriate to the goods being carried.