Dangerous Clauses
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in Insurance Policies IN 'The Commercial Motor" for last week I dealt with the premium rates which operators might expect to pay For the insurance of goods-carrying and passenger vehicles. I now propose to deal with some, of the more general aspects of vehicle insurance, covering also that of goods in transit. Incidentally, in my previous article 1 failed to make reference to electric vehTcles, which, as is widely known, are given preferential terms in respect of insurance, the premium rates being considerably less than those applying to vehicles powered by internal-combustion engines. .
For instance, in the case of a 10-cwt. vehicle the rates are £5 10s,, £6 15s. and £10 5s. in districts A; B and C respectively. The meaning. of those designations was given in my previous article. For a 20-cwt. machine the premiums are £7, ER and £11 5s. and for a 2-tonner £8 15s_, £9 15s. and £13.
It is invariably the case that insurance proposal forms embody clauses offering reductions of premium in the event of the insured taking certain responsibilities upon himself. Generally speaking, these offers are best ignored. Two that often are those relating to the person driving to what are called "excess."
The latter is a provision whereby the operator agrees to pay a proportion of the damage involved. If the amount of the damage be less than the " excess " the insurer bears the cost.
The first clause, limiting the use of a vehicle to a named driver, is almost invariably a dangerous one to include. It may at any time become necessary to ask some other person to drive the vehicle. A number of reasons for such an emergency could be cited. In such cases, the insurance is void in the event of an accident and the licence of the driver of the vehicle, and probably that of the owner, must be suspended for a year. For these reasons the folly of agreeing to such a limitation as that embodied in the clause hardly needs emphasizing.
There is, perhaps, a little to be said in favour of agreeing to "excess," as for example, in the case of an owner-driver who is able-to do his own 'repairs.He might be able to make good any. damage up to the amount of the "excess," at little cost to himself. The same conditions apply, but in a different way, to those organizations which embody a suit
appear tempting the vehicle, and able repairs and maintenance depot, where slight damage can be repaired at low cost. Indeed, I have frequently been informed by operators having such facilities that they find it advantageous to have an "excess" clause included.
As I see it, however, there is this difficulty. It arises in cases where several small accidents may occur during the year. Each of these may involve accidents entailing an expenditure just a little short of the excess," but the total may exceed it several times and may make the procedure an expensive one for the insurer.
At the same time, it is to be agreed that the absence of a number of small claims keeps the insurer its favour with his insurance company, which, in the event of claims being too-frequent, may insist upon the insurer bearing the "excess." There is also the point that when no claims are made the insurer can apply for a " no-claim " bonus on renewing his premium. Again, the bonus may be less than the amount of the 'excess," so that in the event of several small accidents occurring for which no claim is made, the operator would actually be at a financial loss.
To turn for a moment to insurance against claims by employees for injuries they may sustain in circumstances to which common law applies. The definition of that term is too protracted for me to give it at length. A particular case is where one employee suffers injury as a result of the action of another employed in the same concern. In insuring against liability of this kind the insurer has to choose between paying on the basis of the wage roll, or " per capita," or, in other words, he pays a premium calculated as a percentage of the total wages of his employees, or he pays a fixed sum per head. As a general rule, the former is preferable, the latter being satisfactory only where there are but one or two drivers, and where each is solely concerned with the operation of his own vehicle and does not work with a mate.
In " per capita" insurance there is always the risk that, at the time of the accident, the man concerned may, owing to the exigencies of fife moment, be engaged upon some particular work in the doing of which he is not covered. The driver's mate may, for example, not be covered were he to have an accident when lifting heavy goods, starting the engine, or relieving the driver in any way. If "per capita" insurance be preferred, the rate may be about £1 15s. to £2 10s, per head.
When employer's liability insurance is taken out on the basis of the wage roll, the cover should be unlimited, relating to the usual employment of the men and/or any other work they arc normally liable to do. Regarding the latter, this will, of course, be taken into consideration when the proposal form is made out. 1 he cost of insurance is sometimes a little more expensive when taken out in this way, but it offers a more satisfactory cover. The rate of premium may be from £1 10s. per cent. to £2 10s. per cent.
The insurance of goods in transit is one which should have more careful consideration than is us-daily given to it. Many of the policies which, Operators hold cover only fire and theft, which are insufficient. A haulier often imagines that his ordinary vehicle-insurance policy covers' risks to
the goods he carries. That is not the ease. r In connection with insurance of goods in transit there is what is sometimes called "moral liability" to be considered. This arises when the damage caused to the goods covered.by the policy , is not due to any negligence on the part of the haulier, but, Strictly speaking, can be atttibuted to the consignor. The former, however, feels that he would rather pay the damage than have any dispute with his customer, possibly an old and valued one.
