Road transport insurance minefield ahead

All the parties involved in the road transport of goods are going to have to get their insurance houses into order, or they may find themselves in contravention of the new regulations in the National Road Traffic Act 1996. And, according to our legal adviser on the subject, Peter Lamb of Norton Rose Fulbright, just what “into order” means is not too clear, with certain terms “too vague to be enforceable”. Agreeing with this lack of clarity and enforceability was Leonie van Rooyen, director of insurance broker and intermediary Prestmarine. “But,” she added, “if you as a haulier, consignee or consignor transport more than 500 tonnes of cargo a month by road, these amended regulations (and any penalties attached) will apply to you.” And, said Prestmarine MD Riaan Grobbelar: “In practice it’s a nightmare.” Lamb told FTW that the basic ruling behind all this reads: “A person operating a motor vehicle that carries goods on a public road, must be in possession of a written declaration containing the following information: “The licence number of each vehicle or combination of vehicles; the nature and quantity of the goods transported; the contact particulars of the operator (or, in the case of a combination of vehicles, the operator of each part of the rig); and the particulars of every consignor and consignee of the load or loads.” In addition, the operator must be in possession of a written agreement between the consignor and operator for the “transportation of goods” – and that vital “schedule of insurance”. In terms of this schedule, the consignee or consignor “insures” the goods to be carried on the motor vehicle and any liability that may arise from the transportation of the goods (Regulation 330C(g) read with Regulation 330D). This Regulation 330D, Lamb added, prohibits a consignor or consignee from transporting goods on a public road or accepting the goods – unless “such transportation is fully insured for damages that can occur as a result of an accident”. But, he added, it is not clear what “fully insured” means, and it is probably too vague a term to be enforceable. Again he was supported by Van Rooyen. She told FTW that: “Fully insured is not further defined in the regulations. But it is understood that it includes loss or damage to cargo as well as well as the consequential liability arising from an accident.” And, said Lamb: “There are different risks involved with the transportation of goods. “A road accident can cause damage to the carrying vehicle, the goods, road infrastructure, vehicles driven by other road users, and pedestrians.” Also, if harmful substances are spilt on the road as a result of a collision, major damage can be caused to the environment and environmental loss. An accident can also give rise to indirect damages such as economic loss caused by the delay of the delivery of the cargo. “This list is endless and not every possible loss can be insured,” Lamb added. While he noted that the regulation did not distinguish which insurances the consignee or consignor was obliged to take, he advised that carriers and consignors “should procure the cover reasonably required in the circumstances”. But certainly, from a road transporter’s point of view, a goods-in-transit (GIT) insurance is definitely the way to go, according to Kevin Martin, Freightliner fleet owner and chairman of the Durban Harbour Carriers' Association (DHCA). And he added that “a big one” to ensure a transporter is fully covered is public liability insurance. “Things like bridge, environmental and indirect damages could easily run into massive amounts,” he told FTW. He has advised the association’s members that a confirmation of cover letter from their insurer or broker and a detailed summary of their GIT and public liability insurance should be lodged with each client. From the consignor/ consignee viewpoint, Martin stressed that their best defence was “at all times to use recognised professional hauliers and to err on the side of caution”. He also warned that clients should always ensure that both the amount of cover AND the monthly premiums paid by the transporter are checked.