River freight transport: how do you insure your cargo?

Shipping goods by river is often seen as a reliable and less risky option than other modes of transport. The relatively slow speed of navigation, the large carrying capacity of boats and the fact that they are less exposed to road hazards all contribute to this image of safety. However, there is no such thing as zero risk. A shipping incident, a fire on board, a handling problem or even theft can occur and damage or even wipe out your precious cargo. Who will foot the bill if this happens? The liability of an inland waterway carrier is often limited by law or contract. For complete protection of the value of your property, a specific insurance, known as "facultative" insuranceis essential.

This insurance, taken out by the owner of the goods (the consignor, the consignee, or any person with an economic interest in their preservation), covers damage to and loss of property suffered by the cargo during transport by inland waterway. But not all policies are created equal. Insurers generally offer two main levels of cover These include basic cover for "Major Events" and broader protection known as "All Risks". This article will help you to understand these different options, their guarantees, exclusions and what to do in the event of a claim, so that you can choose the cover best suited to your goods and your business.

Two levels of cover for your goods

When you are looking to insure goods transported by inland waterway, the insurer will mainly offer you two types of policy, corresponding to two different cover philosophies. It's essential to understand the distinction if you are to make an informed choice.

Garantie Événements Majeurs" policy: basic cover

As its name suggests, this policy offers protection against a list of risks. limitative serious and well-defined events. Your goods will only be compensated if the damage or loss is the direct result of one of these events specifically listed in the contract.

What major events are typically covered? The list may vary slightly from one insurer to another, but generally includes :

• Serious accidents affecting the transport vessel itself: shipwreck, capsize, grounding, collision, striking with a fixed or moving body.
• Accidents involving a land vehicle used for transporting accessory transport (pre- or post-carriage by river): impact or collision of the vehicle, crushing, derailment, overturning, falling, axle or chassis failure, etc.
• L'fire or theexplosionThis is the case both on the boat and during ancillary land transport.
• Some natural or external events of a certain severity: collapse of buildings, bridges or tunnels, sudden subsidence of roadways, falling trees, breaching of dykes or dams, landslides, avalanches, lightning, floods, overflowing rivers, break-up of ice, tidal waves, cyclones, volcanic eruptions, earthquakes, etc.

The advantage of this policy is its cost, which is generally lower. The major disadvantage is that any damage resulting from any other cause (theft without breaking and entering, breakage during normal handling, getting wet in the rain under a defective tarpaulin, contamination by other goods, etc.). will not be covered. It is a guarantee against 'hard knocks', but it leaves many risks uncovered.

The "All Risks" policy: more extensive protection

This policy works on the opposite principle: in theory it covers all damage to or loss of property to the insured goods, except those explicitly excluded by the contract. It is therefore a much broader and more protective approach for the owner of the goods.

All Risks" covers not only the major events listed above, but also a host of other potential incidents:

• Flight (although specific conditions apply).
• Breakage, wetness, deformation...
• Loss of weight or quantity.
• Damage due to loading or unloading operations.

However, "All Risks" does not mean "without any exclusions" (see below). What's more, even for risks that are covered, specific conditions may apply. For example:

• Partial theft : The theft of only part of the contents of a parcel (for example, a few items in a box) is often only covered if there are signs of forced entry on the packaging.
• Disappearance of entire parcels: The loss of one or more complete parcels must generally be proven by a certificate of final non-delivery established by the carrier or by any other irrefutable document.
• Shortages on bulk goods : For goods transported without packaging (cereals, sand, liquids, etc.), quantity losses (shortages) are often covered by the "All Risks" policy only if they result from one of the following causes key events listed in the basic warranty. Losses due to natural evaporation, minor leakage or weighing inaccuracies (road shrinkage) are generally excluded.

Despite these nuances, the "All Risks" policy offers much greater security than the "Major Events" cover, but is logically more expensive.

Beyond property damage: costs covered

Cargo insurance does more than just compensate for the value of lost or damaged goods. It also covers certain costs incurred to preserve the goods or enable the journey to continue.

