Moving and transporting property brings with it many inherent risks. These risks increase when property is particularly valuable or being moved across international boundaries.
When shipping cargo across great distances, unexpected issues can arise at any time. Freight contracts are extremely important to have in place but they often fluctuate and change between each client. With fluctuating contracts come new risks, gaps can emerge and it’s more important than ever to protect your liability from potential hidden damages.
What are common gaps that can be found in freight contracts?
Liability risks vary between contracts. Most policies are bespoke in order to encompass the entirety of each business.
On a broad scale, there are five common gaps that can often be found in freight and logistics contracts. We want to help you avoid them.
Liability outside of standard trading conditions – Businesses in the freight industry typically use trading conditions that are well established or found within the British International Freight Association (BIFA). However, additional liability may exist outside the bounds of standard industry contracts. When warehousing is provided during a shipment, for example, then liability around the United Kingdom Warehousing Association may be needed as a new addition to that contract. It’s important to determine whether your insurer can cover this kind of extra liability.
Bespoke customer contracts – Sometimes liability is accepted unknowingly through bespoke contracts made my customers. Read contracts carefully before signing and know your obligations. Although bespoke contracts can eliminate surprises, they can also create hidden damages that become buried in the contract terms. It’s essential to know both parties’ obligations under each new contract.
Errors and omissions – Organising and transporting shipments require a high level of knowledge around complicated issues. These issues include customs, shipping regulations and duties. Having secure cover that includes errors, omissions and any breach of duty will protect your business during situations such as shipments to the wrong location or incorrect advice being given. Secure cover should cover you from financial loss, clerical errors and protect you from hefty liability claims.
Missing out ‘additional’ common covers – Some policies don’t automatically include the following common liabilities:
- Employers’ liability – This is required if you have employees.
- Public liability – This protects you from damage or injury to third parties.
- Products liability – This protects you from expenses related to damage or injury while supplying products.
- Pollution liability – This protects you from instances involving pollution to water, the land or the atmosphere.
Be sure to include all relevant covers in your policy.
Risk management – Even the most robust freight liability policy is ineffective unless paired with a diligent risk management effort. Risks can never really be fully eradicated, but they can be heavily reduced. Establishing clear procedures, having clear contracts for subcontractors and clear written instructions for customers are all essential to keep your records full and yourself protected. Follow procedures stringently and adhere to all guidelines and regulations, especially when handling dangerous goods.
If ever you are in doubt, seek out specialised advice to help you put together and strong, effective and bespoke policy to cover your business. At The Trust Insurance Group we have years of experience crafting this kind of policy and we’re always happy to share our expertise.