International road transport plays a crucial role in the global supply chain. The risks associated with it make proper insurance an essential element of any logistics company’s operations.
Among the many partners and clients in the transport industry, there is a common but mistaken belief that entrusting cargo to a professional carrier with OCP insurance (Carrier’s Liability Insurance) guarantees full protection of the transported goods. Unfortunately, many clients do not realize that OCP insurance is not always sufficient to cover the full value of the transported cargo.
How and to What Extent Does Carrier’s Liability Insurance (OCP) Protect Your Cargo?
Carrier’s liability insurance, also known as OCP, is the basic type of insurance for transport companies. This policy covers damages caused by the carrier during the transport service. It includes damage to the cargo caused by a road accident, theft of the cargo, or damage resulting from improper loading or unloading.
OCP is mandatory in most countries and is a prerequisite for conducting transport operations within the European Union.
In theory, this sounds like solid protection for the cargo taken by the carrier. Unfortunately, the devil is in the details. Although the carrier may be legally liable for any damage or loss of the goods, their liability is usually limited. Typically, the carrier’s liability limit is lower than the actual value of the transported cargo. This limitation stems from the provisions of the international CMR Convention, which governs road transport in many countries.
According to the CMR Convention, compensation is limited to the value of 8.33 SDR (Special Drawing Rights) per kilogram of lost or damaged cargo. SDR is a special accounting unit created by the International Monetary Fund, and its value is based on a basket of major world currencies. This value constantly changes; currently, it is approximately 5.26 PLN per 1 SDR.
For example, consider the transport of a MacBook Pro laptop worth 10,000 PLN and weighing 2 kg. Let’s calculate the maximum amount that can be claimed from OCP insurance in the event of damage or loss of this laptop:
- Weight of the shipment: 2 kg
- Compensation limit: 2 kg x 8.33 SDR = 16.66 SDR
- Converted to PLN: 16.66 SDR x 5.26 PLN = 87.63 PLN
As shown, the maximum compensation that the carrier can pay in this case is only 87.63 PLN, which is disproportionate to the laptop’s value of 10,000 PLN. Such an amount is not sufficient to cover the financial loss incurred by the owner of the goods.
How to Protect Yourself Against the Loss of Goods Exceeding OCP Limits? Cargo Insurance
The essence of this problem lies in the fact that in road transport, compensation depends on the weight of the shipment rather than its actual value. In the case of expensive but lightweight shipments, the compensation paid under the OCP policy may be symbolic.
To avoid this problem, it is crucial for transport clients to approach insurance matters consciously. They should consider additional forms of insurance that will cover the full value of the transported goods. One effective option is to purchase Cargo Insurance, which provides full protection of the cargo’s value, regardless of its weight.
Cargo Insurance is a policy that protects the owner of the cargo against financial losses resulting from damage or loss of the goods during transport. It is a voluntary insurance and can cover mechanical damage, fire, explosion, theft, or natural disasters.
Depending on the client’s needs, Cargo Insurance can be taken out for a single transport (single policy) or as an annual agreement covering all shipments (open policy).
Other Forms of Cargo Insurance in Road Transport
Freight forwarder’s liability insurance (OCS) protects the forwarding company against client claims for non-performance or improper performance of forwarding orders. This policy covers, among others, errors in transport documentation, delivery delays, or improper selection of subcontractors.
OCS provides financial security to forwarding companies and their clients, minimizing the risk associated with conducting logistics activities. Every MAKO TSL client is protected under our OCS policy, but it is important to be aware of the scope of this protection. The vast majority of damages and claims arising from the transport of goods fall under OCP, which, as we have shown, covers the damage in a way that does not always reflect the actual loss of value.
Awareness of Limitations and Options for Additional Insurance Can Protect Your Business from Significant Losses
In international road transport, insurance plays a key role in minimizing risk and safeguarding the interests of both carriers and their clients. Proper insurance can protect against financial losses, support in difficult situations, and provide peace of mind. Therefore, it is essential to carefully analyze your company’s needs and choose the right policies that will secure all aspects of your transport operations.
OCP carrier insurance is an important element of cargo protection in road transport, but it does not guarantee full financial protection in the event of loss or damage to valuable shipments. Clients should be aware of the limitations of this insurance and consider additional protections to safeguard their interests.
MAKO TSL encourages you to contact us to discuss your individual insurance needs and choose the best solutions tailored to the specifics of your business. Together, we can ensure the safety of your cargo at every stage of its journey.
