Goods-In-Transit insurance policy (GIT) provides a cover for the insured against loss of or damage to goods following the perils of the road which could be an accident or robbery attack involving the conveying vehicle.
It is imperative to note that as the name implies, this policy covers “Transit Risk” only. What this means is that cover commences only when the conveying vehicle or ship leaves point A, and ceases immediately it gets to its destination. Whatever loss or damage there may be before or after the transit is not recoverable under the ambit of the policy.
GIT relates to movement of goods;
(A) By land; be it road or rail that is within a territorial limit
(B) By water; this is also limited to inland water ways only that is within a geographical location for example Nigeria. Movement of goods by water between countries is covered under the marine cargo insurance policy.
GIT Insurance Policy comes in 2 types of covers;
(A) Restricted Cover – This covers only loss of or damage consequent upon accidental collision or overturning of the conveying vehicle. Under this arrangement, loss of or damage to goods which is not as a result of an accidental damage (collision or overturning) to the conveying vehicle is not covered.
(B) All Risk Cover – This type of arrangement provides indemnity against loss of or damage to goods by fire, accident, theft or pilfering while the goods are being loaded on, carried by or unloaded from the conveying vehicle and while temporarily garaged during transit.
GIT INSURANCE Policies can be arranged in two methods;
(A) Single Transit; this is a one-off arrangement. The proposer gives the description and value of goods to be carried as well as details/particulars of the conveying vehicle. The period of the transit is also stated. As soon as the goods reach the specified destination, cover terminates irrespective of the expiry date of the state period.
(B) Open Cover (Annual Basis); Under this arrangement, the proposer gives full description of goods stating the Estimated Annual Carrying (E.A.C) as well as the Limit Any One Carrying (L.A.O.C). The L.A.O.C is the monetary value of goods the insured intends to carry per transit. The L.A.O.C represents the maximum liability of the underwriters in the event of a loss. The E.A.C is gotten by multiplying the L.A.O.C by the number of times the transit is expected to be made per annume .
Some Factors insurers consider before granting a GIT cover;
(1) The nature of the goods; Are they perishable items, inflammable items, liquid substance, or are they brittle in nature? The nature of the goods is used to determine the degree of risk and exposure, and the possibility of salvage recovery in the event of a loss.
For instance, inflammable goods present a higher risk due to the possibility of a fire damage. If it is brittle in nature, it means it can be easily damaged.
(2) Mode of conveyance; Is the insured using Own vehicles or Hired vehicles. Owned vehicles gives some assurance of a level of control. Hired vehicles poses as a high risk. Where it is a hired vehicle, the insurer is usually interested in the type of arrangement between the insured and the transporter.
(3) Destination; As it stands in Nigeria now, insurance companies are reluctant to grant GIT cover for goods been transported to some northern parts of Nigeria because of the level of unrest and terrorist activities that are prevalent in that area.
(4) Insured’s Security Arrangements; where the insured is using an escort, the insurer has a degree of assurance on the safety of the goods. Where there is a tracking device on the conveying vehicle, it gives the assurance that the progress of the journey can be monitored .
(5) Mode of Packaging:
Of interest to an underwriter is how the goods are to be arranged and packaged to reduce the effect of an impact thereby protecting the cargo from being damaged.
(6) Type of goods: Some goods, by virtue of what they are, attracts interest from criminal elements. For instance; fertilizer, which is an agriculture goods, is used in production of explosives by criminal elements. This makes it difficult to transport within certain areas.
To be Continued…
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7 thoughts on “Understanding Goods In Transit Insurance (Part 1)”
Highly educative. thank you for your efforts. this is one aspect in which the industry is witnessing an alarming increasing in claims, both fraudulent and legitimate ones (dare i say together with FG policies), mostly due to the u/w themselves playing fast and loose with the need for prudence (declaration clause waivers, no pre-loss survey, waiver of material information in the proposal form that would have alerted the u/w to the potential fraudulent inclination of the insured, etc). i look forward to reading your take on suggested remedies.
Thanks so much for your response, you could not have said it better. Indeed, underwriters, having had their fingers burnt repeatedly, are now being careful in granting this type of cover.
Quite informative read though a bit too technical but well delivered. Nice work, keep it up.
Thanks for your comment and the feedback provided.