OREANDA-NEWS. November 09, 2009. IC ROSNO has developed a new comprehensive insurance program enabling protection of carriers’ (forwarders’) property interests in case of incurring liability for compensation of damage to cargo owners, reported the press-centre of ROSNO.   

IC ROSNO has become one of the pioneers to solve the problem of those cargo carriers who, due to legislative reasons1, are not able to insure their contractual liability to cargo owners, and in case of loss of or damage to, the cargo through fault of third parties, they have to count only on their own funds when compensating damage to clients.

The new program for insurance coverage of transport companies, developed by ROSNO, consists of two parts. It contemplates insurance coverage of cargo as property (destruction, damage or loss of cargo or container due to various reasons), whereby the insurant’s function is performed by the carrier, and the insured beneficiary is the cargo owner. Such approach does not contradict to legislation, and it is transparent and understandable for clients thanks to the clearly defined list of insured risks and exclusions from insurance coverage. Also, upon client’s request, policy may include such items required by transport operators as the risks of possible damage to third parties and environment (for example, in case of transportation of hazardous cargo), which, unlike contractual liability, are allowed to be insured.

The approach developed by ROSNO enables maximum protection of the transport operators’ property interests, and the latter are able to modify their insurance coverage in line with their financial priorities, by means of forming the range of insured risks at their own discretion.

An insurant may restrict itself to basic coverage (traffic accident through carrier’s fault, stealage, robbery, damage to cargo resulting from the use of transport vehicles with hidden defects) or extend its insurance policy by including additional risks (breakage of refrigerator, destruction, loss or damage to container, spoilage of cargo due to late delivery, handover of cargo to unauthorized consignee, destruction of or damage to cargo in course of loading or unloading works, loss, destruction or damage to cargo as a result of a traffic collision occurring otherwise than through the insurant’s fault, loss of cargo to robbery, etc.).

One of the program’s most important advantages is that cargo insurance contracts concluded with transport operators largely simplify the loss settlement procedure: while previously the insured accident involved carrier’s liability, which could often be established solely on the basis of court resolution, at present, the insured accident involves the fact of damage (destruction) of cargo due to any reason stipulated by contract and corroborated by the relevant claim of an interested party.

In practice, this means elimination of the need to follow the procedure for ascertainment of carrier’s liability strictly regulated by transport legislation and, to a large extent, it cuts the time spent by insurers on document processing.

Given the current economic crisis, ROSNO has contemplated various insurance premium calculation approaches convenient for insurants. In particular, along with classical calculation, which is based on the quantity of insurant’s transport vehicles, the company also applies calculation based on the planned quantity of trips. The strength of the latter scheme is based on the fact that throughout the year, premium may change depending on the actual transportation volume.

"The previous approach to insurance coverage of a transport company under „classical“ policies was causing dependence of potential clients on decisions made by the insurance company, on the results of judicial practice and on relations with customers, and actually did not provide full-fledged protection to clients, since it did not cover many risks not classified as liability risks but traditionally assumed by carriers and forwarders for the purpose of maintaining relations with customers. This consideration has prompted us to form a new offer. We hope that insurants will appreciate the offered high-quality insurance protection of their interests, which is in full compliance with the provisions of the existing legislation", notes Ms. Darya Turkina, head of the Cargo Insurance Division at ROSNO.

1 According to the clause 1 of Article 932 of the RF Civil Code, the risk of contractual liability is insured only in the cases stipulated by law. Presently, there are no laws in the Russian Federation which would contemplate insurance coverage of transport companies’ contractual liability (except hazardous cargo carriers and customs bonded carriers). Thus, under the law, insurance coverage of carrier’s/forwarder’s liability is not allowed. This liability will arise by virtue of contractual obligations, and not by virtue of law. Judicial practice demonstrates that such liability insurance contracts, even if concluded, are recognized as null and void, i.e. having no legal force. As a result, insurance compensation under such contracts is not paid, and the insurant, a transport company, may only expect to recover the previously paid insurance contribution.