The dangers of goods in transit underinsurance for hauliers

The haulage sector, like many others here in the UK, is feeling the effects of soaring inflation. With the rapidly rising costs of goods, the risk of underinsurance has become significantly higher.

Goods in transit insurance covers items from theft, loss or damage whilst being transported by vehicle from one destination to another. You may carry goods which are subject to contractual conditions such as the Road Haulage Association (RHA).  These conditions along with the monetary limits per tonne specified will determine the amount of cover you’ll require.

Providing essential evidence for your goods in transit limits

If you’re moving goods under these conditions, it’s essential that in all cases that you agree these limits and conditions with your customers. This must be in advance of any work taking place and you must provide evidence. If you fail to provide evidence before the agreement, this could result in significant additional liabilities. This is both from a cover and financial perspective in relation to the value of the claim and potential consequential losses.

You may carry goods on a full responsibility/all-risks’ basis with a sum insured/limit per load across some or all traffic categories. In the current climate it’s imperative that you talk to your customers to ensure that the sums insured/limits per load are enough to replace any potential lost or damaged goods. If you agree a value with the customer, again it is essential that you can produce evidence to this effect to avoid disputes in the event of a claim.

What happens if you need to claim on your goods in transit cover?

Should you need to claim due to a total loss, insurers will only pay up to the monetary limit specified on your policy. However, even if you only suffer a partial loss, some insurers may only pay a share of the claim, reducing payment proportionately in relation to the sum insured against the total value of the goods.

With this in mind, we recommend you review your current processes to ensure all your customers are aware of the basis on which goods are carried and the monetary limits applicable. If you’re in any doubt contact your insurer or broker to discuss your insurance arrangements. You should also check that you’re being provided the appropriate levels of protection in the face of such high rates of inflation.