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Monday, 3 November 2014

Do I need a Goods in Transit Insurance for my Business in Nigeria?
There are risks involved in the transportation of goods from one point to another, either due to the nature of the goods being transported or due to the mode of transportation. It is not uncommon to see valuable goods littering accident scenes, sometimes leading to the occurrence of other accidents. The financial loss from such incidents can be very high and in some instances can cripple a small or medium scale enterprise. Goods-in-Transit insurance, therefore, covers the loss or damage to goods (moveable property) while in transit by land, rail or inland waterways but within the territorial water ways of Nigeria.

A Goods-in-Transit policy is usually arranged to indemnify the insured for theft or loss of goods while in transit, or damage caused by accidents during transit. It covers other damages in transit and, in some cases, the consequences of any untoward delay.

In view of the fact that the Goods-in-Transit cover provided as an add-on to some other policies is limited, having this type of insurance will usually give a company an edge over competitors that do not carry Goods-in-Transit insurance and peace of mind for them and their customers. Without this cover, a transport company could face devastating expenses that could put it out of business. Depending on who is responsible for the goods at any particular time, a Goods-in-Transit policy can be instituted by the owner of the cargo or the transit company (or the haulage company), for protection against liabilities under a haulage contract.

1.0 Scope of Cover
There are two major types of Goods-in-Transit cover:

1.1 All-Risks Cover: This is arranged to indemnify the insured for accidental loss or damage (by any form) while the insured’s property is in transit, being loaded and/or unloaded and while temporarily housed in the ordinary course of transit subject to specified policy conditions.

1.2 Restricted Cover: This type of cover is limited to specific risk exposure. It covers losses due to the occurrence of certain events such as:
a. Fire, explosion, lightning or flood;
b. Collision of the conveyance carrying the goods with an external object;
c. Overturning, jack-knifing or derailment of the land conveyance carrying the goods;
d. Grounding, sinking or capsizing of the vessel carrying the goods or livestock;
e. Crashing or forced landing of the aircraft carrying the goods;
f. Discharge at a port of distress;
g. Loss by theft only as a result of accidental collision or overturning of the conveying vehicle.
A Goods-in-Transit policy can be extended to cover the cost of debris removal following an accident, loss or damage discovered after delayed unpacking, similar risks in an acquired company and risk exposure between the insured’s premises and the premises of a professional packer.

2.0 Types of Goods-in-Transit Coverage
Goods-in-Transit insurance can be arranged in any of the following ways:

2.1 Single Transit: Cover can be arranged for a single trip from one part of the country to the other within a short period. For example, transporting biscuits from Lagos to Ibadan for a specified period (two days, between August 10 and August 12). In practice, a few days may be allowed in between (say August 10 to August 14) to cater for unforeseeable events which might make it impossible for the insured to transport the goods during the specified period. It is recommended that the insured communicates inability to conclude the delivery of goods under this arrangement, to the insurance company, immediately.

2.2 Declaration Basis: Under this arrangement, all the insured’s Goods-in-Transit risks are automatically covered for a period (usually 12 months). At the commencement of the policy an estimate is made of the total value of goods to be transported by the insured during the 12 (twelve) month period and the actual value of goods so transported will have to be declared on the expiration of the insurance period. A limit per carrying (per trip) is usually advised in order to inform the insurers of the maximum exposure at any one time.

The premium paid, which is usually based on the estimated annual carriage, will then be adjusted based on the actual carriage at the end of the insurance period. If the Estimated Annual Carriage (EAC) is greater than the Actual Carriage then a return premium is due to the insured. If, however, the EAC is less than the Actual Carriage, then additional premium is due to the insurer. Visit for more..

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