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I DON'T RUN TRUCKS

TRUCKSTOP NEWS - 21.01.10

Questions and Answers

Q) We recently signed up a new customer. Whereas in the past we've always traded using RHA Conditions, on this occasion we've agreed to the customer's request not to use conditions of carriage and have instead arranged appropriate 'all-risks' cover in line with what our broker suggested. Are we likely to be adequately protected?

A) Arranging 'all-risks' cover is a good start but it doesn't mean you're fully protected. The trouble with not having any conditions of carriage is that you could be held liable for consequential losses as well as direct losses relating to the goods themselves. If the goods you're delivering are critical to, say, a particular manufacturing process and delivery delays could cause a hiccup in production, you could be held liable for a very sizeable loss. The cover under your 'all-risks' policy is unlikely to provide adequate protection for losses of this type.

Rather than dispensing with using conditions of carriage altogether, assuming your customer's primary concern is that the goods you are moving are fully insured, it might be better to ask that you trade under your usual conditions of carriage, but with the standard £1,300 per tonne load limit (assuming standard RHA Conditions) replaced with an adequate overall load limit that's sufficient to cover any consignment and insure accordingly. That way, your customer's goods are fully insured but your liability for consequential losses is restricted to the carriage charges (again assuming RHA Conditions).

Q) Someone recently said to me that if I ensure customers' goods on an 'all-risks' basis for their full value, I need to obtain FSA authorisation. Is this right?

A) Providing you only arrange 'all-risks' cover in your own name in order to protect your business against claims made by customers for loss or damage, and providing you are not offering to arrange insurance on behalf of your customers alongside, or incidental to, your main business, there is no need for Financial Services Authority authorisation.

Q) I've had my HGV licence (or LGV licence as they call it now) for well over 30 years. If my licence were ever withdrawn for medical reasons, that would be the end of my career as a truck driver. Can I insure against the risk of losing my LGV licence for medical reasons?

A) Cover is available against this type of risk though in the main benefits are fairly limited – typically between £5,000 and £10,000. The older you are, the lower the level of benefit tends to be. The question to ask yourself is what you're actually trying to provide yourself with; if it's some money to tide you over for a while until you've found another job or if it's some money to perhaps pay for training to help you find alternative work, such benefits may be well worth while. If it's long-term financial protection that you're after, then LGV licence insurance along these lines is likely to be of only limited benefit.

Q) The recent cold weather prompted me to have a look at my comprehensive insurance policy to see whether damage caused to my truck by frost is excluded. I couldn't see any specific exclusion but my broker said that if there was a claim because my engine had been damaged by frost, it wouldn't be covered. What do you think?

A) There may not be a specific exclusion but what there will be in the policy conditions is a requirement that your truck be kept in a roadworthy condition. There is also likely to be a requirement that you take all reasonable steps to prevent or minimise loss, damage or accident and maintain the vehicle in sound condition and good repair. If your truck engine was damaged due to frost, your insurer is likely to argue that it's because you haven't taken reasonable care, you've failed to keep the vehicle in a roadworthy condition, or you've failed to keep it in a good state of repair. Alternatively, they may regard frost damage as mechanical breakdown which would also be excluded.

Q) We currently back up our computer records and take a copy home once a week. Our computer policy says we should do that daily. Doing the job daily seems rather time-consuming so that's why we only back up weekly. Are we likely to have a problem if there's a claim?

A) The short answer is yes, you could well have a problem. Daily backing up does make sound sense from a risk management perspective; from a policy cover perspective, it's essential that you comply with policy conditions.

Q) Our warehouse insurance policy is subject to 'average'. Please explain in simple terms what that actually means.

A) 'Average' means that in the event of a sum insured being inadequate, any claim settlement may be reduced by an amount proportionate to the level of under-insurance. For example, if a sum insured should be £100,000 but is set at only £50,000, in the event of a fire causing £10,000 of damage, only £5,000 may be paid. For this reason, it is essential to ensure that your sums insured are calculated correctly according to the basis on which your insurance programme has been arranged.