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After our publication entitled Cheap Cannot Be Good some representatives of our customers began to address us. Let me remind: I told about a situation when a “cheap” carrier was transporting freight, the latter was damaged and the customer incurred financial loss.

Those who addressed us asked identical questions: how to secure themselves against such incidents, and how insurance companies treat such cases, given that carriers are subject to mandatory liability insurance?

In the previous article I partially answered these questions. Certainly, the best way is to look at a carrier’s truck in advance physically. If transportation is ordered on a regular basis such examination is obligatory. You can come to the carrier’s site and look at the condition of their fleet. The easiest way is to examine the truck when it has already arrived to your site for loading. However, the most reliable way to secure oneself is to insure every shipment against all types of risks.

To clarify the second point I addressed our insurance partner, one of the insurance market leaders, being among the top 10 insurance companies of Ukraine. I have got an explanation that freight / cargo insurance against all types of risks and carrier’s liability insurance have certain particularities.

When a shipment is insured against all risks and an insured event takes place, the freight / cargo owner receives full reimbursement of the freight / cargo loss or damage, irrespective of through whose fault the insured event occurred during transportation.

When carrier’s liability is insured, payments are carried out only if the insured event has taken place not (!) through the carrier’s fault. That is, freight / cargo damage will not be regarded as an insured event, if the truck has been in defective condition (holes in the truck tent, technical defects, etc.), if the vehicle design has been changed, parts or equipment have been installed without permission of the vehicle manufacturer, if the driver has violated transportation rules, and so on.

Should we take into account the actual condition of carriers’ trucks, we can say with certainty that an insurance company will not cover risks associated with carrier’s technical issues. Conclusion: liability insurance does not work when a carrier is “cheap”.

Nobody will argue it is easier to prevent a situation than to search for solutions to problems. I strongly recommend you to delegate freight / cargo delivery functions to a forwarder that will always find the best transportation solution. Protect yourselves and your shipments!

Logistic Center LLC Managing Partner Dmytro Kushch