Cargo insurance is a vital component of the transport and logistics industry, providing essential protection for goods in transit. Without insurance, companies and clients would risk being left with high costs in the event of damage to or loss of their shipments. During the certification process for its transport partners, Cito therefore pays special attention to ensuring that the necessary insurance policies are in place, guaranteeing smooth and secure transport.
What exactly is transport insurance and why is it important?
Transport insurance protects the client's interest in a means of transport or goods for the duration of the transit and any associated storage or stopovers. Its primary goal is to cover extraordinary costs that may arise from unexpected damage. Shipments are exposed to a wide variety of risks on their way from sender to recipient. While transport can be affected by sudden weather phenomena and geographical events, goods and vehicles in urban areas are particularly threatened by risks such as traffic accidents or theft.
Different insurance policies cover various damage scenarios, thereby not only protecting those involved in the logistics chain but also safeguarding the value of the transported goods.
- Carrier liability insurance: Carrier liability insurance protects against financial losses caused by one's own actions or the actions of third parties in road traffic. This insurance applies to anyone who transports goods professionally for a fee or has them transported by other carriers. Cargo damage, such as loss or breakage, as well as financial losses, such as those resulting from delayed delivery, are covered by carrier liability insurance. It forms the basis for adequate insurance coverage and can be contractually extended and customized as needed.
- General freight forwarding policy: A general freight forwarding policy is fundamentally based on cargo insurance terms and conditions. By taking these regulations into account, an individual, needs-based insurance framework can be created that provides clients with additional protection against damage to their goods during transport and storage.
Transport insurance can also be taken out based on interest or transport route. The types of transport insurance based on interest are likely the most relevant options for small and medium-sized enterprises as well as private individuals and are discussed in more detail below:
- Goods-in-transit insurance: Goods-in-transit insurance explicitly covers the value of individual freight goods during transport, regardless of whether they are transported by one's own means or by third parties.
- Carrier insurance: This is also a legally required insurance for carriers operating vehicles over 3.5 tons. The carrier transports goods and is liable for any potential damage. This type of insurance can protect against loss or theft during transit and can cover costs if damage occurs during the transport process.
- Own-account transport insurance: This covers the transport of one's own goods and assets, which is also carried out by one's own employees. This insurance is frequently used by companies with their own inventory.
Prevention is the most important approach
According to research by the International Union of Marine Insurance (IUMI), the average annual loss ratio in the transport industry is around 68%. While insurance primarily offers protection once a loss has already occurred, it is in the interest of all stakeholders to integrate preventive measures into the supply chain so that transport can be as efficient and damage-free as possible. Digitalization already offers many opportunities to strive for risk reduction. The use of tracking technologies has become an essential standard in the transport industry—especially in the on-demand transport sector. Large transport companies additionally support tracking with sensor-telematics systems, which are designed to automate the process from damage detection to notification.
Cito has taken out its own carrier liability insurance and also ensures that its transport partners have done the same. Furthermore, with its own general freight forwarding policy, Cito offers the option of arranging additional individual cargo protection, for example, if the freight is particularly valuable.
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