Eliandro Oliveira

Transportation Insurance x Carrier’s Liability Insurance

Deputy Clarissa Garotinho, from the PR/RJ, is the author of Bill number 3463/2015, which was submitted to the plenary on October 28th, 2015. The objective of the proposed bill is to alter law nº 11 442/ 2007, which governs road transportation of cargo, to prevent the possibility of third parties purchasing obligatory trucker’s liability insurance (RCTR-C), specifically shippers who contract truckers to carry their merchandise. 

The deputy alleges that the diversity of risk management (RM) rules imposed on truckers generates uncertainty and impracticability of compliance, and leads to lack of insurance cover under the policy contracted by the shipper.    

The mentioned bill raises several questions concerning the obligation of contracting cargo transportation insurance, among various other aspects.   Especially, from a practical standpoint, what is the difference between Inland Transit Insurance,  which covers loss and damage to merchandise during transportation, and Trucker’s Liability Insurance, which covers liability for loss and damage caused to third party merchandise entrusted to the trucker for transportation?  This is the topic that will be discussed in today’s blog post.

Although both Inland Transit Insurance and Trucker’s Liability Insurance are obligatory and governed by the same decree law 73/66, there are several differences between them, viz.: 

  1. Cover

Although Inland Transit insurance covers loss and damage, it is more comprehensive, and it is written on a first loss basis, whereas Trucker’s Liability insurance covers liability, it is written on a second loss basis, and it is used when the transporter is liable for damage caused to the merchandise.      

  1. Insurance Placement

Inland Transit Insurance (placed by the shipper) does not substitute Trucker’s Liability insurance (placed by the trucker); likewise, the waiver of subrogation letter does not exempt the transporter from the obligation of contracting Trucker’s Liability insurance.

The shipper cannot purchase Trucker’s Liability insurance in his own name (and be the Insured); but he can be the policyholder on a Trucker’s Liability insurance policy, by contracting this insurance instead of letting the transporter place it, the latter being the Insured, as per Art. 13 of law 11 442/07.

Therefore, without prejudice to the analyses on duplicity of insurance costs and the considerations regarding Bill Nº 766/2015 of the Federal Senate, from a technical standpoint there is no duplicity in the Inland Transit and in the Truckers Liability insurances, as far as insurance cover and interests are concerned.

  1. Policies

The insurances of the mentioned parties are specific; therefore, the policies have different characteristics that do not mingle. The insurable object (cargo) is unquestionably the same under both policies, however, the insureds (beneficiaries) and the covers under the inland transit insurance and under the trucker’s liability insurance are different and supported by different contracts.        

  1. Liabilities

The cargo owner’s liability and the transporter’s liability are different, and the ownership of the merchandise and the liability for the transport operation are two different things. The insurance placed by the owner of the merchandise is an insurance for goods, intended to cover specific physical property during transportation, be it by road, air or water (sea, river and lake). Depending on the route, one single policy may cover the three transportation modes (multimodal). If previously negotiated, the insurance cover may extend beyond the unloading of the vehicle at destination.   

Whereas trucker’s liability insurance is a door-to-door insurance. It covers the goods transported from the moment they are loaded on the vehicle through to unloading, i.e., coverage ends when the merchandise is unloaded from the vehicle at destination. The merchandise loading and unloading operations, on/from any transportation mode, also require additional coverage.  

In view of the foregoing, companies engaged in cargo transportation are obliged to contract liability insurance for loss and damage that may be caused to the cargo entrusted to them for transportation, against a bill of lading or  waybill.

Trucker’s liability insurance for cargo disappearance (RCF-DC) is facultative, and may be contracted either by the shipper or the transporter. It covers the transporter’s liability for loss of cargo arising from simple or qualified theft; robbery; simple extortion through kidnap; misappropriation and larceny.

Cargo disappearance will be covered only if it occurs concomitantly with the disappearance of the transporting vehicle. The Simple Theft cover must be negotiated in advance and included as a particular clause.     

Credrisk Marine is an independent insurance broker focused on providing specialized solutions for the supply chain. Find out more about our solutions for Cargo Transport Insurance and Liability Insurance.

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