Couriers, removals firms, man and van service providers, third-party delivery operators and businesses that provide their own, in-house delivery services can all benefit from goods in transit insurance. Otherwise known as GIT insurance, these sorts of policies are aimed to meet a specific commercial need. In this guide, you will find out everything you need to know about goods in transit insurance, how and why it differs from other common business insurance policies, why you might benefit from obtaining one and what to do if you have a claim. Read on if you handle commercial or personal goods on a professional basis and want to make sure you are covered in the unwelcome event of a loss through damage, theft or unforeseen circumstance.
What Is Goods in Transit Insurance?
To begin with, it will be important to define exactly what goods in transit insurance actually is. To be clear, goods in transit insurance is a financial product just like any other type of insurance. This sort of policy specifically aims to cover the monetary value of items that are being conveyed from one place to another. You can think of goods in transit insurance as a little like home contents insurance. This is because damage caused by accidents, such as dropping items on the floor, will be covered. Like home contents insurance, what is being insured is the value of the item up to a certain level. However, unlike contents insurance, which doesn’t cover items that have been taken out of their usual location, goods in transit insurance covers damages and losses that occur while items are in between locations.
As such, GIT insurance is primarily aimed at businesses that move items on behalf of their clients. Logistical firms, courier companies, removals contractors and self-employed delivery operators often want this sort of insurance so that any problems they encounter while carrying out their services don’t lead to a financial loss. In other words, such business models might have to pay for goods that are broken or lost while they are in their care. However, with GIT insurance, they know that they’ll be able to make a claim against any such losses, so long as they have not been incurred deliberately, of course.
Therefore, goods in transit policies tend to differ from other sorts of insurance documents that are aimed at the general public. To put it simply, they are primarily designed for professionals who handle goods. As such, they are worded more like other business insurance policies and will sometimes contain technical terms or jargon. For this reason alone, it is a good idea to get to know more about goods in transit insurance, what it covers and what it does not. In fairness, different goods in transit policy documents will differ depending on the insurer. However, there are plenty of similar clauses, terms and responsibilities that are placed on policy holders that are common among most insurance companies.
Please note that goods in transit insurance is often considered to be a good idea for professional goods handlers. Many firms have GIT insurance in some form simply because they know that their customers are likely to want to know that such a policy is in place if their goods were to be damaged or lost while they’re in transit. Importantly, this tends to be the case in the UK even when the firm concerned has never broken anything or made a claim. In other words, it is something that can be considered marketable by the firm in question. Typically, courier companies, for example, will have something on their website and client contracts that makes it clear that all the goods they handle will be insured up to a certain value. In turn, this gives customers greater peace of mind and can lead to more work, certainly when clients compare service offerings with couriers that do not have this sort of cover as a part of their day-to-day operations.
Is Goods in Transit Insurance a Legal Requirement?
Answering the question of whether goods in transit insurance is a legal requirement or not in the UK is straightforward. It is not. Anyone can convey goods from one location to another by hand, by road or by any form of transportation they like in the UK without GIT insurance. The only legal restrictions that would really prevent this under UK law would be goods that are controlled, such as certain chemicals, for example, or illegal items. However, it is unfair to say that because there is no legal requirement placed on individuals or firms to have goods in transit insurance that it is an avoidable business cost. Why is this?
Firstly, many customers want to know that their items will be covered by insurance while they are taken from one location to another. Homeowners who have hired a removals contractor to help them on their moving day, for example, will often explicitly make it clear that they expect their appointed firm to have adequate cover in the event of a breakage. If the removals company does not have goods in transit insurance, then their customers’ home contents insurance is highly unlikely to pay out in the event of a claim. Such policies rarely cover items outside of the home or when they’re being handled by professionals. The same applies to removals companies handling office moves and other types of commercial relocation work.
There again, courier firms collecting orders from a supplier and taking them to a customer on behalf of their client may not be obliged under law to have GIT insurance but the reality is they often need it. Without adequate cover, consignments that might go missing en route or that suffer from damage as they are handled will result in a financial loss. Either the client takes the risk or the courier firm handling the goods would. Under these circumstances, legal disputes are likely to follow, especially if higher-value items are involved. To avoid this, taking out goods in transit cover means that both the courier firm and its clients will feel more confident in the professionalism of the service on offer.
