Cargo and goods in transit insurance
The location of risk for a cargo or goods in transit policy is the country where the insured is located at inception. This is usually the address of the insured shown on the contract documentation.
Cargo and goods in transit contracts are almost always purchased by corporate bodies, so, for further details on insured’s location, you should consult the information on establishments. Individual persons may purchase insurance of personal possessions, in transit from one country to another. The location of risk is then the insured’s addresses at the inception of the contract.
Exceptions
Definitions of “domestic” insurance in the insurance laws of Bermuda, the British Virgin Islands and Guernsey include property in transit to or from these jurisdictions. Insurances of such property are therefore insurances of risks located in these jurisdictions. This could mean that the risk is located in more than one country.
Storage cover and exhibition stay risks
Different rules may apply to standalone storage cover, insurance of exhibition stay risks and contracts where the storage period is extended beyond the standard cargo policy's 60 days. These are insurances of movable property risks and the following rules apply:
- EEA Member States (other than in Germany or Austria) – the location of risk is determined by the location of the insured property.
- Countries that are not EEA member states (and Germany and Austria) – the location of risk is determined by local rules. In Germany and Austria, and in most other territories, it is the country where the insured is located.
Example
An art exhibition is arranged in Germany and Spain by a UK company. The art is normally based in the UK but will be temporarily exhibited in Germany and Spain. The UK company is the sole insured on the policy. For the transit element (all legs) the risk is located in the UK as that is where the insured has its establishment. The German stay element has no location of risk as the German authorities do not recognise the risk as situated in Germany and as the property is not in the UK the UK authorities do not recognised the risk as being in the UK. The Spanish authorities recognise the Spanish stay risk as subject to Spanish regulation.
Global contracts
A Global contract is a contract insuring risks located in more than one country.
Cargo and goods in transit contracts are global contracts if they are taken out by a corporate body and cover other corporate bodies or other establishments as well. The contract may refer to specific named entities or may state that all subsidiaries, associated companies, branches (or other forms of establishment) are covered under the policy.
Premium apportionment
A global contract may give rise to regulatory and tax exposures in different jurisdictions. Compliance with these requirements requires the overall premium to be apportioned between the countries in which risks are located. Guidance on premium apportionment is provided here.
