'Transporters prohibited from moving uninsured cargo'

The latest amendment to the National Road Traffic Regulations demands careful scrutiny since ignorance of its implications could result in loss of insurance cover. As has been well documented, in terms of the amendment it is the responsibility of the consignor and consignee to ensure that the cargo is fully insured. But a question raised by FTW reader Dave Thompson, general manager of Johannesburg-based CTS East, was whether the transporter was also required to insure the cargo. The answer, says Francine Hattingh of Eikos Risk Applications, is ‘no’. “The transporter must however carry an insurance schedule on its vehicle reflecting details of the insurance on the truck and the load and it does have to enter into an agreement with the consignor/consignee regarding transport responsibilities,” she added. “He is also prohibited from accepting cargo if the loading and transport are not in accordance with the Act. Thus the implication of these requirements is that the transporter is prohibited from moving uninsured cargo.” She suggests that the agreement that the transporter is required to enter into with the consignor/ consignee is the ideal place to set out the relevant insurance arrangements and the obligation to arrange cargo insurance may be placed squarely on the consignor and/ or consignee. “The haulier must however still have a liability policy in place alongside the consignor/consignee’s cargo insurance due to the requirement that not only the load but transportation risks must also be fully insured,” she said. Hattingh also recommends that transporters have both Goods In Transit (GIT) and liability cover in place since this enables them to move cargo that isn’t insured by the consignor/ consignee and also avoids the administration involved in checking that the consignor/ consignee has proper insurance in place. “If the consignor does not arrange adequate insurance for the cargo, the transporter will be in breach of the regulations if he then moves the cargo by road.” The transporter, in his capacity as bailee, can however insure the cargo entrusted to him – but if that property is damaged or destroyed he is required to pay the insurance proceeds to the cargo owner. “The reason for this,” says Hattingh, “is that the insurance by the transporter, while in his own name, is ultimately for the benefit of the cargo owner or bailor.” And since cargo interests very often have already arranged appropriate cargo insurance for the cargo that the transporter will move, she advises hauliers to consider arranging a “GIT contingency” policy, which does not cover all loads moved by the transporter, but only those loads which are not already insured by the cargo interests to whom they may sub-contract. The bottom line is that the haulier must still have a liability policy in place alongside the consignor/consignee’s cargo insurance. “This because it is mandatory that not only the load, but transportation risks must also be fully insured.” The question that arises, however, is what role the Department of Transport should play in regulating the insurance of cargo. “Surely it is up to the owners of that cargo whether they self insure or not,” says Eikos director Hugh Reimers. “The department’s only interest, in my view, should relate to damage to the infrastructure (roads for example) and pollution risks which they are arguably entitled to ensure are adequately covered by “an offending party”. “This valid concern has turned into a nightmare of misdirected regulations which are impossible to police or enforce and which only serve to make attorneys richer.” INSERT & CAPTION 1 The department’s only interest, in my view, should relate to damage to the infrastructure. – Hugh Reimers INSERT & CAPTION 2 The bottom line is that the haulier must still have a liability policy in place alongside the consignor/consignee’s cargo insurance. – Francine Hattingh