The aim should be to insure with a broker who is sufficiently experienced to realize that such risks do occur, and Who will appreciate the need for meeting his client by bearing at least some of the cost of the damage.
An experienced haulage contractor, who has given a good deal of time to the study of the problem of insurance of goods in transit, told me that a considerable proportion of his business was concerned with carrying goods to the docks. Nearly always, he told me, goods lie for a considerable time on the quay before they are shipped. Few policies provide for covering the goods under such conditions.
, His advice to operators who carry goods which have to be set down at a warehouse or clearing house, for instance, should be covered against risks of damage and pilfering during the time the goods are thus left.
Another point raised by my informant was the inclusion in insurance policies of an "average" clause. Consider what would happen in the case of a man who, some years ago, insured for £600 'goods that. are now worth £1,000. Assume that some of these goods are stolen' and that their replacement will cost him £100. The insurance company will pay him only £60 On the ground that his policy covers only .six-tenths of the value. That is an average clause now in operation.
Trouble often arises in connection with claims for loss of goods in transit if the consignee has also insured them. In such an event, prolonged and complicated negotiations ensue, and must be completed before the haulier and his customer have their claims satisfied. There is, as a rule; no financial loss entailed, but there are vexatious and irritating delays which are nearly aways blamed on the haulier by his customer. That is something which every operator should try to avoid.
Points in a Good Policy
My friend then gave me a brief schedule of points which should be covered in a real "all-risks" goods-in-transit insurance poiicy. In the first place there should be no " average " clause, and there should be a " non-contribution " clause which obviates disputes of the nature to which I have referred. Goods lying on the quayside, or in some corresponding position off the vehicle, but still in the care of the haulier, should be fully covered.
The policy covers all vehicles owned or hired by the insurer, or belonging to his sub-contractors: The next clause states that the goods are covered from United Kingdom to United Kingdom and until f.o.b. steamer.
The limit of insurance is £5,000 for any one vehicle, B20
£10,000 for any one vehicle with trailer, and £10,000 for any six-wheeled or eight-wheeled vehicle. The cover is for all risks of loading and damage from any cause, theft, pilferage. short 'delivery, non -delivery, damage by -other cargo, breakage and leakage of containers, and damage caused by breale-age oi leakage to skip vans.
All theloregoing risks are covered " irrespective of percentage," which is another way of stating that there is no "average" clause included Another important clause states
. that the insurance includes, compensation for damage or injury to the goods causedduring lbading and unloading, packing and unpacking, and covers the goods while they are temporarily stored in the Ordinary course of transit. Next comes a provision which is usually excluded from any insurance policy, that of compensation for damage arising from riots, strikes, civil commotion's and malicious means, There is 'a specific clause excluding any claims for damage caused by moth. This is a point to which I have occasionally referred in dealing with the insurance of stored furniture.
Apparently no insurance company will insure against moth risk. „ .
Another provision in this policy, which closely parallels that of the no-claim bonus which applies in respect Of vehicle insurance, is that if, on the expiration of the policy, it is found that the total of claims does not exceed 25 .per cent. of the gross premiuin, the underwriters will return 211 per cent. of the premium. If it be found that the total of claims does not exceed 50 per cent, of the gross, premium the under:, writers will return 10 per cent. of the net premium. .
A further point raised by my friend.was -the danger to the operator of adhering to those.-so-called " Standard Conditions of carriage" which provide for a £200limit risk On any individual load. In the caSe. of any load being valued in excess of that amount, the -operator is expected to Make special arrangements to insure it and charge the Custornet accordingly.
There are many occasions when this would involve a: large addition to the charge which the Operator Would ordinarily make to Ills customer for carrying the traffic. The addition would, presumably, not have to be made if the operator had taken out a policy such as the One described. " , The extra cost is great because, in the ease or valuable
traffic, it would be assessed on the actual value of the load, instead "of on the haulage rate-, as in the case of the "all-claim" policy outlined. Moreover, it may be anything front Is. to 2s. 6d. per cent, of that value.
On one particular cOmModityWhich is valued at £200 per
, ton, the elm cost. of insurance over a 200Lnille -lead *bold be nearly £3 per ton, SciThat if the ordinary hablage load Were £4,-the.opefator would have to Charge the consignee as much as £7 per ton for the traffic if he had to take the
responsibility of insuring the load S.T.R.