Evaluate goods in transit insurance

Goods in transit insurance covers property against loss or damage while it is in transit from one place to another or being stored during a journey. You can take this insurance out for goods being distributed in your own vehicle or by a third-party carrier, both domestically and abroad. Policies often specify the means of transport to be used, which may include the postal service.

If you are shipping your goods by sea then you would take out marine insurance. This also includes the transit of cargo over land at each end of the voyage.

Cover

A goods-in-transit policy will protect you from:

• Theft (while in transit)
• Loss (while in transit)
• Damage caused by accidents during transit
• Damage caused during transit
• The consequences of any untoward delay (in some cases)

As with other forms of insurance, you and your provider will need to agree on how much the goods are valued at. If the goods are new then this shouldn't be too much of a problem. Remember, this type of insurance does not protect you if you find the goods you have ordered or dispatched are inferior, below standard, or damaged through inappropriate packaging - this is not quality control.

There are two types of cover:

• Old-for-new - items are replaced at their current market value
• Indemnity cover - the insurance company will take into account general depreciation.

Be careful to check which type of cover the insurance company is proposing (obviously the former is a far better option), but it can be expensive. If you do purchase an old-for-new policy, make sure to value your contents at their replacement value, not at their actual value.

Special features

Some policies have special features. These can include built-in legal expenses, cover for possessions in your vehicle, food spoilage in freezers, garage cover, outbuildings cover, etc. If you want to keep your insurance premium to a minimum, ask the insurer about leaving off special features, or try raising the excess. The policy will probably insist that you submit a contents list, with individual items over a certain value specifically priced. This varies with different insurance companies.

Level of risk

Also be aware that, like all insurance, the cost of goods-in-transit insurance depends on the level of risk. If your company has a record of losing goods then you are likely to find the premiums getting more expensive. If you do have such a record then consider taking measures to increase the level of your security.

Incoterms

Incoterms are the standard trade codes used for international contracts. They delineate the risk and cost obligations for both importer and exporter, and therefore which party needs to take out insurance. However, the obligation for insurance is at minimum cover only, if you require more cover this must be negotiated in your contract.