Find out what you need to pay attention to when selecting shipping insurance.
Depending on the type of goods being transported, the whole shipment might be worth six or even seven figures. If something goes wrong and you do not have the right insurance, the results can be fatal. But how do you avoid situations like that? And how do you choose the right insurance for your own transport company? Klaus Schäfer, from the German shipping insurance experts KRAVAG, provides important tips and advice.
Truck, Freight Forwarder, and Additional Insurance
The term shipping insurance covers, primarily, three important areas:
1. just like every car driver needs car insurance, road hauliers also require truck insurance.
2. The moment goods are being transported, freight forwarder insurance is mandatory. This type of insurance is legally required for road hauliers and transport companies shipping commercial goods. The goods being transported are then insured with a price per kilogram on a case to case basis.
3. However, if the goods being transported are, for example, electronics, tobacco or other high price items, their value may quickly exceed the amount covered by insurance. “Let’s assume you have freight forwarder insurance that covers 100,000 €, but the shipment is worth a total of 200,000 €. This extra 100,000 € requires additional insurance. In this case, the freight forwarder or transport company must offer the customer additional transport insurance” explains Klaus Schäfer, Marketing Director at KRAVAG.
4 Important Criteria for Choosing the Correct Insurance
1. Appropriate Consultation
Just as with any other important decision, it is very helpful to consult an expert before selecting shipping insurance. This is because insurance for transporting goods requires expert knowledge. “I need to know how my freight forward insurance relates to the shipping insurance and the truck. There are so many rules to take into account, for example, where should I park my truck at night? The consultant must be able to check my freight orders and recommend and provide me with the relevant insurance” says Schäfer.
2. Simple Insurance Maintenance
In addition to individual consultation, ease of handling the insurance is an important factor. It should be as simple as possible. The KRAVAG insurance expert recommends taking a second look. “It’s best if the insurance can be dealt with using digital solutions, and even better if it integrates with my existing software. It might be the case, for example, that a particular policy seems cheaper at first glance, but handling it requires so much work from personnel that it ends up being more expensive than it seems.”
3. Quick and Professional Claims Settlement
Another important criteria when selecting shipping insurance is the issue of claims settlement in the event that the goods are damaged. Relationships with customers are on the line, so it has to be wrapped up quickly. According to Klaus Schäfer, the speed is more important than the claims method. “Let’s assume we are dealing with a truck transporting dangerous goods. There’s an accident, and a dangerous liquid leaks from the container. Professionals must deal with it immediately. At KRAVAG, it is our subsidiary KUSS (KRAVAG Umweltschutz und Sicherheitstechnik GmbH – KRAVAG Environmental Protection and Safety Technology), that deploys immediately to the site of the accident, secures it professionally, and contacts the police and the environmental authority.” The same thing applies to load theft. Because the more time that passes between the damage and the claim, the more expensive it is. “The sooner we learn about load theft, the quicker we can start activities to help us find the goods again. Or inform neighbouring countries about the theft,” Schäfer continues.
4. Fair Fee System
The fourth thing to look out for, according to Klaus Schäfer, is the fee system. The fees should adjust to match the claims. For example, if a company owns a lot of trucks but causes very little damage, their insurance fees should be lowered. “A good insurance company should be able to provide customers with advice and let them know how to reduce damage. It’s easy to test! Just ask your insurance advisor if they can tell you which drivers are most likely to be in which accidents, and how this can be prevented.”
Relationship between Load Safety and Parking Spots
HGV drivers often find it challenging to find a parking spot for their truck when they have to stop for the night. Not only that, it has to be a safe parking spot, in which fuel will not be stolen overnight and nobody will slit open the tarpaulin and steal the goods. And then there is the 45 hour rule, which often prevents the driver from spending the night in their vehicle. This has a negative effect on insurance. “Usually, the driver shouldn’t be on the road when they have to take their weekly break. But sometimes it can’t be avoided. If the driver is forced to stop but can’t find a secure parking spot, then we have to talk about it and find a solution together.” A recommendation from the KRAVAG director.
In general, regular communication between the insured party and the insurance company is required to keep insurance up to date at all times. “Especially when starting a transport company, it is important to talk to the insurance provider on a regular basis and if necessary, to say to them: well, that was my original plan. But now I have an order that is a bit different from the plan. Is it still covered by my insurance?”, Schäfer explains. Transport companies and freight forwarders should therefore check with their insurance when taking on unusual orders.