Cargo Insurance, What Are The Risks?  Part II

In the courier and last mile delivery industry, the law protects the buyer.  Therefore, you must expect to be held responsible for most problems with your customer's shipments unless - you carefully prepare in advance. All too often the size of the risk you are taking is not recognized. Frequently standard insurance will fail you, and even specialized insurance requires you to take precautions and obtain declared values.

Cargo contents today vary greatly. Most couriers carry much more than envelopes, documents, and innocuous small parcels. In fact, couriers are always looking for ways to expand the types of deliveries they make. Your challenge is to expand your business without threatening your very existence by taking on risks you are not necessarily prepared to meet.

“Special Care” Needs for Cargo

While some work is simply a bad bet, most high-risk shipments fall into the "needs special care" category. This type of cargo care will vary from case to case. Sometimes your people should take added precautions, and sometimes you must demand that your customer exercise special care.  Often the courier owner must provide appropriate language on the delivery receipt or contract of carriage, or by securing insurance for a customer or delivery. Often the best solution will be a mix of these risk strategies.

Jewelry provides a good example of a high-risk delivery that requires additional assessment and coverage options. Many cargo policies either exclude or severely limit coverage for jewelry - as well as art, antiques, etc. Typically, if underwriters know that you consistently take extra precautions to safeguard more valuable shipments, you can get coverage for much less.

Know Declared Values & Liability Limits

It is incumbent on the courier owner to train their order takers that when they hear the word "jewelry" - or "computers", "spare parts" or "package" for that matter - they need to inquire if the value of the goods is greater than your normal limit of liability.  If yes, then they should ask for a declared value and offer to provide insurance at whatever rate you charge.  Declared values should be communicated to the driver for inclusion on the delivery ticket/slip/receipt and remember to get a signature on both ends.

The process becomes easier if your "limit of liability" is more realistic than the customary $100. Consider adopting a higher limit, say $250 or $500, or even $1000.  Not only will it save time if fewer shipments require declared values, but also in the event of a loss a higher limit carries more legitimacy.  If a shipment is that expensive it's reasonable to ask for warning so that special precautions can be taken.  With other high-risk, high-value commodities the process is similar.