Transit Insurance: Everything You Need to Know (Detailed Guide)
Businesses are going global and their goods are being sold in international markets too. This globalisation has not only increased the potential of business profits, but it has also led to better marketing opportunities and competitive products. While globalisation is driving business expansion, the risks associated with the transportation of goods cannot be ignored. When the goods are being transported through land, air or water, they face the threat of damages due to unforeseen contingencies. In case of any damage, businesses stand to lose a great deal of money. That is why, to protect the financial risks faced by goods being transported, a transit insurance policy is available. Let’s understand what this policy is all about –
What is transit insurance?
Transit insurance is an insurance plan which covers the risks faced by goods when they are being transported from one place to another. The policy covers being transported by air, water, road or rail.
What is covered under transit insurance?
Transit insurance coverage includes common perils which might cause damage to the goods which are being transported. These perils against which transit insurance protects the goods are as follows:
- Any type of natural or man-made calamity
- Overturning of the transport vessel
- The collision of the vessel which damages the goods contained therein
- The derailment of the vessel
- The sinking of the vessel
- Risks faced while loading and unloading the goods
- Risks faced in packing and unpacking of goods
- Accidental damages
- Malicious damages
- Impact damage
- Theft, etc.
Who should invest in a transit insurance policy?
A transit insurance policy is suitable for businesses and individuals who are involved in regular transportation of goods. The policy can be bought by the following types of parties –
- Manufacturers of goods
- Importers and exporters of goods
- Custom house agents
- Transporters or aggregators
Types of transit insurance for goods
Transit insurance policies can be offered in multiple variants. These variants are as follows –
- Single transit policy
This policy covers one particular journey and is suitable for businesses that do not transport their goods frequently. The policy would cover the goods which are being transported on a particular journey only.
- Customised policy
This policy is a flexible transit insurance policy which can be customised for businesses to suit their coverage requirements.
- Open policy
This policy covers multiple transits occurring within a given period of time which is, usually, one year. So, if businesses transport their goods frequently, they can buy this policy and ensure coverage for multiple trips without buying a different policy for each one.
- Overnight vehicles’ insurance policy
If the goods are to be stored overnight in a vehicle, this policy is suitable as it covers the goods in such cases.
- Goods in transit (carrier’s) cover
If your goods are transported using the transport vessel of a third party carrier, the carrier might not undertake the risks of damage to your goods. You can, therefore, buy this policy to cover the damages when the goods are being transported using another carrier service.
- Goods in transit (own vehicle) cover
If your own vehicle is being used for transporting the goods, this cover would insure the goods against possible damages.
- Multiple vehicles cover
If multiple vessels are used in the transportation of goods, this policy can be taken to cover the goods being transported through different vehicles. The policy would cover multiple vehicles under a single plan.
Why transit insurance is required?
A transit insurance policy proves to be a boon for businesses because of the various benefits it provides. Here are some of the benefits of transit insurance policies which make them a must-buy –
- Coverage under transit insurance plans is provided on globally standard terms. Thus, even when you are transporting your goods internationally, you can meet the coverage requirements of the country to which the goods are headed
- Transit insurance coverage provides financial support to businesses which might face considerable losses if their goods are damaged during transit. The policy, therefore, helps keep the business finances stable even after a loss
- Since any possible loss is covered under the transit insurance policy, businesses can also maintain their profitability even when any contingency damages their goods. This profitability also helps businesses maintain their solvency and their market value
- The policy can be customised as per the requirements of the business and is, therefore, suitable for all types of businesses
So, if your business is engaged in the movement of goods, which it surely would be, buy a transit insurance plan and secure the losses which you might face if your goods don’t make it to their destination. The policy is easy to buy and comes at low premium rates making it a simple and necessary addition to the transit of your goods.
Frequently Asked Questions
- In case of a claim, what documents would be required?
If you face a claim in your transit insurance policy, you would have to submit the following documents for claim processing –
- Invoice of the goods in original
- Survey report
- Bill of Lading
- The claim form, filled and signed
- Shipping details
- Correspondence is done with carriers and its copies
- Any other documents as required by the insurance company
- What is the meaning of deductible under transit insurance?
A deductible is the level of claim which the insurance company does not pay. Only when the claim exceeds the deductible limit it is paid and even then the deductible limit is paid by you and the insurance company pays the rest.
- Are partial losses covered?
Yes, even if the goods are partially damaged, the insurance company would cover the financial loss that you have suffered.