While all manner of property may be damaged or destroyed by any number of causes, including natural disaster, theft, vandalism, fire, etc., goods and equipment in transit face increased risks, both from traditional causes of loss and from exposures distinctive to transit. Particularly, such goods and equipment are at an increased risk of theft or disappearance and face unique en route-type exposures, including collision or upset of transport vehicle, custody changes, title transfer discrepancies, improper packaging, and negligence on behalf of the carrier. Goods being shipped outside of the US are especially at risk of from perils such as piracy, government confiscation, and war-related actions.
The financial responsibility for a loss may be borne by the shipper, carrier, or recipient, depending on the type of carrier or the terms of sale of the items being shipped. Carriers fall into one of three types: common, contract, and private. Responsibility for loss or damage to items when shipped via common or contract carriers is generally the carrier's; however, the amount of the carrier’s liability can be limited by the bill of lading. For example, FedEx and USPS, both contract carriers, limit their liability, through wording embedded in their standard bill of lading, to a maximum value of $100 per parcel, unless a greater value is declared and an additional fee paid. High-risk goods (e.g. electronics, alcoholic beverages, fresh or frozen food) or those goods particularly attractive to thieves (e.g. precious metals and stones, money and securities, furs) are more costly to insure, and carriers may further limit their liability when transporting such goods or decline to transport such goods at all.
In order to help mitigate the risk associated with goods in transit, one must be sure to choose the carrier carefully. All reputable carriers have substantial safeguards in place in order to reduce the likelihood that their clients will suffer severe losses. The fragility and irreplaceability of the object being shipped should also be taken into consideration when planning the object’s transport. Specialty carriers may be considered for particularly high-value or delicate goods. Fine arts are particularly susceptible to damage while in transit, as any small amount of jostling or improper packaging can have material effects on the quality or condition of the piece in question.
Prudent risk management demands that the shipper maintain a detailed inventory of any shipment, which may include makes, models, serial numbers, and any other unique or identifying features, as all of these things can help facilitate loss recovery. Finally, it is important for anyone shipping or receiving goods to, immediately upon receipt of those goods, check the contents and ensure that nothing has been damaged. Failure to check goods upon receipt may void insurance coverage or delay any recoveries due.
Not all risks associated with transporting goods can or should be mitigated solely through insurance. Careful practices such as protective packaging and mindful selection of carriers, drivers, packers, and others who will be handling the goods in transit and at destination locations can help reduce the likelihood or magnitude of loss or damage. It is in the best interest of those planning to transport or ship high-value items to carefully plan an itinerary that will reduce the number of unnecessary stops between departure and arrival destinations and keep packing and unpacking to a minimum.
Compounding the loss incurred when goods are damaged or destroyed, indirect losses are also possible. These losses could include forfeiture of grant funding if research is delayed or suspended and extra expenses that may be required to rent, repair, or replace items at an expedited rate.
Another consideration when multiple parties are involved in processing a shipment is who holds title, and therefore who bears financial responsibility, for the goods at any given point in a voyage. Appropriately allocating this responsibility is key to ensuring adequate protection is in place. Such allocation is especially important when goods are being lent, borrowed, bought, or sold, as these instances have multiple parties with interest in a successful shipment. Agreement as to who owns the financial responsibility should be reached in advance of the departure. Best practices suggest that whoever has care, custody, or control over the goods in question or whoever is the beneficiary of the agreement should shoulder the financial responsibility. For example, if Harvard is loaning a piece of scientific equipment to another research institution, the loan agreement should specify that financial responsibility in the event the equipment is damaged or lost will be borne by the borrower, both while in transit and while in the borrower's facilities.
For instances when Harvard retains financial responsibility for goods and equipment in transit, the school or department can independently and unilaterally retain the entire risk of loss or damage, transfer the risk to the carrier via contract, or finance the risk through the purchase of insurance, assuming that an insurer is willing to accept it under the given set of transit (risk) conditions.
To eliminate the need for departments to individually source suitable transit insurance, the University provides a global Goods & Equipment in Transit Insurance program for departments and Tubs to insure against many of the risks associated with items while in transit. Special rules apply with respect to initial declarations and annual inventory reporting. Coverage can be requested through our Online Risk Management System.
If you have special circumstances or are uncertain how the insurance programs might apply, we encourage you to email or call the Risk Financing and Insurance Department at 617-495-7971 for additional program details.