As with all insurance, vehicle shipping insurance is an expense to your business, but without it, a single catastrophe can eliminate years of earnings or even put you out of business altogether. Whether you are in the used car export or exporting new vehicles to China, it is important to realize that many car exporters are not in business long enough to appreciate the risks they are exposed to. When they choose to partner with Techlantic for vehicle export or trade financing, the knowledge we have and existing insurance policies we have in place can prove to be extremely valuable for our partners.
The shipping insurance you need depends on the risk to which you are exposed. When exporting cars out of Canada or importing cars from Canada, it is important to look closely at the sales conditions and how you can collect payment from your customer or recover damages if you have paid and there is an incident.
The responsibility of the buyer and the seller are well defined in the Incoterms you agree on. But even if the buyer is responsible for the vehicle shipping insurance, then collection of payment by the exporter can be hard if an unfortunate event takes place. An additional complication is the moment the risk transfers from the seller to the buyer. With the common Incoterm “CFR”, the risk transfers when the exported vehicles are loaded on board of the vessel. It is important to note that the vehicles are not inspected at that time, causing uncertainty when damage occurred. Many car exporters do not realize that with this term they still need a proper insurance policy to cover damages that occur prior to loading.
It is of course important to do everything you can to avoid claiming on your car shipping insurance. The best way to prevent damage is by using reputable trucking companies, forwarders, and shipping lines. In case of damage, find the guilty party via the inspection reports each time vehicles are transferred. Claim the guilty party for damages, to limit your insurance premiums or to qualify for no-claim discounts. You then still need insurance when you are not willing or able to pay for damages and losses.
To reduce risks, sellers should insure vehicles from the moment they pay until payment is received. And of course, also meet the requirements of the Incoterms to which they agreed.
When adding insurance, it is most important to select a reputable insurance company as well. The premium payable then depends on the type of insurance and the deductible you agree on. The type of insurance can be “All risk insurance” or “Restricted insurance”. The insurance policy determines the vehicle value which must be insured. Most insurance companies require to provide all details before the insurance starts, which can be hard. There have been many incidents that we have heard from other car exporters where they were not covered because incidents occurred prior to them adding the vehicle to their policy. If possible, work with your shipping insurance provider to accept that you declare cars insured monthly. This reduces risks as cars are always insured and monthly reports save a lot of time. If you are buying from Techlantic and you would like the vehicle to be insured after you have issued, payment please instruct us accordingly as there are additional charges that are applicable.
When you are establishing car shipping insurance policies, read the policies and the conditions to which they refer carefully. Make sure they meet your requirements and make sure that you meet their requirements. That includes the limitation of the age of vessels used for transportation, which is usually 25 years. That may also include the maximum amount insured of all vehicles in one location or on one carrier. Techlantic has automated reporting systems established that will check and monitor these types of conditions to ensure we are always compliant. Another important item to note on your shipping insurance policy are the risks due to calamities which effect all vehicles in one location. For instance, flooding, hail, sinking of a vessel, etc. It is also very important to proactively note the documents required to submit a claim to the insurance company and make sure you can fulfill those requirements when you must submit a claim.
Another commonly missed task when deciding on your vehicle shipping insurance requirements are the general conditions of shipping lines on the back of the bill of lading. Many vehicle exporters are not aware that when a vessel sinks, the shipper may be held responsible to contribute to the total damage of the event. Relying on the insurance of a shipping line or trucking company is always a bad idea. You do not know their conditions or if the premium has been paid. Furthermore, their policies limit damages payable often to an amount per kg weight of the vehicle unless the trucker entered the correct value of the vehicle on his bill of lading which is most often not included.
If you have questions about the insurance that we provide, please do not hesitate to contact us and discuss to make sure you are adequately covered.