CARRIER S LEGAL LIABILITY INSURANCE:

Transcription

1 CARRIER S LEGAL LIABILITY INSURANCE: The legal rights and liabilities in respect of carriage of goods by road is governed by the provisions of the carrier s Act Goods may be carried at Owner s risk or Carrier s risk. If the goods are carried at owner s risk, the carrier is liable only in the event of negligence, if the goods are carried at carrier s risk, the carrier is liable to pay irrespective of negligence. If valuable goods, as listed in the schedule of the act are carried, each package valued at more than Rs. 100/-, the carrier is not liable for any loss or damage unless caused by a criminal act on the part of the Carrier or their servant. If full value is declared and extra freight paid if required, Carrier is liable for loss or damage. As per section 10 of the Act notice of loss or injury to be given within 6 months from the time when the loss or injury came to the knowledge of the plaintiff. No suit can be instituted unless notice in writing has been given. Suit must be instituted within 3 years from the knowledge of loss. Exception: The common carrier is not liable for loss or damage caused by : (i) (i) (ii) (iii) (iv) (v) Act of God. National Enemies. Improper or bad packing. Inherent vice. Justified delay. Misconduct or default of consigner. The common Carriers Act 1865 defines a common carrier as an individual, firm or company other than the Government, who transports goods as a business for money over land or inland waterway.

2 In terms of section 8 of the Carriers Act, the liability of the common carrier is absolute. A common carrier can limit his liability in all respects save and except against NEGLIGENCE AND CRIMINAL ACT ON HIS PART OR ON THE PART OF HIS SERVANTS AND AGENTS. In order to provide an insurance cover to the common carriers and transporters against the stipulation of absolute liability under the Carriers Act, the Carrier s Legal Liability Policy has been devised. This policy has been since revised in 1977 and At present the CLL policy gives the following coverage: Basic cover: covers damage to goods caused by fire,explosion and or accident to the vehicle carrying the goods due to negligence or criminal act of his servants. The cover will commence with the loading of the cargo and end with its unloading. Wider cover: The following risks are covered in wider cover which is allowed as a package deal and no partial extension may be allowed: (i) Damage to cargo as in basic cover. (ii) Damage by fire, burglary, riot & strike and malicious damage affecting the goods at warehouses or transshipment yard, whilst in the custody of the carrier. (iii) Shortage of goods due to theft or pilferage of cargo at any time whilst in the custody of the carrier. (iv) Flood or water damage. (v) Breakage, leakage, damage due to improper handling. RATING GUIDELINES: Rating is based on the gross vehicle weight of the vehicle as per Motor Tariff. Subject to a warranty that vehicle will be maintained in a road worthy and fit condition. There should exist a comprehensive MV policy of the vehicle.

3 Rates given are for limit of liability of Rs. 1 lac for Basic cover only and vehicles upto 5 years of age only. 100% loading for vehicles above 5years of age. 50% loading on basic cover rate for wider cover on own vehicles, and 100% on chartered/hired vehicles. Wider cover to fleet owners approved by Bank. Wider cover for chartered/hired vehicles only if period of charter of hire exceeds 6 months. RATING SCHEDULE: Based on the Gross Vehicle weight of the vehicle as per Motor Tariff. Subject to a warranty that vehicle will be maintained in a roadworthy and fit condition. There should exist a comprehensive motor policy on the vehicle (preferably with same insurer.) Rates given below are for limit of liability of Rs. 1 lakh for BASIC COVER ONLY and vehicles upto 5 years of age only. Gross Vehicle Closed Body Other than Tankers and special Weight Vehicles Closed Body product carriers 1. Upto 2000 kg. Rs. 400 Rs. 500 Rs Each addnl. Rs. 125 Rs. 150 Rs kg. Upto 6000 kg. 3. Each addnl kg. Rs. 100 Rs. 125 Rs. 150 Upto kg. 4. Each addnl kg. Rs. 5 for Rs. 10/- Rs. 15/- per Upto kg. Every 100 kg per 100 kg 100 kg. AGE OF VEHICLE: Rates given are a for vehicles upto 5 years of age above 5 years: 100% loading.

