P-III.F · Inland Marine Risks
Transit policies: annual vs. trip, and the named-peril exception
Two ways to insure shipments:
Trip transit policy: bought for one specific shipment.
Annual transit policy: covers the insured's shipments during the policy term, so it suits a business that ships regularly, such as a distributor sending goods by truck every week.
The usual exception: open perils is the general rule for inland marine policies, but an annual transit policy is usually provided on a named-peril basis. It covers only the perils it lists, such as fire, lightning, windstorm, collision and derailment.
Under named perils, the loss must be caused by a listed peril. Suppose a policy lists only fire, lightning, windstorm, collision, overturn and derailment, and a load shifts inside a trailer on a smooth highway and crushes cartons. There is no coverage, even though no exclusion applies. A shipper should read the list of perils closely. Open-perils transit forms do exist, but they are not the usual form.
Remember
· Annual transit = all shipments during the term; trip transit = one shipment.
· Annual transit is usually NAMED perils, the exception to the open-perils rule.
· Named perils: no listed cause, no coverage.
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