In looking at these two coverage forms, I should point out that I used to work at Lloyds and have a great affinity for their way of doing business. That being said, I have never seen a good contingent cargo policy form out of London. I regret the Lloyds Roanoke form is not a comprehensive form as well.
Interestingly, the Lloyds Roanoke form we see used is sold through Registry Monitoring Insurance Services ( RMIS), a good operation that has had a long history in the insurance certificate monitoring business. We see such services now offered elsewhere with more technological capability. But it was smart of RMIS to offer a product with insurance. It is a shame the product is less than satisfactory.
What I thought made sense is to go over what I see as strenghts along with small deficiencies and big ones :
Strenghts:
- covers road, rail and air
- specifically covers insurer insolvency
- It looks like dishonesty of others is covered which is a big deal
- Freight charges included
- 10% debris removal
Small Deficiencies:
- Policy period is mentioned as annual but is cancelable anytime with notice. So if the insured has a bunch of losses and gets canceled midway through the policy period, they are in trouble.
- Limit is subject to annual aggregate- While it is highly unlikely, I have never seen a cargo carrier have an annual aggregate and would be surprised if certificate holders ( shippers) like that.
- Insured expenses over the limit not covered.
- the wording is convoluted which is typical out of London- Take " only while the subject-matter insured". Not sure what that means and it is not defined.
- deductible is higher than industry standards.
Big Deficiencies:
- Commodity exclusions- I have never seen such a large list of commodity exclusions. That puts additional pressure on any insured to make sure #1 that they are not only being asked to broker any excluded commodities ( such as tobacco products, electronics. etc..) but also #2 they have not agreed to imdemnify the shippers for that excluded commodity
- 72 hour limitation if commodity at one location
- Dampness exclusions- basically means that if you are hauling flatbed, you are not going to pick up the main exposure to loss
- Unattended vehicle exclusion- a known big problem
- Excludes Refrigeration breakdown on any trailer over 10 years old
- No Excess insurance provided. Only pays up to the limit or sublimit of the primary carrier
- No Difference in Conditions Coverage provided- it is the main coverage a shipper and an insured is looking for
The Hanover form offers a nice solution for all the big deficiencies in the Lloyds Roanoke form and also offers coverage for an additional premium for spoilage, E & O, and identity theft- a very big deal. It candidly is why brokers buy insurance in the marketplace. The Lloyds Roanoke form is known disparagingly in the marketplace as a "following form" policy. While I am not sure that is fair, it certainly has its limitations.
I understand a lot of brokers are buying the Lloyds Roanoke form. I am not sure why with all these issues....
As always, this is simply one viewpoint but I suggest your insured and your agents do their homework.
