CARRIERS LEGAL LIABILITY INSURANCE:

The legal rights and liabilities in respect of carriage of goods by road is governed by the
provisions of the carriers Act 1865.
Goods may be carried at Owners risk or Carriers risk. If the goods are carried at
owners risk, the carrier is liable only in the event of negligence, if the goods are carried at
carriers risk, the carrier is liable to pay irrespective of negligence.
If valuable goods, as listed in the schedule of the act are carried, each package valued
at more than Rs. 100/-, the carrier is not liable for any loss or damage unless caused by a
criminal act on the part of the Carrier or their servant. If full value is declared and extra freight
paid if required, Carrier is liable for loss or damage.
As per section 10 of the Act notice of loss or injury to be given within 6 months from the
time when the loss or injury came to the knowledge of the plaintiff. No suit can be instituted
unless notice in writing has been given.

Suit must be instituted within 3 years from the

knowledge of loss.
Exception: The common carrier is not liable for loss or damage caused by :
(i)

Act of God.

(i)

National Enemies.

(ii)

Improper or bad packing.

(iii)

Inherent vice.

(iv)

Justified delay.

(v)

Misconduct or default of consigner.

The common Carriers Act 1865 defines a common carrier as an individual, firm
or company other than the Government, who transports goods as a business for money
over land or inland waterway.

In terms of section 8 of the Carriers Act, the liability of the common carrier is
absolute. A common carrier can limit his liability in all respects save and except against
NEGLIGENCE AND CRIMINAL ACT ON HIS PART OR ON THE PART OF HIS
SERVANTS AND AGENTS.
In order to provide an insurance cover to the common carriers and transporters
against the stipulation of absolute liability under the Carriers Act, the Carriers Legal
Liability Policy has been devised. This policy has been since revised in 1977 and
1995.
At present the CLL policy gives the following coverage:
Basic cover: covers damage to goods caused by fire,explosion and or accident
to the vehicle carrying the goods due to negligence or criminal act of his servants. The
cover will commence with the loading of the cargo and end with its unloading.
Wider cover: The following risks are covered in wider cover which is allowed as
a package deal and no partial extension may be allowed:
(i)

Damage to cargo as in basic cover.

(ii) Damage by fire, burglary, riot & strike and malicious damage affecting the goods at
warehouses or transshipment yard, whilst in the custody of the carrier.
(iii) Shortage of goods due to theft or pilferage of cargo at any time whilst in the
custody of the carrier.
(iv) Flood or water damage.
(v) Breakage, leakage, damage due to improper handling.
RATING GUIDELINES:
Rating is based on the gross vehicle weight of the vehicle as per Motor Tariff.
Subject to a warranty that vehicle will be maintained in a road worthy and fit
condition.
There should exist a comprehensive MV policy of the vehicle.

Rates given are for limit of liability of Rs. 1 lac for Basic cover only and
vehicles upto 5 years of age only.
100% loading for vehicles above 5years of age.
50% loading on basic cover rate for wider cover on own vehicles, and 100% on
chartered/hired vehicles.
Wider cover to fleet owners approved by Bank.
Wider cover for chartered/hired vehicles only if period of charter of hire
exceeds 6 months.
RATING SCHEDULE:
Based on the Gross Vehicle weight of the vehicle as per Motor Tariff.
Subject to a warranty that vehicle will be maintained in a roadworthy and fit
condition.
There should exist a comprehensive motor policy on the vehicle (preferably
with same insurer.)
Rates given below are for limit of liability of Rs. 1 lakh for BASIC COVER ONLY
and vehicles upto 5 years of age only.
Gross Vehicle

Closed Body

Other than

Tankers and special

Weight

Vehicles

Closed Body

product carriers

1. Upto 2000 kg.

Rs. 400

Rs. 500

Rs. 750

2. Each addnl.

Rs. 125

Rs. 150

Rs. 200

Rs. 100

Rs. 125

Rs. 150

Rs. 5 for

Rs. 10/-

Rs. 15/- per

Every 100 kg

per 100 kg

100 kg.

1000 kg. Upto 6000 kg.

