Insurance
The movement of goods involves the following;
- A Contract of Sale
- A Contract of Carriage
- A Contract of Marine Cargo Insurance
These are all separate contracts with different parties. We as a Road Haulage Contractor are involved in the Contract of Carriage. The Contract of Sale and the Contract of Marine Cargo Insurance is negotiated between the Buyer and the Seller.
Loss or damage to customers goods in transit is a fact. Although it occurs to less than 0.2% percent of the shipments we handle, it makes good business sense to educate you our customer about our liabilities, what you can do to protect yourself against loss or damage, and how to properly handle claims if loss or damage to your goods occurs.
It is a common misconception that Road Haulage Contractors insure customers goods. We do not insure customers goods, we insure our legal liability to goods owners for physical loss or physical damage to customers goods as a result of our negligence, by contract – IRHA Conditions or by law – The CMR Convention.
Our Legal Liability as a Road Haulage Contractor to goods owners
- Goods carried within the Republic of Ireland and between the Republic of Ireland and the United Kingdom of Great Britain and Northern Ireland
We operate under the Irish Road Haulage Association (IRHA) Standard Trading Conditions forming the Contract of Carriage for these movements.
The full wording can be found here
Financial Limitations under the Contract of Carriage
Under Article 12 of the IRHA Conditions of Carriage the financial liability of the Road Haulage Contractor is limited to the lesser of;
- the value of the goods actually lost, mis-delivered or damaged
or - the cost of repairing any damage or of reconditioning the goods
or - a sum calculated at the rate of one thousand eight hundred Euro (€1,800) per tonne on the gross weight of the goods actually lost, mis-delivered or damaged
and the value of the goods actually lost, mis-delivered or damaged shall be taken to be their invoice value if they have been sold to a third party and shall otherwise be taken to be the replacement cost thereof to their owner at the commencement of transit, and in all cases shall be taken to include any customs and excise duties or taxes payable in respect of those goods.
- Goods carried between Ireland and Europe
The Contract of Carriage is dealt with by way of the CMR Convention (i.e. an International Convention that has been signed in to Irish Law)
All Road Haulage Contractors have a legal liability to the goods owners for goods carried between Ireland and Europe (i.e. between two countries that have ratified the CMR Convention. All EU Countries have ratified the CMR Convention).
The full wording can be found here
Financial Limitations under the Contract of Carriage
Under Article 23 of the CMR Convention the financial liability of the Road Haulage Contractor is limited to the lesser of;
- the value of the goods at the place and time at which they were accepted for carriage
or - the cost of repairing any damage or of reconditioning the goods
or - a sum calculated at the rate of SDR 8.33 per kg on the gross weight of the goods actually lost, mis-delivered or damaged
In addition, the carriage charges, Customs duties and other charges incurred in respect of the carriage of the goods shall be refunded in full in case of total loss and in proportion to the loss sustained in case of partial loss, but no further damage shall be payable.
The value of an SDR (Special Drawing Rights) fluctuates but hovers around €1.25 to SDR 1.00.
Comparison between IRHA Conditions and CMR Legal Liability
Limit per tonne
IRHA € 1,800
CMR €10,400 (fluctuates as per the International Monetary Fund)
Information on SDR can be found here
The difference between Carriers Liability Insurance and Marine Cargo Insurance
Carriers Liability Insurance
We as a Road Haulage Contractor have a Carriers Liability Insurance Policy which indemnifies us for our legal liability to goods owners for physical loss or physical damage to customers goods as a result of our negligence, by contract – IRHA Conditions or by law – The CMR Convention
Marine Cargo Insurance
Goods owners would be advised to have their own marine Cargo Policy which covers their goods whilst in transit.
Goods owners should speak with their insurance advisors who can arrange a short term policy for a particular shipment or an annual policy for regular shipments.
The full value of the goods is insured and the scope of cover can vary depending on your requirements. You can insure for the CIF value of the goods or the Selling Price depending on your requirements.
Incoterms
Make sure your Incoterms or shipping terms are agreed to in writing prior to transporting your goods. Knowing your terms will dictate who is responsible for what and can save a headache in the long term.
It may or may not be your responsibility to procure Marine Cargo Insurance depending on the Incoterm in the Contract of Sale.
CIF and CIP are the only two Incoterms that specifically state that Marine Cargo Insurance is to be arranged by the Seller. All other Incoterms are silent on the matter and should be discussed and agreed between the buyer and the seller at the quotation stage.
General Average
General Average occurs when extraordinary losses are incurred by the master of the vessel or aircraft. In a General Average situation, all goods owners are legally liable to pay the master for the loss of the vessel or aircraft. So in addition to losing your goods you would be responsible to pay additional expenses to the ship’s master or aircraft owner.
The insurance would cover all costs for General Average and post the necessary bonds for release of your goods if it were salvageable.
Physical loss or damage to goods
Should the unfortunate happen and your goods are lost or damaged you notify your Marine Cargo insurers and we notify our Carriers Liability insurers. In certain cases a surveyor from bot insurers may be required to inspect the damaged goods. Your Marine Cargo Insurers deal with the claim in the first instance an pay you in accordance with the terms of the policy. If the Marine Cargo Insurers deem us the road haulage contractor to be liable as a result of our negligence they will seek to recover their outlay from our Carriers Liability Insurers in accordance with IRHA Conditions or the CMR Convention whichever is applicable.
Claim example;
CIF value of goods: €100,000
Weight of goods: 1,000 kg
Movement: From Italy to Ireland
Your Marine Cargo Insurance Policy will pay you the goods owners €100,000 and seek recovery from our Carriers Liability Insurers.
As the goods are coming from Italy to Ireland the CMR Convention governs this movement.
Our legal liability under the CMR Convention would be 1,000kg X SDR8.33 = SDR8,330. If SDR1.00 = €1.25 then our legal liability would be €10,412.50. The Marine Cargo Insurers will accept this amount.
