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Motor Truck Cargo And Couriers And Messengers Coverage Form - Shippers Interest Or Owners Interest (IM 7600)

1. What the form is

The IM 7600, "Motor Truck Cargo And Couriers And Messengers Coverage Form - Shippers Interest Or Owners Interest," is a commercial inland marine insurance form. Its primary purpose is to provide coverage for physical loss or damage to goods while they are being transported by motor truck or by couriers/messengers. Crucially, this form is designed to protect the financial interest of the shipper (the party sending the goods) or the owner of the goods, rather than the carrier's liability. This is a key distinction, as carrier liability is often limited and may not cover the full value of the cargo. The IM 7600 aims to fill these potential gaps.

2. Classes of business it applies to

This form is versatile and can be utilized by a wide range of businesses that ship goods and want to ensure their property is protected during transit, regardless of the carrier's fault. Examples include:

• Manufacturers: Companies shipping finished products to distribution centers or directly to customers. For instance, a furniture manufacturer shipping a truckload of custom-made tables to retailers.
• Wholesalers and Distributors: Businesses that transport goods from manufacturers to retailers. For example, a food distributor shipping perishable goods to grocery stores.
• Retailers: Especially those that handle high-value items or make frequent shipments to customers or between store locations. A jewelry store using a courier service to send a valuable piece to a customer is a good example.
• Businesses Using Courier/Messenger Services: Firms that regularly send documents, samples, or small packages via couriers and require coverage for those items. A law firm sending sensitive legal documents via a messenger service could use this form.
• Any Business Shipping Its Own Goods: If a company uses its own vehicles to transport its goods, this form can provide coverage for those goods while in transit, as it focuses on the owner's interest.

Essentially, any entity that retains a financial interest in goods being transported by land (motor truck) or by local delivery services (couriers/messengers) could be a candidate for this coverage.

3. Special considerations

• Shipper's Interest vs. Carrier's Liability: It's vital to understand that this form covers the shipper's or owner's interest directly. This is different from a motor truck cargo liability policy (which a carrier would purchase to cover their legal responsibility for the goods they transport). Shipper's interest coverage often provides broader protection and can respond even if the carrier is not legally liable or if the carrier's liability limits are insufficient to cover the full loss. For example, if a truck is damaged by a natural disaster for which the carrier is not liable (an "Act of God"), the shipper's interest policy could still cover the cargo damage.
• "All-Risk" vs. Named Perils: Depending on the specific policy terms negotiated, this coverage can be written on an "all-risk" basis (covering all risks of physical loss or damage except those specifically excluded) or a "named perils" basis (covering only losses caused by perils specifically listed in the policy). "All-risk" is generally broader.
• Valuation: The basis of valuation for the cargo (e.g., invoice value, selling price, or actual cash value) should be clearly defined in the policy to avoid disputes at the time of a claim.
• Exclusions: Common exclusions might include loss due to delay, inherent vice (a quality in the property that causes it to damage or destroy itself), insufficient packing, or illegal trade/contraband.
• Relationship to CM 00 01: The form IM 7600 would typically be used in conjunction with the Commercial Inland Marine Conditions form (CM 00 01) and a declarations page. The CM 00 01 contains general conditions applicable to most commercial inland marine coverage forms.
• High-Value or Target Commodities: Shipments of unusually high value or those susceptible to theft (e.g., electronics, pharmaceuticals, alcohol, tobacco) may require special underwriting attention, higher premiums, or specific security requirements.

4. Key information for agents and underwriters

• Risk Assessment: Key factors in underwriting and pricing include:
  • Type of goods being shipped: Perishability, fragility, susceptibility to theft, and overall value are critical.
  • Mode of transport: Are goods shipped by common carriers, contract carriers, or the insured's own vehicles? What is the reputation and financial stability of the carriers used?
  • Geographical area of transit: Routes with higher risks of theft, accidents, or severe weather may impact pricing.
  • Loss history: The applicant's past loss experience is a significant indicator of future risk.
  • Packing and Loss Prevention: How are goods packed? What measures are in place to prevent loss (e.g., tracking devices, security escorts for high-value loads)?
  • Coverage Limits and Deductibles: The requested limits of insurance and the chosen deductible level will directly affect the premium.
• Pricing: Rates are typically applied per $100 of value being shipped, but can also be based on gross receipts or a flat premium for smaller risks. Underwriters will consider all risk factors to arrive at an appropriate rate.
• Coverage Gaps: Agents should ensure clients understand potential gaps if relying solely on a carrier's liability. For instance, released bills of lading may limit carrier liability to a very low amount per pound, far below the actual value of the goods. This form helps address that gap.
• Underwriting Guidelines: Insurers will have specific underwriting guidelines detailing acceptable risks, prohibited commodities, required security measures for certain goods, and territorial limitations. For example, shipments into or out of certain countries or regions known for instability might be excluded or require special approval.
• Documentation: Underwriters will typically require detailed applications, information on the types of goods, shipping practices, loss history, and financial statements for larger risks.
• Moral Hazard: Given that the insured has an interest in the goods, underwriters will assess for moral hazard, particularly if the insured is frequently shipping high-value, easily disposable items.