Carrier Legal Liability

Sidebar_image1 Sidebar_image1 Sidebar_image1
1 3 2 4 5 6
Sidebar_image1 Sidebar_image1 Sidebar_image1

The demarcations between carriers legal liability (CLL) insurance and multi-modal transport operator (MTO) legal liabilities insurance are defined in terms of different modes of transport coverage, coverage of the geographical region, and the service provider’s statutory requirement of buying the respective policy.

Carrier legal liability covers the legal liability arising due to fire or accident to the vehicle during the transit which resulted in damage or loss of goods or cargo. The coverage is active during the loading and unloading of goods, meaning if any damage occurred to goods due to improper handling of goods at the time of loading or unloading, it will be covered under CLL insurance. The reason for loss should be the negligence of the insured in order to cover the claim against such damages.

Multimodel transport operators’ legal liability covers any loss or damage to the consignment or delay in delivery of the consignment incurred due to the errors or omission committed by MTO or if the multi-modal transporter is in fault due to any negligent act or breach of contract. While the consignment is in charge of the MTO, he will be held liable for any delay or loss of cargo.

Carrier legal liability insurance and multimodal transport operator liability insurance policy serve the transportation industry, logistic industry or freight forwarders in order to mitigate the risk of damaging the goods during transit because of negligence. Both these policies capture different service providers. Carrier legal liability insurance majorly covers the truckers while Multi-modal legal liability insurance policy covers freight forwarders, MTO, Hauliers, In Transit Warehousing, Ship Agents, Clearing and forwarding agents, custom house agents and Packing & consolidating agents.

Read About: How is the duration and applicability of cover determined in Carrier legal Liability Insurance?

Carrier Legal Liability provides coverage for road movements and on the other hand, MTO legal liability provides coverage for all modes of transport such as air movements, sea movements, road movements, and rail movements involved under one contract.

One of the major differences between carrier legal liability and Multimodal transport operator liability is the coverage of geographical regions mentioned in the terms of the policy as carrier legal liability covers the legal liability of the insured for actual physical loss of or damage to goods while being transported within India only by a vehicle specified. Whereas a Multimodal transport operator’s legal liability cover all marine liabilities of the logistics industry.

For an MTO, It is mandatory to have its services insured in order to get the license from The Director General of Shipping It is not mandatory for carriers to ensure their services but the carriers who want to take this insurance should be registered under the Carriers Act.

Read: What is covered under the freight forwarder insurance policy?

Case Study 1: ABC logistics private limited specializes in inland transit. Its operation usually consists of domestic road transport. The logistics firm uses trucks as a mode of transport and in order to provide a protective shield for its business, they have availed carrier legal liability policy. In case of legal claims arising due to an accident to the vehicle or negligent act from the firm’s side, then carrier legal liability will cover the defence cost incurred during the litigation process.

Case Study 2: ABC Corporation Limited is an international freight forwarders firm. It usually uses international waterways in order to transport goods between different countries. ABC Corporation limited majorly transports FMCG products manufactured in India to other different countries. Since the organization operates internationally, it is mandatory to buy MTO’s legal liability policy under the MTO act.

It is important to be aware of the statutory requirement of having these policies in order to provide transportation services internationally or domestically. It is always advisable to avail of these policies to add a protective layer to your services.