4 WIDER COVER: 50% loading of basic cover rates for own vehicles (100 loading of basic cover rates for vehicles on charter/hire). Wider cover can be granted only to fleet owners and only after careful scrutiny of applications by Regional Office. The transporters should be Bank approved preferably. Wider cover can be granted for vehicles on charter/hire only if period of charter/hire exceeds 6 months. The following risks are covered in wider cover which is allowed as a package deal and no partial extension may be allowed: (i) (ii) (iii) (iv) (v) Damage to cargo as in basic cover. Damage by fire, burglary, riot & strike and malicious damage affecting the goods at warehouses or transshipment yard, whilst in the custody of the Carrier. Shortage of goods due to theft or pilferage of cargo at any time whilst in the custody of the Carrier. Flood or water damage. Breakage, leakage damage due to improper handling. EXCESS: 1) Rs. 10,000/- each & every claim. 2) Tankers: 5% of S.I. or Rs. 15,000/- each & very claim, whichever is higher. DISCOUNTS: A) No claim discount on each vehicle insured. No claim in 1 st year - 15% discount on premium No claim in 2 nd year - 25% discount on premium No claim in 3 rd year - 30% discount on premium

5 No claim in 4 th year No claim in 5 th year - 40% discount on premium - 50% discount on premium In case of any claim reported Insured will lose the entire discount earned. B) Fleet discount When Insured owns and operates a fleet of vehicles (minimum 10) for vehicles 10% discount on gross premium Above 20 to 40 vehicles - 10% discount on gross premium Above 40 vehicles - 25% discount on gross premium Fleet discount will be sanctioned only by Head Office. HIGHER LIMITS OF INDEMNITY: Rates given are for limit of indemnity upto Rs. 1 lakh. For higher limit i.e. upto Rs. 10 lakhs per vehicle additional 2.5% on the additional indemnity limit may be charged. RIOT & STRIKE EXTENSION: (INCLUDING TERRORISM COVER) can be given with basic cover along also charging premium in following rate on the limit of indemnity. Closed body vehicles: 0.50% Other vehicles & trailers: CLAIMS: 1. Claims should be settled on the basis of indemnity and only on receipt of discharge voucher from cargo owners.

6 2. The RTO Registration book should be compulsorily produced to ascertain whether vehicle was plying on charter or not. 3. In case a vehicle is carrying hazardous goods, the drivers licence should be suitably endorsed. The claim should otherwise be treated as non-standard. 4. The Fitness Certificate of the vehicle should be valid at the time of accident; otherwise the claim should be dealt with as non-standard. 5. For settlement of claims it is not essential to await court judgements to prove negligence. Prima facie if liability exists then advocates opinion may be obtained and case finalized on merits. ACCEPTANCE LIMITS: Regional offices have been granted the authority to accept proposals upto the following limits of liability: - Cover Limit of Liability 1. Basic Rs. 20 lakhs per vehicle 2. Wider Rs. 10 lakhs per vehicle Fleet discounts to be approved by Head Office.

7 CASE STUDY Insured: M/s Sharda Carrier s Policy: CLL, Basic cover Period of insurance: to Limit of indemnity: 10 lacs Occurrence: Accident on the highway as the driver fell asleep due to tiredness. The tanker overturned and was badly damaged. The driver and the cleaner were grievously injured and all the crude oil drained out from the tanker. Date of accident: 29 th December Total amount of loss: Rs. 2 Lacs (includes I lac of property damage) Brief details: The tanker was bringing refined petroleum product (petrol) from the IOC refinery to the petrol pump belonging to M/s. Sharda Carriers. IOC deducted an amount of Rs. 1 lac from the freight charges payable to M/s. Sharda Carrier s for the loss of the petro. How would you proceed in this claim and what would be the Co s liability.