The two types of policy ("Major Events" and "All Risks") generally cover :

• The reasonable expenses during transport to protect the goods from material damage covered by the policy or to limit the extent of such damage (e.g. emergency tarpaulin costs, costs of drying out, etc.). This is the application of the salvage obligation, which is also incumbent on the insured.
• The costs incurred as a result of interrupted or interrupted travel (due to an insured event) to enable the goods to reach their destination: costs of unloading, temporary storage, transhipment to another vessel or another mode of transport, and costs of re-routing. Please note that this cover generally does not apply if the interruption to the journey is due simply to the carrier's financial failure.
• La contribution to general average (if applicable on inland waterways) and assistance costs to the carrier vessel, insofar as these costs relate to the protection of the insured goods.

The difference between the two policies lies in the conditions under which they are covered:

• Under the Major Events cover, these costs are only covered if they result from one of the following conditions key events listed and guaranteed.
• Under "All Risks", they are covered as soon as they are incurred to avoid material damage that is covered (i.e. not excluded) or following a trip interruption itself caused by a covered risk.

What is never (or rarely) covered: exclusions

Even the "All Risks" policy has exclusions. Some of them are common to river insuranceOthers are specific to goods.

General exclusions (brief reminder)

As with "body" insurance, the general exclusions apply: wilful misconduct on the part of the insured, war, civil unrest, nuclear risks, illegal activities, sailing outside zones, etc.

Exclusions specific to goods

These exclusions are particularly important because they cover frequent causes of damage to cargo:

• The inherent vice : This is the intrinsic defect of the goods, their natural tendency to deteriorate or be damaged without any external cause (for example, a fruit that ripens too quickly, a chemical product that decomposes spontaneously, a pre-existing manufacturing defect). Such damage is not covered.
• Worms and vermin : Damage caused by insects or rodents is generally excluded, unless their presence is the direct result of an insured event (for example, prolonged wetting following a shipwreck).
• The influence of atmospheric temperature : Damage due to normal variations in temperature or humidity (condensation, surface rust, alteration by heat or cold, etc.) is not covered, unless specific cover has been taken out for sensitive goods.
• Road braking : This is the loss of weight or quantity considered normal and unavoidable during transport for certain goods (evaporation for liquids, dehydration for fresh produce, loss of dust for powders, etc.). This normal loss is not compensated.
• Insufficient or unsuitable packaging: If the goods are damaged because they were not properly packed, secured or stowed, the insurance will not cover them, especially if these operations were carried out by the insured party himself or his agents. It is essential to use packaging that is suitable for river transport.

Delay exclusion (specific to "All Risks")

The "All Risks" policy, although broad, generally excludes the financial consequences of a simple accident. delay in shipment or arrival goods (loss of business, contractual penalties, etc.). Insurance covers damage to materialsThis does not include purely commercial losses caused by the delay, unless the delay is the direct result of a major insured event affecting bulk goods (a very specific case as described above).

Goods often excluded (but redeemable)

As with hull insurance, certain types of goods are excluded from standard cover because of their nature or value, but can often be covered by a special agreement and an additional premium:

• Furs, objets d'art, sculptures, paintings, antiques, collectors' items.
• Documents and samples whose market value is out of all proportion to their intrinsic value.
• Live animals.
• Goods classified as dangerous by regulations (their transport requires specific precautions and insurance).

When does cover begin and end? The insurance period

To be effective, the insurance must cover the goods for as long as they are exposed to the risks of transport. River cargo policies generally adopt the principle of "store-to-store" cover.

This means that the guarantee begins when the goods are prepared and packed for dispatch, leave the sender's warehouses at the point of departure of the insured trip. It ends when they enter the recipient's shops (or its representatives) at the final destination specified in the contract.

This broad approach therefore covers not only the river navigation phase itself, but also the possible initial and final transport (pre- or post-carriage by road or rail) as well as transhipments between different modes of transport, provided they form part of the same insured journey.

What happens if the trip is interrupted or extended through no fault of your own (e.g. lock-keepers' strike, flooding blocking navigation)? The insurance normally remains in force, but the insurer may ask for an additional premium for the extra time you are exposed to the risk.

