Every business has its own legal and client-related liabilities that require careful consideration. The same holds true for transport operators providing national and international logistics solutions to clients from different industries. In particular, the challenges related to the work of Multimodal Transport Operators or MTOs are quite complex. They are engaged in transporting goods via multiple modes under a valid contract, hence the name.
Depending on the types of goods in transit, the liabilities of an MTO are quite significant. This is why they need multimodal transport operator insurance cover. If you have plans to become a registered MTO, knowing what is covered under this form of freight insurance is quite crucial.
This article will take you through various sides of multimodal transport insurance, its benefits, coverage, and purchase process.
Things You Might Not Know About MTO Insurance
- MTO insurance is meant for transportation operators and freight forwarders from various legal obligations they face with respect to the services they provide.
- Other than freight forwards, multimodal transport insurancealso covers the marine and cargo liabilities of haulers, ship agents, forwarding agents, and custom house agents.
- In-transit warehousing, whenever required, also falls under the purview of an MTO insurance policy.
- This type of freight insurance policy is also required to deal with the legal responsibilities of MTOs who are liable for any damage or loss to the goods they transport for their clients. These responsibilities are defined under the Multimodal Transportation of Goods Act, 1993.
What Does Multimodal Transport Operator Insurance Cover?
In general, an MTO insurance policy covers legal liabilities arising from any physical loss or damage to cargo when in transit or custody of the insured. It also extends coverage to the subcontractors hired to provide required transport services. The need for MTO insurance arises from the very fact that the consequential losses resulting from the damage or loss of goods in transit can result in a financial setback for any multimodal transport operator.
Here, multimodal transport insurance helps them deal with the liabilities arising out of damages or loss of goods, fines or duties, or any third-party liability that may arise. The exact insurance coverage is defined as per the terms of the purchased policy.
In insurance terms, an MTO insurance plan covers the following aspects:
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Cargo liability
In simpler words, it means that multimodal transport operator insurance will cover the loss or damage to the cargo in transit or delay in the shipment delivery. It provides insurance cover against such consequential losses along with those resulting from general average and salvage charges.
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Regulatory breach
The policy also indemnifies you (the insured) against any legal liability to claims arising from unintentional breaches of regulatory or statutory provisions.
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Third-party liability
In case of any accident during transit leading to an injury or damage to third-party property, MTO insurance protects you from any claim.
Why Should You Buy an MTO Insurance Policy?
If you are still wondering why investing in MTO insurance is critical to securing your MTO registration, you must know that:
- You cannot get the licenses required or fulfill the legal aspects defined under Section 3 of the Multimodal Transportation of Goods Act, 1993 without buying MTO insurance.
- You will come across clients who think of MTO insurance as a compliance check before hiring a multimodal transport operator. Not having this place may make you lose many business opportunities in the long run.
- In case of loss or damage to the goods in transit, filing a claim under a valid MTO insurance plan will turn out to be finance-friendly.
How to Buy MTO Insurance in India?
Now that you know about the ins and outs of multimodal transport insurance, you might want to take the next step toward buying a suitable policy. Before you do so, you must know that the niceties related to this type of commercial insurance often require you to compare different policies before you zero in on the right one. You can benefit from taking the insurance aggregator route to policy purchase for a hassle-free experience.
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