Cargo insurance, or CMR insurance, is the carrier’s civil liability insurance that protects goods or cargo handed over for transportation against unforeseen damages and sudden losses. CMR insurance protects in cases of damaged cargo delivery when, according to the CMR Convention rules, the road carrier becomes civilly liable.
Cargo insurance or CMR insurance – How does it work?
CMR insurance or carrier’s civil liability insurance works according to the terms of each concluded insurance policy and the contractual points stipulated therein. The civil liability policy includes and covers risks resulting from the carrier’s fault causing damages to a third party, such as cargo damage or loss due to the driver/carrier’s fault during transportation by road transport, among other similar risks.
Depending on the transportation specifics, it is often possible to negotiate with the chosen insurance company additional clauses in the CMR insurance policy covering other risks for compensable damages.
Types of cargo insurance
The international cargo transportation regulations, or ICC (Institute Cargo Clauses), envisage three types of coverages for the risks included in policies or insurance contracts, in ICC (A), ICC (B), and ICC (C) categories. The insurance coverage categories define liabilities associated with various potential risks during the transportation of any insured cargo:
- ICC (A) – highest category insurance with the broadest coverage, including liability for all potential risks that could occur during the loading, unloading, transportation, or storage of cargo, and provides insurance compensation for all insurance events;
- ICC (B) – medium category insurance, including liability and compensation for the coverage of risks specified in the cargo insurance policy, occurring due to specific risks included in the contract;
- ICC (C) – lowest category insurance, where limited liability is determined for the risks included in the policy or contract, which the policyholder must prove in the event of loss. These risks may be associated with several emergencies, such as fire or explosion.
Cargo insurance requirements
To activate any acquired cargo insurance protection, there are several requirements and obligations that the insured or policyholder must meet when concluding an insurance contract. Each insurance company’s cargo insurance requirements may differ, but the basic requirements will generally be similar. The most crucial cargo insurance requirements might be as follows:
- Submit complete information about the cargo and associated risks to the insurer, which could be particularly significant in preventing these risks.
- Inform the insurer about any other insurance contracts related to the insured cargo.
- Notify (in writing) the insurer about the possibility of increased risk conditions at any stage of the concluded contract, which can significantly increase the potential loss volume.
- Inform the insurer about the CMR Contract concluded with another insurance company.
- Ensure the transportation of the insured cargo only with a vehicle that does not harm the safety and storage conditions of the cargo.
- Use only vehicles that have passed technical inspection for cargo transportation.
- Etc.
Where can cargo insurance be done?
Cargo insurance is most commonly done with insurance companies or insurance brokers, where the cargo owner or sender evaluates potential risks and agrees with the insurer on the risks to be included in the policy related to the specific cargo. Insurance for cargo transportation can be done for one-time and systematically repeated cargo transportation.
Insurance companies
An insurance company is a joint-stock company or a European commercial company, or a mutual insurance cooperative society registered in the Republic of Latvia, which, based on the Insurance and Reinsurance Law, has the right to provide insurance. Evaluating the company’s needs and risks associated with the cargo, clients are provided with insurance offers with the most advantageous terms.
Insurance brokers
Adhering to good practice principles and ethical codes, insurance brokers collaborate with their partners to find and develop the most suitable insurance offer for each client based on professional risk assessment. In the event of an insurance case, insurance brokers always represent their client’s interests. In Latvia, the activities of insurance brokers are supervised by the Bank of Latvia.
Frequently asked questions about CMR insurance
Depending on the type of vehicle and the contractual points included in the issued insurance policy, the risks included in CMR insurance may vary. Typically, the policy includes and covers risks arising from the carrier’s fault, such as accidental or intentional cargo damage during loading/unloading, transhipment, transportation, and road traffic accidents resulting in cargo damage.
CMR does not cover risks arising from transportation with a vehicle not owned or rented by the insured or transportation with a vehicle not in technical order. Also, risks for transportation made according to any international postal convention or transportation related to the movement of personal belongings, mortal remains, live animals, securities, various jewellery, and other valuables are not covered.
The policyholder is the carrier or freight forwarder who, for a fee, carries out cargo transportation with at least two vehicles, none older than 14 years, and has purchased a CMR insurance policy from the respective insurance service provider – the insurer. According to the concluded CMR insurance contract, the insurer is the insurance company or broker.
The insurance premium for CMR insurance, which defines the carrier’s civil liability for cargo preservation, is determined based on the Geneva Convention on the Contract for the International Carriage of Goods by Road (CMR). If the carrier cannot avoid liability for damaged or completely/partially lost cargo, the limiting insurance rate of the carrier’s liability is 8.33 SDR (Special Drawing Rights) or approximately 8.5 EUR per 1kg of cargo.
Based on the risks of loss of the insured object included in the CMR insurance policy, the cargo carrier or freight forwarder is exempted from liability for covering losses associated with cargo delays if they occurred not due to the carrier’s or freight forwarder’s provable fault or under unavoidable circumstances.
