Carrier Legal Liability Insurance is useful in covering losses or damages that may arise during transportation of goods. The indemnity under carrier legal liability insurance can’t exceed in the following –
- The per event sum as mentioned against AOA (Any One Accident) in the policy document for any loss or damage with regard to fire, or accident or series of fire or accident arising due to any event
- In no case, it can be more than the total sum insured as mentioned against AOY (Any One Year) in the policy document with regard to losses or damages which occur during the tenure of the insurance
Any deductible has to be paid by the policyholder from his/her pocket. In the insurance sector, the deductible is the amount that a policyholder has to bear on its own before the insurer kicks in to pay the remaining amount.
If your carrier legal liability insurance also includes deductible, you would have to pay it first, and the insurer would cover the remaining amount.
Further, the insurer in any circumstances shall not be liable to indemnify under the policy in respect of various scenarios, like-
- Any loss or damage that occurs beyond the period of insurance
- Consequential loss arising from loss or damage to goods
- Strikes or acts of terrorism
- Depreciation, delay, loss of market or any act of confiscation by the public authority
- Refusal from the government, government agency or other competent authority to grant necessary permit or license
- Goods which are being transported illegally
- Any consequence of riot, strike, war
Case
Since 2010, T.S Transporter has been transporting goods of M.S Engineering between Pune and Chennai. Considering the nature of the work, T.S Transporter bought a carrier legal liability cover to get protection against various risks and losses that can arise while discharging the business duties.
The carrier legal liability insurance will pay the amount for which the policyholder shall become legally liable to pay as compensation for physical loss or damage to merchandise while in transit, including loading or unloading and when goods are in the custody of the policyholder.
Last year, while transporting goods, T.S Transporter’s truck met with an accident when it hit a trolley coming from the other side. Due to the accident, a substantial part of the consignment got damaged. As T.S Transporter became legally liable to compensate the other party, the company approached the insurer for the claim settlement.
Here the total claim was Rs 5 lakh, and T.S Transporter had a carrier legal liability insurance cover of Rs 10 lakh. In this case, the loss was less than the coverage, and therefore, it was covered by the insurer, except the deductible limit. While buying the policy, T.S Transporter had put a deductible clause which stated the insured would pay loss or damage up to Rs 50,000, and anything above would be paid by the insurer. Therefore, in this case, T.S Transporter paid Rs 50,000 as a loss and the remaining amount was settled by the insurer.
A few months ago, T.S Transporter inked an agreement with K.L Mining for transporting goods of the latter to Chennai. However, when the consignment was still under transit, heavy rainfall started which not only delayed the consignment but also partially damaged it.
As T.S Transporter had a carrier legal liability insurance, it approached the insurer for the claim settlement. In this case, the total claim was Rs 20 lakh, however, the insurance coverage was Rs 10 lakh. As a result, the insurance company settled the claim only up to Rs 10 lakh and that too after deducting deductible which was paid by T.S Transporter.
It means the insurer’s indemnity limit under carrier legal liability insurance cover was limited to the extent of the insurance cover available under the policy. In this case, the insurer did not pay the entire claim amount as the cover was less than the loss. Also, the deductible clause was applied.
