Transit Insurance

Updated: 09 June 2023

What Does Transit Insurance Mean?

Transit insurance is a type of insurance policy that covers business goods or personal belongings while they're being moved from one place to another. These policies typically give you coverage from the time it is loaded onto the specified method of conveyance (a truck, for example) until you reach the destination declared on the policy.

The policy is usually restricted to transportation overland (ie. by truck, rail, airplane, or ferry in connection with land transportation) and travel on ocean marine vessels are excluded.

This type of insurance covers property in transportation through all stages of the journey including:

  • Packing and unpacking.
  • Loading or unloading.
  • Transportation.
  • Storage of goods during the move.

It also covers the damage or loss of the goods while in transit due to mishandling or other forms of damage such as accidents, explosions, impact fires, theft, and malicious damage.

Losses that can be attributed to the shipper such as improper packaging or inherent vice in the property being transported is not covered.

There are different types of transit insurance depending on what role you play in the journey. For example, people who own the goods in transit would get a different type of transit insurance than someone responsible for their actual transportation.

Transit insurance is useful to people who regularly transport goods over large or small distances, especially couriers.

Insuranceopedia Explains Transit Insurance

Transit insurance only applies to goods transported over land including automobile, rail, air, or ferries in connection with land transport. As a result, transportation by ocean marine vessels are excluded and require a special type of policy known as ocean marine cargo insurance.

Transit insurance can be purchased by all types of people involved in the journey such as the owner of the goods being transported, or the company hired to transport the goods. There are even trip transit policies that are meant to insure a single trip to be used when moving offices or when ordering in a particularly valuable piece of equipment for your business.

When shipping goods, it is important to check whether the business transporting your goods is well covered. And even if they are well insured, you should also consider getting your own transit insurance policy to avoid any issues as their coverage is outside of your control and may have inadequate limits, be canceled without your knowledge, or they may have breached some warranties (like a locked vehicle warranty) that could invalidate coverage leaving you exposed to heavy financial loss.

The goods covered by transit insurance can be raw materials, manufactured goods, packaging material, or goods owned by someone else. Other than offering the policyholder indemnity from damage or loss, the insurance coverage also covers other related expenses such as incidental storage (ie. if the truck broke down and the goods need to be kept in cold storage nearby before alternate transportation can be arranged to complete the delivery), and alternative accommodation expenses.

The insurance policy contract's details and rates will depend on the type of cargo, the cargo's declared value, the course of the journey, time periods, and the goods' predefined areas of transit.

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