Insurance

Between Seller and Buyer, neither has the obligation to insure the goods, unless separately agreed upon, and the Incoterms confirm this, with the sole exception of CIF and CIP.

Despite there being no obligation, many exporters rightly prefer to insure their goods: this is because they understand that providing their goods covered by insurance represents a service increasingly appreciated by international customers, and therefore they tend to fully guarantee against travel risks all goods leaving their factory.

Furthermore, arranging insurance helps avoid all the disputes that often arise when, in the absence of an insurance policy, the seller or buyer must bear a loss—disputes that inevitably affect commercial relationships, with clearly greater damage to the weaker party.

Ultimately, providing goods covered by valid insurance in commercial exchanges proves to be a preferential factor both psychologically and in relationships with counterparts, considering that marketing campaigns today emphasize optimal delivery service, of which insurance—like transportation—forms an integral part.

Liability limits:

Some economic operators erroneously believe, when entrusting the shipping mandate of certain goods to the freight forwarder, that the latter is fully responsible for damage (loss, destruction, theft, etc.) to these goods.

On the contrary, the freight forwarder is an agent who assumes the obligation to conclude, in their own name and on behalf of the person who has appointed them (principal), a transport contract and to carry out accessory operations. The freight forwarder must insure the goods only if they receive “a written and express order from the principal,” and in that case, the insurer will be responsible for the material damage suffered by the goods.

In the absence of such explicit instruction, the carrier operates with a precise liability limitation provided by International Conventions on transport. The carrier’s liability limits can be summarized as follows:

International Conventions on transport. The carrier’s liability limits can be summarized as follows:

  • 8.33 SDR*/kg gross weight of lost or damaged goods (CMR Convention – road transport)

  • 16.66 SDR*/kg gross weight of lost or damaged goods (CIM Convention – rail transport)

  • 17.00 SDR*/kg gross weight of lost or damaged goods (Montreal Convention – air transport)

  • 2.00 SDR*/kg gross weight of lost or damaged goods or 666.67 SDR per package or loading unit. The higher limit applies. (Brussels Convention – maritime transport)

*SDR = Special Drawing Right (verifiable on Sole 24 ore)

These limits make evident the importance of providing complete insurance coverage for goods in transit “All Risks” by the entitled party, to protect against various damages that the goods might suffer.

Risk and damage:

Risk is an event of probabilistic nature which, if it occurs, may give rise to damage.

In other words, it is not the damage itself that is always insured, but rather the damage if resulting from an insured risk.

How to file a reservation:

Filing a reservation consists of reporting, depending on the case, on the transport document or on different documents (e.g., by registered letter with return receipt) anomalies regarding the goods or packaging. The filing of the reservation, if countersigned by the person against whom it is raised, implies attributing responsibility for the anomalies to that person and exempting from any responsibility the person who raised it and obtained the countersignature. Therefore, the purpose of reservations is to facilitate the identification of the person responsible for any anomalies in the execution of transport.

Reservations are of two types:

  • For visible/apparent damage: must be noted on the transport document but in any case immediately upon receipt of the goods; afterward, it can never be raised again.

  • For damage not externally visible/not apparent: must be raised within a different time limit according to the various Conventions of the different modes of transport; if it is not raised within this precise time limit, nothing can later be objected to the carrier.

One consideration concerns a widespread practice among companies (recipients), that is, to accept goods always and only after having affixed on the document the wording: “accepted with reservation of verification” / “accepted with generic reservation” or others with the same meaning. It is beyond doubt and has been for some time that these reservations have no legal recognition and therefore represent only wasted time, because the reservation is either for apparent damage and then must be specified immediately, or it is for non-apparent damage and then there is all the time to raise it subsequently, but still within the terms provided by the individual international transport Conventions.

The procedure to follow in case of damage to insured goods:

If at the time of arrival/receipt of the goods at destination they appear damaged, the receiver of the goods must observe all the following rules:

  1. take steps to minimize the damage;

  2. must immediately request the intervention of the claims adjuster indicated on the insurance certificate (providing all necessary data and assistance), who must prepare the survey report, quantifying the damage and specifying the cause(s) that originated it

  3. promptly communicate to insurers all notices and information relating to the event;

  4. any losses and/or damages suffered by the insured goods during transport must be verified by the consignee, through written reservations and in contradiction with the carrier at the time of delivery if these are apparent damages, or within the terms provided by the individual international transport Conventions if these are non-apparent damages. “Warning: in the absence of written reservation or verification in contradiction, the goods are presumed to have been delivered by the carrier in accordance with the conditions contained in the bill of lading or other transport document”;

  5. for all damages for which the carrier’s liability might be involved, the insured, the receiver, or their representative must hold responsible, by registered letter with return receipt, the representatives of the carrier itself, after having invited them to assess the damages;

  6. absolutely do not proceed with the sale of damaged goods without prior authorization from the insurance company;

  7. provide all documentation;

  8. after the claims adjuster has prepared and issued the survey report (damage report), send it to the insurance company to obtain settlement of the damage;

  9. do whatever else is required for the prompt execution of said measures.

Claims must always be accompanied by the following documents:

  1. damage certificate:

  2. insurance certificate (duly endorsed);

  3. transport document: original bill of lading or certified copy / Airwaybill / CMR:

  4. delivery document on which the reservation was noted;

  5. invoice for the goods;

  6. packing list;

  7. copy of the letter of complaint to the carrier or its agent;

  8. original of the response received;

  9. other supporting documents that may facilitate the settlement of the damage.

ATTENTION:

WHAT IS DESCRIBED ABOVE ARE NOT THE CLAUSES OF THE INSURANCE POLICY AND HAS NO LEGAL VALUE, BUT IS PURELY DESCRIPTIVE