Of course, at some point in time, the government could make a change in the law and state that firms and individuals handling goods in transit must first obtain an insurance policy. If so, then the uptake of such policies could increase dramatically. Some professional and trade bodies already recommend it among their members. Indeed, some require it if accreditation is to be obtained within such bodies. Therefore, the lack of legal obligation for GIT insurance is irrelevant for many professionals who handle shipments and deliveries in the UK today.
Who Needs Goods GIT Insurance?
All firms that handle goods – either their own or their clients’ – outside of their usual base of operations will benefit from some level of GIT insurance. As mentioned above, there isn’t a legal requirement for this sort of policy in the UK when handling items. However, it is often advisable for firms to take it out or they may suffer from financial penalties if things that they are moving are damaged, stolen or simply lost. Therefore, all companies that have their logistical operations organised in-house, perhaps with a small fleet of delivery vans at their disposal, should consider taking out goods in transit cover. If not, their fleet insurance is unlikely to pay out for damages that might occur while deliveries are being made. This would certainly be the case if the damage was caused by a driver dropping something or knocking into it when loading or unloading. It is also often the case that fleet insurance won’t cover accidents that happen en route, either, perhaps due to a road traffic accident. Under such circumstances, it is usually only the vehicle(s) involved that would be covered.
However, it is not just businesses that make their own deliveries to clients that will find goods in transit insurance useful. Firms that provide such services to their clients will also benefit from a policy of this type. Courier firms – whether they use cyclists, motorbike riders or van drivers – will often find that GIT insurance is a good fit for their business model. This is the case whether the firm in question handles deliveries through its own driver network or makes use of sub-contractors. Equally, goods in transit insurance should be considered by all owner-drivers who make multi-drop deliveries. Remember that unnoticed breakages may have occured even before items are picked up by multi-drop drivers. Without adequate insurance, it is the last-mile driver who may pick up the tab for problems so this sort of cover is usually worth it for smaller courier operators as well as larger ones.
Removals companies that handle business and personal possessions during relocations, house clearances and the one-off removal of some belongings will also benefit from GIT insurance in most cases. Removals firms will often handle breakable items during their day-to-day work, something that means being insured is often highly beneficial no matter how diligent the removal operatives are in their work. The same thing goes for many businesses that operate in the automotive sector. When cars, vans and trucks need to be collected for repair, for sale or to simply get them off the road, a specialist policy for goods in transit will frequently cover unforeseen eventualities in the way that standard motor insurance does not.
Finally, it is worth mentioning that hauliers, international freight forwarders, air freight operatives and shipping container providers are all able to benefit from GIT insurance, too. They should confirm that their policy covers international shipments, however, since not all do. That being said, such policies would cover accidents and losses that were to occur on British soil for domestic deliveries and collections.
What Does Goods in Transit Insurance Cover?
Goods in transit covers all sorts of incidents and problems that can occur with shipments and deliveries. Typically, GIT insurance is designed to help businesses that have goods that are not their own in their possession in three different ways. The first of these is the potential loss of goods. Items go missing all the time. They can be mislaid, of course, which means that they could show up once more and eventually reach their intended destination. However, mislaid goods still might be subject to disputes or legal claims even if they are ultimately found. GIT insurance should cover the loss of items that have simply gone missing.
Nevertheless, goods in transit don’t just go missing by accident because they can sometimes be subject to theft. Even if you are handling goods yourself and know that you won’t steal them, the person you are delivering to could make a false claim that they never received them. There again, couriers might be handed the wrong item to deliver deliberately so that a false claim of theft can be made. Either way, being covered for acts of theft is very reassuring. Of course, in some supply chains, goods may be stolen while they are being passed on or left in a supposedly secure location.
Thefts can also occur from delivery vehicles while they’re parked or left overnight. The clauses of many goods in transit insurance policies will cover these sorts of eventualities. Like everything to do with insurance, it is best to check the details regarding losses.
The second eventuality that GIT insurance is designed to cover is loss from breakages. When items are moved around, they are simply more likely to suffer damage than when they’re in storage. As such, insurance that specifically covers items that are placed in the back of trucks and vans or in the panniers of a courier’s motorbike is desirable. So long as the items concerned are deemed to have been sufficiently well protected – that is, they have been packaged up appropriately – a claim can be made for accidental damage that results in complete loss of value. Some policies will also provide insurance for partial damage, such as scrapes and bumps, even if the goods are not completely ruined following an accident.
