INSURANCE

GOODS IN TRANSIT INSURANCE HELPS

KEEP A RESILIENT TRANSPORT INDUSTRY

Ensuring that goods in transit arrive safely at their destination is a make-or-break aspect of many businesses. GIT insurance is a necessary safeguard against catastrophic financial losses when things don’t go according to plan, advises VERNON SUBBAN

The transport sector is the lifeline of our economy, and this was particularly reaffirmed during the hard lockdown to curb the spread of Covid-19 in 2020, when hauliers had the nation covered by working tirelessly to get all our essential goods delivered. Presently, at any given time there are a considerable volume of goods on our roads, as the largest percentage of our freight relies on this mode of transport. For those numerous businesses whose bottom line is dependent on goods arriving safely from one point to another, this can become a daunting task. Goods in Transit Insurance will protect the goods that a business is responsible for while in transit against loss, theft or damage.

GOODS IN TRANSIT (GIT) INSURANCE EXPLAINED

The moment those trucks or vehicles carrying precious goods leave a business premises and get onto our country’s roads, they become vulnerable to numerous risks. Since the first recorded truck hijacking around 1989, it has become a multibillionrand business for criminals. The past two years have been unprecedented for the trucking industry’s risk exposure – the Covid-19 pandemic and lockdown restrictions, the July 2021 unrest, and the continued arson attacks on trucks. Coupled with other perils and hurdles, this has led to devastating financial losses for many of these businesses.

Goods in transit (GIT) insurance covers goods against loss, damage or late delivery, while it is in transit from one place to another or being stored during that journey. It includes transportation of a business’ own goods from the business premises to the client as well as goods delivered on consignment. For haulage contractors or transport operators, clients’ goods are also safeguarded while on consignment (goods are considered to be on consignment for the entire transit period even if the buyer/ consignee settles cash on delivery).

The amendments to the National Road Traffic Act of 1996 also requires transport operators to provide evidence that both the vehicles and goods to be transported on our roads are insured for damages that may occur as a consequence of an incident. The transport operator also needs to have

a written declaration of the nature and quantity of goods being transported. So, current agreements and standard trading terms would need to incorporate the terms of the amendment, especially in respect of who is responsible for loss or damage to goods in transit in the business transaction.

WHAT DOES GOODS IN TRANSIT INSURANCE COVER?

The following goods that are transported within South Africa are generally covered by GIT insurance: • Raw materials • Goods and materials in the process of being manufactured • Goods that belong to someone else for which your business is responsible • Ropes, chains and packaging material used to transport goods • Loss of goods due to a fi re or accident • Loss or damage caused by theft or hijacking • Loss or damage of goods due to civil commotion, public disorder, strikes, riots and terrorism are covered by SASRIA (South African Special Risks Insurance Association – the only insurers in the country who offer this cover) and can be included in conjunction with above cover. The GIT cover extends to include among others: • Deterioration of refrigerated stock – in the event of transporting perishable goods that are dependent on refrigeration, it becomes essential to add this aspect on, due to possible losses from cooling malfunctions. • Cover in other African countries – should delivery routes extend across our country’s borders, this needs to be specifi ed on the policy, as it will ensure cover should anything untoward occur in a neighbouring country. • A certain period of storage is covered during the course of transit provided that the vehicle is kept in a locked building and there is evidence of forced entry – this cover is essential when there are any unexpected delays, but will not cover planned storage. The nature of the transport/logistics industry today dictates the necessity for bespoke GIT Insurance policies, considering the number of exclusions in standard policies. GIT insurance will provide uninterrupted cover from the moment goods are loaded at the business premises, the manufacturer’s or producer’s premises to the moment it is delivered to the client.

THE RIGHT GOODS IN TRANSIT INSURANCE COVER

Insurance will remain a vital component in the supply chain management of goods transport and logistics. Whether a large fl eet cross border transporter, or a one-man owner-driven outfi t, ensuring that the business has the right GIT insurance cover cannot be overstated. The most important aspect to consider would be to be insured on the maximum possible value of the goods being transported. Opting for an average amount would certainly lower premiums but would result in being paid out for undervalued goods in the event of a claim. Be familiar with packaging, loading and unloading terms and conditions as these could also infl uence the outcome of a claim. Policy conditions need to be checked for exclusions like unusual loads, such as ammunition and other hazardous goods, so that they can be included if needed. A raise in premium will then follow, as the cost of GIT insurance is directly dependent on the level of risk. Weight-rated restrictions may also apply. Goods that are left unattended will be excluded from cover, so driver’s need to be educated on the importance of vigilance while goods are in transit.

RISK MANAGEMENT – A VITAL ASPECT TO HELP REDUCE THE GOODS IN TRANSIT INSURANCE PREMIUM

With the value of goods lost or stolen in transit soaring and clients demanding perfect order fulfi lments, risk management for businesses in the transport and logistics industry cannot be overemphasised. Goods owners need to choose reputable carriers/transport operators, who have strategies in place to minimise losses including among others, strict driver management programmes – drivers who transport hazardous materials, livestock and refrigerated trucks, need to be specifi cally licenced to do so. Delivery routes need to be carefully planned to have minimal stops before delivery. Tachographs allow transporters to monitor vital activities of drivers as they are ultimately the kingpins to a safe and uneventful delivery. Transport companies who transport high target goods like electrical gadgets, computers and other sought-after items, generally dispatch two drivers to ensure an uninterrupted trip. Due care and precaution need to be taken when packing and unloading goods as well. Continuous innovation in telematics, artifi cial intelligence and more have become critical to the success of monitoring goods in transit through our road networks, with resultant cost savings. The transport industry is by its very nature a high-risk class of insurance, so it becomes most welcome when insurers offer reduced premiums for compliance with comprehensive risk management programmes.

CONCLUSION

Road transport remains an essential service that drives our economy and ultimately affects our everyday life. It is the dominant way we move large volumes of goods from one point to another in Southern Africa, albeit capital and labour intensive. Ensuring that goods in transit arrive safely at their destination therefore becomes the lifeblood of many businesses. Goods in transit insurance will continue to safeguard these businesses from catastrophic fi nancial losses as a result of hijackings, theft, mishandling and other factors, keeping them part of this burgeoning aspect of the economy.

VERNON SUBBAN

INSURANCE BROKER

SUBBAN AND SUBBAN RISK MANAGERS