3. Each addnl. 1000 kg.
Upto 12000 kg.
4. Each addnl. 1000 kg.
Upto 12000 kg.
AGE OF VEHICLE:

Rates given are a for vehicles upto 5 years of age above 5 years:
100% loading.

WIDER COVER:

50% loading of basic cover rates for own vehicles (100 loading of basic
cover rates for vehicles on charter/hire).

Wider cover can be granted only to fleet owners and only after careful scrutiny
of applications by Regional Office. The transporters should be Bank approved
preferably.
Wider cover can be granted for vehicles on charter/hire only if period of
charter/hire exceeds 6 months.
The following risks are covered in wider cover which is allowed as a package deal and no
partial extension may be allowed:
(i)

Damage to cargo as in basic cover.

(ii)

Damage by fire, burglary, riot & strike and malicious damage affecting the goods
at warehouses or transshipment yard, whilst in the custody of the Carrier.

(iii)

Shortage of goods due to theft or pilferage of cargo at any time whilst in the
custody of the Carrier.

(iv)

Flood or water damage.

(v)

Breakage, leakage damage due to improper handling.

EXCESS:
1) Rs. 10,000/- each & every claim.
2) Tankers: 5% of S.I. or Rs. 15,000/- each & very claim, whichever is higher.
DISCOUNTS:
A) No claim discount on each vehicle insured.
No claim in 1st year

- 15% discount on premium

No claim in 2nd year

- 25% discount on premium

No claim in 3rd year

- 30% discount on premium

No claim in 4th year

- 40% discount on premium

No claim in 5th year

- 50% discount on premium

In case of any claim reported Insured will lose the entire discount earned.
B) Fleet discount
When Insured owns and operates a fleet of vehicles (minimum 10) for 10-20 vehicles
10% discount on gross premium
Above 20 to 40 vehicles

- 10% discount on gross premium

Above 40 vehicles

- 25% discount on gross premium

Fleet discount will be sanctioned only by Head Office.

HIGHER LIMITS OF INDEMNITY:
Rates given are for limit of indemnity upto Rs. 1 lakh. For higher limit i.e. upto Rs. 10 lakhs
per vehicle additional premium @ 2.5% on the additional indemnity limit may be charged.
RIOT & STRIKE EXTENSION:

can be given with basic cover along also charging

(INCLUDING TERRORISM

premium in following rate on the limit of indemnity.

COVER)
Closed body vehicles:

0.50%

Other vehicles & trailers:

0.75.

CLAIMS:
1. Claims should be settled on the basis of indemnity and only on receipt of discharge
voucher from cargo owners.

2. The RTO Registration book should be compulsorily produced to ascertain whether

vehicle was plying on charter or not.
3. In case a vehicle is carrying hazardous goods, the drivers licence should be suitably
endorsed. The claim should otherwise be treated as non-standard.
4. The Fitness Certificate of the vehicle should be valid at the time of accident; otherwise
the claim should be dealt with as non-standard.
5. For settlement of claims it is not essential to await court judgements to prove
negligence. Prima facie if liability exists then advocates opinion may be obtained and
case finalized on merits.
ACCEPTANCE LIMITS:
Regional offices have been granted the authority to accept proposals upto the following limits
of liability: Cover

Limit of Liability

1. Basic

Rs. 20 lakhs per vehicle

2. Wider

Rs. 10 lakhs per vehicle

Fleet discounts to be approved by Head Office.

CASE STUDY

Insured: M/s Sharda Carriers

Policy: CLL, Basic cover
Period of insurance: 01.04.2000 to 31.03.2001
Limit of indemnity: 10 lacs
Occurrence: Accident on the highway as the driver fell asleep due to tiredness. The
tanker overturned and was badly damaged. The driver and the cleaner were grievously injured
and all the crude oil drained out from the tanker.
Date of accident: 29th December 2000.
Total amount of loss: Rs. 2 Lacs (includes I lac of property damage)
Brief details: The tanker was bringing refined petroleum product (petrol) from the IOC
refinery to the petrol pump belonging to M/s. Sharda Carriers. IOC deducted an amount of Rs.
1 lac from the freight charges payable to M/s. Sharda Carriers for the loss of the petro.
How would you proceed in this claim and what would be the Cos liability.