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What types of insurance do I need as a Transport company in the EU?

It is mandatory for Transport companies operating in the EU to have certain insurance certificates. In this article we will investigate which insurance certificates are mandatory and which are optional or recommended. 

What kind of insurance should I consider as a freight forwarder or carrier company?

1. Vehicle liability insurance (mandatory)

Liability insurance for vehicle(s) is mandatory and should be combined with cargo liability insurance.  

When a vehicle is registered in any EU country, you must insure it for third party liability. This compulsory insurance is valid in all other EU countries. It covers an accident causing damage to property or injury to anyone other than the driver. It doesn’t cover other costs (e.g. the cost of repairs to the vehicle.)

To reduce your risk even further, you can add additional insurance (optional), called first party liability. This insurance plan extends your cover (e.g. incidents to the driver, damage to the vehicle, theft of the vehicle or its contents, vandalism, and legal assistance).

However, there are no EU-wide rules on additional optional vehicle insurance. When a vehicle crosses the borders within the EU, different rules may be applied in each country. Sometimes insurance plans could be limited by time (e.g. days, weeks abroad) or by distance (e.g. distance from the border of the country where the vehicle is registered). In some cases insurance coverage may not include theft or vandalism, when crossing the border of the home country. 

2. Cargo liability insurance (mandatory)

As mentioned above, cargo liability insurance must match the vehicle liability insurance. 

Cargo liability insurance is required by law in Germany for commercially transported goods and typically covers a fixed amount of money. In cases when a goods worth is more than the fixed cover amount, then an additional insurance is mandatory to cover the whole amount. 

3. Professional liability insurance (optional)

This type of insurance provides protection when you or your employees are responsible for personal injuries, property damage or financial loss. The type of damage may vary in different circumstances, starting from accidental damage to property while loading or unloading goods and ending at data protection violations. Every transport company should evaluate this risk and consider insurance plans to minimize future expenses. 

4. Disability insurance (optional)

In the logistics industry accidents happen. Therefore the risk that you could become disabled due to an accident or too ill to work could be present in your everyday work life. As an owner of the transport company, this may impact not only you but your employees as well. You may have losses because of your illness and inability to do your job. Your company can lose potential orders and customers. 

If you are a self-employed driver, it is even more important to consider disability insurance and add additional coverage for unforeseen incidents. If you were to fall ill, you may not be able to physically drive your truck and deliver goods. In this case your main source of income will be severely impacted and the right insurance would protect you.

Insurance providers offer variable coverage and you should be aware of what is included in the coverage in order to minimize your risks. 

5. Legal expenses insurance (optional)

In the logistics industry you have to deal with many parties like subcontractors, customers and also your employees. Some disagreements may arise between you and another party. Generally, legal insurance covers the costs of legal consultations, hiring lawyers, documentation preparation for legal disputes and court appointments.

Summary

As the EU consists of many different countries, national regulations will apply to mandatory insurance in each country. Vehicle liability insurance is mandatory across all EU countries and Cargo liability insurance is mandatory in Germany for commercially transported goods.

Valuable but optional insurance includes professional liability insurance, disability insurance and legal expenses insurance. 

These are recommended to be considered when operating as a freight forwarder or carrier company. 

However, insurance providers can offer different plans or additional coverage in different EU countries. You should think about your business needs and in which countries you plan to operate: only in your home country or EU-wide? By covering your risks with different types of optional insurances, you can minimize unforeseen expenses in the future.

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