Choosing the right carrier’s liability insurance (OCP) policy is a key decision for every transport company. While this type of insurance is not mandatory, it can effectively protect carriers from financial consequences arising from damage, or theft of cargo. What aspects should be considered when selecting such a policy? What should you pay special attention to in order to ensure maximum safety for your company and your clients? Here’s how to choose the best OCP insurance policy for your business.
Table of contents
- What is OCP insurance?
- What does OCP insurance cover?
- Is OCP Insurance Mandatory for Transport Companies?
- Types of OCP Insurance
- What to consider when choosing an OCP policy?
- OCP insurance vs. Cargo insurance
- Does OCP Cover Freight Forwarding Activities?
- Benefits of OCP for road carriers
- Final thoughts – The importance of choosing the right OCP policy
What is OCP insurance?
OCP insurance—short for Carrier’s Civil Liability Insurance—applies to companies engaged in the transport of goods. Though voluntary, OCP is typically purchased for a period of 12 months and payments can be divided into 2-4.
It’s important to emphasize that OCP should not be confused with third-party vehicle liability insurance (OC). While the latter is mandatory for any vehicle, OCP remains optional but provides additional protection specific to cargo transport activities.
What does OCP insurance cover?
OCP insurance protects both the carrier and the client by covering financial losses arising from the carrier’s liability for damage to the goods in transit.
The exact scope of the policy is defined contractually, but typically includes coverage for:
- Damage or spoilage of cargo, e.g. perishable goods such as food;
- Destruction of transported cargo;
- Natural disasters, e.g. earthquakes or floods;
- Theft of goods or the vehicle itself.
It is important to note that the OCP policy’s coverage can be tailored to the carrier’s specific operations and needs.
Additional coverage options
Many insurers offer policy extensions that go beyond the standard scope of OCP coverage. When selecting a policy, it is advisable to consider additional protection for situations such as:
- Transport of hazardous materials
- Transport of live animals
- Losses resulting from robbery or fraud
- Goods requiring temperature-controlled transport
- Driver negligence, e.g. leaving the vehicle unattended or keys in the ignition
- Gross negligence, e.g. drunk driver, failure to obey traffic signs
- Legal expenses.
What is not covered? – OCP policy exclusions
Equally important as knowing what is covered is understanding what is excluded from coverage. Common exclusions in OCP insurance include:
- Damage due to driver error, such as traffic law violations;
- Lack of required licenses or qualifications for the driver;
- Exceeding permissible driving hours, violating work time regulations;
- Improper securing of cargo, leading to damage;
- Poor vehicle condition which directly generated loss, resulting in transport issues;
- Parking lot violation, resulting in theft issues.
Is OCP Insurance Mandatory for Transport Companies?
No, OCP insurance is not legally required. However, it provides financial protection in the event of accidents or unforeseen incidents. It is distinct from mandatory vehicle liability insurance (OC), which is a legal requirement.
Types of OCP Insurance
Carrier’s liability insurance can be divided into two main types:
Domestic OCP
Covers transportation of goods within the borders of a specified country.
International OCP
Covers international transport, across multiple countries. This is essential for companies operating in cross-border logistics.
What to consider when choosing an OCP policy?
When selecting a policy, several factors should be evaluated:
Sum insured
The sum insured defines the maximum compensation paid in the event of a claim. Choosing a sufficient amount is crucial—an inadequate sum may not cover the full value of the transported goods, exposing the carrier to financial loss.
It is also worth considering the requirements of contractors, who often expect a specific minimum sum insured in the transport contract. It should be remembered that the transport of high-value goods (e.g. electronics, medicines, machinery) requires higher protection to avoid the risk of insufficient security. A properly selected sum insured ensures greater financial security of the company and builds its credibility on the transport market.
Policy cost
The cost of OCP insurance depends on several factors, including:
- Insured sum;
- Coverage scope;
- Type of cargo transported.
Premiums are higher for policies that cover additional risks like theft, ADR (hazardous goods), or international haulage. However, a low-cost policy may not provide adequate protection, so it's important to compare offers and choose one that offers the best value for the level of coverage.
Insurer reputation
The choice of insurer should take into account not just cost and scope of coverage, but also reliability and customer service quality. Look into reviews from other carriers—check how quickly claims are settled and how clients are treated.
An insurer with a solid reputation will provide efficient claims handling and legal support. Additional services such as risk monitoring or legal assistance are also worth considering.
Policy jurisdiction
Jurisdiction is a very important aspect, many foreign insurers indicate that the dispute will be resolved in the UK or Belgium, which significantly increases the initial amount of the dispute. It is important to determine a convenient jurisdiction for yourself based on the location of your company's registered office.
OCP insurance vs. Cargo insurance
It’s essential to distinguish between OCP insurance and cargo insurance:
- OCP insurance is intended for road carriers, protecting them from liability for third-party property damage or loss regarding CMR convention 8,33 SDR for kilogram.
- Cargo insurance protects the owner of the goods, whether importer or exporter, against loss, theft, or damage during transport (domestic and international) for full value and it does not depend on how carrier insured their risks Cargo insurer handling further process.
Does OCP Cover Freight Forwarding Activities?
No, OCP insurance covers only the carrier’s liability, not the freight forwarder’s. For forwarding activities, companies need Freight Forwarder’s Liability Insurance (OCS), which covers mistakes in transport organization, including selecting the wrong carrier, delays, or loss due to forwarding errors. Sometimes it can be chosen as extra option next to carrier liability.
For companies that combine both activities—transport and forwarding—both OCP and OCS policies may be necessary to provide full protection.
Benefits of OCP for road carriers
Investing in a robust OCP policy brings several advantages:
Liability protection
OCP insurance protects the carrier from civil liability when damage to third-party goods occurs without fault on the carrier’s part.
Financial security
The policy covers the costs associated with loss, damage, or delay of cargo, shielding the company from major financial risks.
Enhanced credibility
Having OCP insurance boosts the company’s reputation and builds trust among clients and business partners.
Contract compliance
Many shippers require OCP as a standard clause. Having a valid policy allows carriers to secure more contracts and win high-value clients.
Legal safety net
If a customer files a claim, the insurer pays compensation—provided the event falls within the policy’s scope—reducing the risk of legal disputes and safeguarding cash flow.
Final thoughts – The importance of choosing the right OCP policy
An appropriately selected OCP policy is a key component of risk management for road transport businesses. While it is not mandatory, having such insurance can protect your company from significant financial losses in case of transport-related incidents.
When choosing a policy, pay close attention to the coverage scope, insured sum, and the insurer’s credibility. Investing in solid insurance not only strengthens your company’s position in the market, but also ensures peace of mind when running daily transport operations.
If you run a transport company and need assistance—for example with driver settlements or accounting—our experts are here to help. Get in touch, let us know your challenges, and we’ll handle the rest.
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