Lastly, many goods in transit insurers will offer a third type of cover. This tends to relate to perishable goods or those that have a limited shelf life in some way. Such policies will provide the courier or haulier that is conveying them with cover if there is a delay that is outside of their control. Again, not all policies include this sort of cover. Some insurers offer it as an additional sort of policy on top of standard GIT insurance.
Do I Need Goods in Transit Insurance For My Business?
Legally speaking, no firm that handles goods in transit needs a specific GIT insurance policy. Nevertheless, many removals firms, for instance, will have goods in transit insurance to meet the level of cover their competitors have. This way, for example, they will be able to say to their prospective clients that while their belongings are in their care, they will be insured up to a certain value. Some removals firms will opt for a higher value than their competitors because they want to appeal to commercial clients as well as undertake removals work at larger properties which tend to have goods valued at a greater level than others. Consequently, although GIT insurance isn’t needed for removals firms, it is now the norm in the industry.
For much the same reason, couriers and man and van operators also take out GIT insurance each year. In other words, they want to meet or exceed the level of cover they can offer their clients compared to their competitors. In such cases, especially with smaller operators that may not have significant financial reserves, goods in transit insurance serves a second purpose that goes beyond a useful marketing tool. Couriers and self-employed drivers tend to need it because it means that they are no longer financially exposed to such an extent that they might go out of business following a loss. For example, a courier firm that has no cover could be sued for the loss of a high-value consignment and ultimately be forced to cease trading if the damages are at an unaffordable level. However, with GIT insurance, they’ll know that such business-critical circumstances will be avoided so long as a valid claim can be made.
For some enterprises, particularly SMEs operating in the courier, delivery and logistical sectors, GIT is really a requirement if they are not to be exposed to excessive business risk. Indeed, this can be the case whether they undertake delivery work themselves or sub it out to other operators.
Is Goods in Transit and Liability Insurance a Good Idea?
Yes, both goods in transit insurance, as well as liability insurance, are worth having if you handle goods that are owned by clients. However, the key thing to point out about them is that they are different sorts of policies, each designed to offer a specific type of cover to courier firms, removals companies and self-employed delivery drivers. Firstly, liability insurance is designed to cover businesses – and sole traders – from anything they might do which leads to losses or damage during the course of their work. This sort of insurance is designed for many different types of businesses whether or not they handle goods in transit. Essentially, such policies help to protect businesses from lawsuits they might face as a result of carrying out their professional duties.
For example, let’s say that something a courier did in the course of his or her duties injured a member of the public or caused them to be inconvenienced in some way such that they missed a flight or a business meeting. Under such circumstances, the courier – or their employer – might be sued for negligence or for a personal injury. It would depend on the exact circumstances, of course, but public liability insurance should offer some degree of commercial protection if a financial settlement out of court was needed or, indeed, a judge found in favour of the suing party. Liability insurance also helps UK firms if they were to face a lawsuit from an employee, a client or even a shareholder. Neither public liability insurance nor goods in transit insurance are legally mandated in the UK. That said, it is something that many in the courier and haulage sectors would recommend.
Nevertheless, liability insurance is primarily focused on the actions of people and how they interact with others and their property. Liability insurance might cover losses incurred from a late delivery due to professional negligence, for example, but it is highly unlikely that a successful claim could be made for items that were damaged in transit. Nor would they usually cover losses from goods being misplaced.
This is why a separate, more specialist policy is advisable for delivery firms, couriers, removals companies and so on. In short, liability insurance provides some protection but not for items that are broken, scraped, rendered inoperable or otherwise damaged during transit. Many firms only need some liability insurance for the sort of work they do. However, any companies and individuals that handle goods should consider not only obtaining liability insurance but goods in transit insurance, as well.
Does Hiring a Van Include GIT Insurance?
More often than not, hiring a van to conduct courier work, carry out multi-drop deliveries or undertake removals work will mean that you do not automatically benefit from goods in transit insurance. Some hire companies – as well as van leasing firms – like to market themselves in such a way that suggests all of the insurance that drivers need for their work is bundled into the price of the daily, weekly or monthly rental agreement. However, this is not usually the case. What is going on, then?
To be clear, insurance is usually included when you hire a van for a professional purpose. This will be the insurance that is required under UK law to drive a van on British roads. However, you might need to pay more for anything over the legal minimum. The rental firm may charge more for anything other than third-party insurance, for example, or may levy an additional fee for breakdown recovery. What won’t be included – in the majority of hire agreements – is goods in transit insurance.
