A carrier legal liability insurance policy compensates the insured for the physical loss, destruction or damage to goods or merchandise which is in the insured’s custody. The damage can occur during loading or unloading or while the goods are housed on or off vehicles during its transit.
Goods, in this case, can be either merchandise, baggage, and chattels of any description other than specifically excluded items.
Determination of duration in the carrier legal liability insurance:
- The duration applies for only the damage caused due to fire or accident during or after loading of the goods in the vehicle.
- The damage should have been taken place either at the point of origin or during the transit until the unloading process of the goods. The destination of unloading must be specified in the policy.
- The cover applies up to expiry of four to seven days when the goods had first arrived at the destination via a vehicle. Whichever event may occur first, that duration is considered for the coverage under the carrier legal liability insurance.
Read More: How is the indemnity limit defined under Carrier Legal Liability Insurance?
The applicability cover is determined in case of the following scenarios:
If any fire or accident has occurred during the loading of the goods or during transit of the goods, it is covered under the carrier legal liability insurance.
This insurance policy also covers the damage or loss caused due to any criminal acts or negligence of the insured’s servants during the transit of the goods.
The cover applies to damage of the vehicle due to fire, accident or any explosion. In any of these events, the goods will be definitely damaged and hence the coverage is given to the insured.
The insured is also protected for cargo salvage, emergency storage costs or any transshipment activities.
If there is any breakage of goods due to improper handling, it is covered under this policy as well.
The insured is covered against any financial loss that he might face due to the lost freight. This may take place because of the damage caused to the cargo.
The damage caused due to collision or overturning of the vehicle is also covered under this policy.
Case Study:
Travel Fast was a transporting company, that helped in transporting goods and consignments of other companies to their destined location. Travel Fast was in transportation business since last 12 years. Due to the experience and the service quality, business had definitely boomed for this company.
One day, Travel Fast transporting company got a consignment of transporting goods of a manufacturing firm. The goods were worth rupees 2 lakhs. They had to be transported to Jaipur via Nashik. Since Travel Fast was in this business since long time, it had purchased a carrier legal liability insurance policy to protect the goods that it transported in case of any loss.
The transit began on 22nd May 2008. All the goods were properly loaded on the carrying vehicle. But, during the transit, the vehicle met with a major accident. No damage was caused to any life, but the goods of the manufacturing company were totally damaged. Now, Travel Fast company became liable for the damage of the goods since the accident took place during the transit. The manufacturing company sued the travel fast transportation company for the damage caused to the goods worth rupees 2 lakhs.
The transportation company immediately contacted its insurance firm. The Insurers investigated the matter and found that the accident took place during the transit of the goods and the cause for damage to the goods was a major accident.
The policy secured by the transportation company was worth rupees 8 lakhs. Since the damage caused was of rupees 2 lakhs, the insurer helped the Travel Fast transportation company to successfully settle the claim.
