Exporters rely on carrier insurance despite risk of losses

According to Czech Statistical Office data, Czech exports grew by 6% between 2016 and 2017. Despite the fact that the average value of the exported goods also attacks the 290 billion crowns in the first five months of 2018, exporters rely on the fact that the goods are sufficiently insured through carrier insurance. In many cases, however, this insurance does not provide a sufficient cover. This applies in particular to international haulage of high-​value smaller goods, such as electronics.

Owners of goods who have entrusted their international shipments to a carrier are advised to take out the so-​called cargo insurance in order to obtain indemnity up to the value of the consignment in the event of loss. Carrier insurance covers losses only to the extent of their liability under the applicable law.

"Unfortunately, a number of companies consider the expense of cargo insurance unnecessary, or they start to take interest only when something has happened – which is too late," says Dagmar Sýkorová, Cargo Risk Specialist at RENOMIA.

Exporters should know that be reminded because in international haulage, the carrier is obliged to compensate losses only in a limited amount. For example, in the case of road transport, the CMR Convention [1] is only up to approximately CZK 260 per 1 kg of gross weight (SDR 8,33 /​ 1 kg of gross weight). This is particularly inadequate for the transport of light and high-​value goods such as electronics, mobile phones, tablets or laptops. Analysts of the export market say in the comments on the growth of exports is being driven not only by traditional exports of motor vehicles and engineering products, but also electronics and computers.

In international haulage of goods in the case of theft of a consignment worth CZK 3 million and a weight of 2,000kg, the owner of the goods may suffer losses of up to CZK 2,5 million. This is due to the fact that the carrier’s liability is capped at CZK 520 thousand (2,000kg x 260 CZK /​ 1 kg), in accordance with the CMR Convention. In other words, exporters should not rely on carrier insurance for any goods that are more expensive than CZK 260 per kilogram.

"In addition to the limited liability of the carrier, depending on the weight of the shipment, various events may arise during transport, which are not covered by the carrier’s liability. These include, for example, losses caused by a road accident caused by another road user, robbery, various natural hazards or other losses that the carrier could not avoid. That is why cargo insurance is strongly recommended. Owners of goods argue that this insurance is expensive but this is not, according to our experience, the case," explains Sýkorová.

Cargo insurance rates for road haulage within the EU range from between 0.5 and 1 per mille of the value of the cargo (loss-​prone cargo), which, for a cargo valued at CZK 3 million, works out at between CZK 1500 and CZK 3000. In proportion to the possible loss of up to CZK 2.5 million, this amount is a negligible expense.

[1] Applicable legislation governing the duties of international cargo carriers

Graph: Export in the Czech Republic in 2016 and 2017 (millions of CZK)