Therefore, any self-employed driver who undertakes courier or delivery work on a sub-contracted basis with a van they don’t own – but lease or rent, instead – will benefit from taking out their own GIT insurance policy. Why? Because without it, the driver is likely to be held liable for any losses or damage that occurs to the goods they are transporting while they are in transit. Accidents that might happen on the road should be covered by the rental company’s insurance. This will only cover the costs of damage done to the van and other vehicles involved in the accident, though. If packages are damaged as a result of such an incident, you will more than likely need GIT insurance to cover them.
Nevertheless, the insurance market also offers something else that is relevant to drivers who pick up and deliver goods for a living. This is frequently referred to as hire and reward insurance. Typically, van rental companies use this sort of financial product to provide something like goods in transit insurance within the rental agreement that their customers sign. Often, there is something of a mark-up when this sort of policy is taken out. Many more savvy drivers choose to rent their van(s) with vehicle insurance only and have their own GIT insurance policy to cover any accidents or losses that might occur while they’re working.
Of course, it very much depends on the quoted price but this tends to suit drivers who even work part-time in the multi-drop delivery or courier sectors. GIT insurance will usually cover an individual or a firm – in the case of a business policy – no matter which vehicle is being driven to carry out the work, so long as it is legally on the road, that is. This way, drivers who rent their vans can usually switch rental firms at will without worrying about not being covered if any damage were to occur to the goods in their care while out and about.
How Much Is Goods in Transit Insurance?
The answer to how much GIT insurance will cost is that pricing varies on a number of factors. Typically, insurers will have policies that are suited to commercial businesses with a certain number of employees or delivery vehicles. These are fleet insurance policies that tend to suit larger removals firms as well as courier businesses that have multiple drivers. There again, individual operators who own – or rent – their own delivery vehicle can still obtain goods in transit insurance. It just depends on which end of the market will suit them best.
One of the most important factors in the price of goods in transit insurance today is the level of cover required. Effectively, this means the maximum pay out that an insurer will make following a successful claim. Whether this is a thousand pounds or a million will depend on the level of cover. Generally speaking, the more you can claim, the more you can expect to pay in your premiums. In this regard, goods in transit insurance is very much like other types of insurance policy, such as holiday insurance, life assurance and loss of income insurance.
There again, insurers will charge more for GIT insurance depending on the nature of your business. If you specialise in deliveries for clients, then you will probably expect to pay more than a firm that manufactures goods but also delivers them with its own logistical operation. Couriers that deliver higher-value items that are perhaps easier to steal, such as luxury goods like watches, jewellery and fine wine will often face higher insurance costs than those which deal with more run-of-the-mill goods. Your firm’s turnover also sometimes plays a part in how policies are costed.
If you undertake international deliveries by driving goods to continental Europe, for example, then this can push the costs of goods in transit insurance up. However, paying for a whole year of insurance – rather than making monthly instalments – tends to reduce insurance costs. Like so many things connected to GIT insurance, it will depend on the insurer as well as the customer’s circumstances. Smaller operators without the need for a high level of cover can expect to pay something upwards of £200 annually. Note that such pricing is indicative only and that all GIT insurance is subject to insurance premium tax. The standard rate for this is 12 per cent. The higher rate that insurance companies are obliged to levy is currently 20 per cent for policies that are liable for it.
Who Provides Goods in Transit Insurance in the UK?
In the UK, there are many insurance companies that sell goods in transit insurance to professionals in the delivery and supply chain sectors. In fact, many of the firms that offer GIT insurance are just the same ones that provide commercial vehicle insurance. That said, like anything in the insurance market, you should not assume that the first policy you see will be the best price you can achieve. Nor should you compare one GIT insurance policy with another based solely on price.
For some smaller operators with just one or two employees and a couple of vans, individual GIT insurance for each delivery driver might be the best way to go. However, this is often not advisable if you manage a larger fleet which will often mean employing lots of drivers, sometimes directly and sometimes as sub-contractors. To put it simply, not all goods in transit providers are cost-effective if larger fleets of a dozen or so vans are in daily use. Some won’t cover sub-contracted drivers either because the insurer will expect each sub-contractor to have his or her own GIT cover.
