What is Transit Insurance?
Transit insurance, in simple terms, refers to an insurance plan that provides coverage for business goods being moved from one place to another. That is, if your business goods/merchandise/commodities are being moved from place ‘A’ to ‘B’ by trucks, then a land transit insurance policy will ensure that financially, the goods are being covered in case of any unforeseen mishaps.
The policy usually covers B2B goods transportation by road (e.g., via trucks, vans, tempos, and railways) from the time of goods being loaded to their unloading at their destination.
In road-based B2C or B2B logistics, damage to goods is commonplace. Transit insurance plans provide coverage for goods damaged during road transportation, in turn lowering risks and losses for the shipper.
What is covered under transport insurance in India?
In India, transit insurance coverage usually extends to specific situations that may damage goods in transit. Based on the plan taken, coverage can include:
- Packaging and unpacking errors
- Transportation by roadways or railways
- Materials handling, loading and unloading
- Warehousing and storage
- Any other contingencies caused to goods in transit e.g., theft, fire, road accidents, vehicle overturning, malicious damages, etc.
Types of transit insurance policies in India
There are different types of land transit insurance available in India used by logistics and trucking companies.
Domestic transit insurance policies are available in different types. Some of the most common variants are:
- Single insurance policy
This policy provides insurance coverage for goods transported in a single journey, i.e., point of origin to destination. For example, if you have to ship goods from Delhi to Pune via a single truck shipment, you can get a single coverage plan to secure the shipment.
This type of coverage plan is more suitable for businesses that ship occasionally or are shipping a single consignment only.
- Open insurance for goods transportation
This inland transit insurance policy provides coverage for multiple shipments across a specific period e.g., 1 year.
For example, if a business ships numerous consignments to Delhi, Mumbai, Chennai, Ahmedabad, or any other city throughout the year, an open transit insurance policy is more suitable. For LTL and PTL shipping consignments moreover, an open transportation insurance policy is more effective. It will ensure that the goods are covered from damage, especially since there’s loading/unloading done more than once.
As such, if you have numerous consignments planned, you can purchase the insurance policy for multi-shipment coverage only once, without having to buy insurance every time you ship.
- Customised transport coverage plan
As the name suggests, a customized transit insurance plan allows transporters the flexibility to customize the insurance policy as per their requirements.
This is recommended for businesses and transporters who ship different goods across locations. Based on the insurance provider, the insurance can be customized according to the type of goods, location, value, vehicle type, and more.
- Third-party transit coverage plan
A third-party transit insurance plan is required when goods are being transported through third-party vehicles. That is, if you are shipping goods through a different vendor vehicle, this insurance coverage will reduce risks for goods in transit. (Note: This should not be mistaken for third-party logistics services or providers of 3PL services.)
For instance, if you are a freight forwarding company, and have to ship goods to rural pin codes, you may work with third-party carriers especially if you do not have your own vehicle for transportation. The insurance coverage will ensure that your goods are protected, and any unforeseen damages do not result in direct financial losses.
- Multiple vehicle cover for goods in transit
As an individual, you must be familiar with situations where you have to change modes of transportation to reach a point. Similar is the case with goods transportation. Multiple carriers are used to transport goods from one place to another, which requires multi-vehicle transit insurance coverage.
There are times when goods have to be moved through multiple vehicles. For example, using heavy trucks to transport goods from city-to-city, and then mini-vans to transport to rural interiors. A single policy will cover the entire shipment. It will also ensure that any damage/loss caused when goods are transferred from one vehicle to another is insured.
It is however a business call to move goods through single or multiple carriers and take domestic insurance for goods in transit accordingly.
Benefits of Transit Insurance:
- Reduces risks of financial losses caused by shipping damages to goods in transit
- Ensures the safety of goods throughout transportation caused by any general or natural causes
- Provides transporters flexibility to buy insurance coverage based on business needs
- Available for businesses and individuals having to transport goods by roadways