However, if you (or the recipient) take delivery of the goods before they reach the intended final destination shop (e.g. you collect them directly from the dock), the warranty will cease immediately at that point.

There is also an absolute time limit: the duration of cover after the boat's arrival at its destination cannot exceed a period fixed by the policy, often fortnight calculated from the end of unloading of the insured goods. Beyond that point, if the goods remain waiting on the quay or in a port warehouse, they are no longer covered by the transport insurance.

Cargo damage: how to proceed

If you notice or suspect damage or shortages to your goods on arrival (or even en route if possible), you need to react quickly and methodically to safeguard your rights to compensation.

Ascertaining the damage: compulsory expert appraisal

The first thing to do is to have the condition of the goods officially recorded. You must request the intervention of a damage surveyor or an approved river surveyor. CESAM (Comité d'études et de services des assureurs maritimes et transports de France) recommends competent experts. Your policy may also designate specific bodies.

This request for an expert opinion must be made as quickly as possible, generally within a few days. three working days following the end of the guarantee period (i.e. arrival in your shops or the 15-day post-unloading limit). The expert will then carry out a contradictory expertiseIf possible in the presence of representatives of the carrier and the insurer, to determine the nature, cause and extent of the damage and loss. His report will form the basis of your insurance claim.

It is also essential to take all the necessary precautionary measures necessary (to protect the goods from further damage) and protect your rights against the inland waterway carrier or any other potentially liable third party (by making written, reasoned reservations on the transport document, respecting the deadlines for confirming these reservations by registered letter, etc.).

Calculating compensation: the insured value as a benchmark

How does the insurer calculate compensation? The basis is insured value that you declared when you took out the policy (and for which you paid a premium). Please note that in the event of a claim, you must justify this value (through invoices, for example).

The policy generally sets a ceiling on this insured value: it cannot exceed the highest of the following amounts:

• Le cost price of the goods at the place of destination, plus an additional expected profit (often fixed at 10% or 20%, unless a higher rate is justified).
• La value of the goods on the date of arrival according to market prices or the terms of the sales contract.
• Sometimes, for manufactured goods, the replacement value when newThis is only the case if it has been specifically agreed with the insurer and if you can provide proof of the actual replacement in the form of invoices.

Once the insured value has been validated, the insurer determines the depreciation rates the value of the goods (by comparing their value in a damaged state with their value in a sound state). This rate is then applied to the insured value to calculate the gross compensation.

If the goods have to be sold en route as a result of the damage, the compensation will be the difference between the insured value and the net proceeds of the sale. If the insurer decides to have the goods repaired (by sending them back to the place of manufacture, for example), it will pay all the costs of returning and repairing them, even if the total exceeds the insured value.

Finally, the insurance indemnity generally includes expert's fees and expenses or the Damage Commissioner. A franchiseif provided for in the contract, will be deducted from the final amount.

Surrendering goods: a conditional option

As with "body" insurance, in extreme situations you can choose to "relinquish" your damaged goods to the insurer, i.e. relinquish ownership in exchange for payment of the full insured value. This option is only available if :

• The carrier vessel is recognised as being unable to continue the voyage and the goods have not been reloaded for delivery to their destination within a set period (often three months).
• Or if the amount of material damage and loss covered reaches at least the following amounts three quarters (75%) of the insured value.

If you opt to surrender the vehicle, you must notify the insurer. Policies are often silent on the period of time the insurer has to accept or refuse the surrender.

Properly insuring cargo during river transport requires a good understanding of the cover available and its limits. The choice between a "Major Events" policy and an "All Risks" policy will depend on the value and sensitivity of your goods, as well as your appetite for risk.

Choosing the right cargo insurance depends on the nature of your goods and the acceptable level of risk. To secure your river transport, our firm can help you select the right warranty.

Sources

• Insurance Code (in particular art. L. 174-4)
• French insurance policies for goods transported by inland waterway ("Major Events" and "All Risks" - general principles derived from standard forms)