There again, couriers and multi-drop delivery firms often need slightly different GIT insurance compared to hauliers and removals contractors, for example. Seek out a specialist insurer if you transport heavy cargoes or hazardous goods since these classes of material may be exempt from standard policies. Removals contractors may also need additional cover for when they are lifting and handling goods in people’s homes and offices. Damage can and does occur with all goods in transit but insurers tend to view removals work as more likely to result in losses, so a specialist policy from a specialist insurer will sometimes be preferable.
Although there are regulators in the UK covering the insurance industry – including the Financial Conduct Authority, for example – there is no specific set of regulations covering the sale of goods in transit insurance. Therefore, it is best to take out a policy with a reputable firm. Many insurers are members of trade bodies and groups, such as the Association of British Insurers, for instance. Look out for such accreditations and trade association memberships as a sign of financial probity and professionalism. This is the case whether you have approached a broker or an insurance firm that provides GIT insurance to policy holders directly.
When Can I Claim on GIT Insurance?
You can make a successful claim against a goods in transit policy if the criteria of the policy have been met. Since the specific terms of all such insurance policies differ somewhat, it is impossible to say exactly when the conditions for a successful claim have been met. Nevertheless, the majority of such policies are designed to cover accidental damage and losses that have not been incurred deliberately. If that applies to you or one of your drivers, then contact your broker or insurance firm and let them know about the issue. If it is clear that you do not stand a chance of making a claim – perhaps because the damage incurred was deliberate – then your insurer should inform you. In all other cases, you will need to make a claim and wait for it to be assessed.
Typically, goods in transit insurance claims are conducted by filling out a claims form. Whether you do this on paper or online is down to the insurer. Ideally, you will be in possession of all of the facts relating to the damage or loss of the goods your firm was transporting. This will include any of your contracted conditions of carriage with your client. Insurance companies will typically want to know the entire value of the goods you were transporting at the time of the incident that caused the loss regardless of how much you happen to be claiming for. In addition, any supporting evidence of the damage will be useful. Taking a photo of damaged goods and what might have caused the incident can be helpful in this regard.
In some cases, accidents will result from traffic collisions or from criminal behaviour by third parties. Theft of goods in transit would certainly fall into this category, for instance. If you have been obliged to make a report to the police about such a loss, then a copy of their report or the crime number that has been allocated to the case should be included within your claim. You will also be expected to validate the financial extent of the loss. For example, if a computer you were transporting to a customer on behalf of a retailer were to be crushed, then the sales invoice for it should prove its market value. Without it, the insurer may make their own valuation.
If an item needed to be repaired following damage, then you will also need to provide evidence of this. A repair bill from an approved or respected professional will be the best thing to provide under these circumstances. Finally, your claim will also need to be supported by some evidence that the goods in question were under your control at the time. This is to help prevent fraudulent claims of damaged goods, of course. A packing ticket or delivery schedule with the item(s) on it will usually suffice.
Remember that some GIT insurance comes with an excess amount. It simply won’t be worth making a claim to replace damaged or stolen goods – or to have the costs of repairing them reimbursed – unless your claim exceeds this figure. Generally speaking, the higher the excess is set to, the lower the premiums of the policy will be. This is something to consider when taking out goods in transit insurance in the first place, of course.
Goods in Transit Insurance in Summary
Hopefully, this comprehensive guide to goods in transit has left you better informed about this type of policy and why it can be so beneficial to all professionals who transport commercial goods and personal items owned by their clients. In summary, the most salient points to remember about goods in transit insurance are:
– Goods in transit insurance is a type of haulage freight insurance or courier insurance that can also be taken out by owner-drivers and removals specialists to cover them for losses and damage to goods they are moving.
– Goods in transit is often referred to by insurers as GIT insurance for short. From a policy holder’s perspective, it means the same thing.
– The cheapest GIT policy you might find won’t necessarily offer the best value for money. Check what is covered and what is not before choosing one policy over another.
– Set the excess – if one is offered – to a reasonable level you can afford to cover yourself if financial losses from damaged goods occur.
– Taking out goods in transit insurance is something that you can use to market your firm. Many fleet operators and courier firms fund their GIT insurance from their marketing budgets as well as from their operational overhead finances.
– Be prepared to supply documentary evidence to back up any claim you might need to make against a GIT policy.
– Never assume that because you have hired a van or truck to work with the goods inside it will be covered by the rental company’s insurance. More often than not, this won’t be the case.