Subbies insured?
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Legal Bulletin gave much apposite advice regarding subcontracting (CM 2430 Sept). However, one important element was missing—that of insurance.
All too often hauliers and freight forwarders agree to subcontract work out to other operators on the spur of the moment and matters such as conditions of carriage and insurance cover are all too often overlooked. The problems start when a freight forwarder, contracting with his client in accordance with the European standard C:V1R (the convention on the contract for the carriage of goods by road internationally) subcontracts a load to a UK-based haulier for final delivery to destinations in England. When a loss occurs, the freight forwarder's client expects to receive payment in accordance with the CMR Convention at around £6,000
per tonne. At that point the freight forwarder is horrified to discover that the haulage contractor he has used only maintains insurance cover up to the limits of the Road Haulage Association's RI-IA 1991 Conditions—£1,300 per tonne. An all-too expensive £4,700 per tonne difference.
Other problems occur when the subcontractor used decides to subcontract the load yet again. The principal haulier has no control over who is used and this can lead to further problems, particularly under CMR. Many freight forwarders and principal hauliers, having suffered such losses in the past, have now put in place excellent subcontractor vetting schemes and no longer use subcontractors that fail to meet their stringent criteria. The lesson is clear—don't wait to be yet another statistic. Speak to a specialist insurance broker.
Peter Blanc, Director, FMW Corporate Risks, Chelmsford, Essex