Cargo transportation is crucial for the economy, but it carries risks and responsibilities for all parties. Thus, ensuring proper protection is vital, and this can be achieved through cargo insurance.
In Brazil, Law No. 11.442 of 2007 outlined the regulations for road freight carriers, including the mandatory civil liability insurance for damages to third-party cargo.
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The law was modified by Law No. 14.599 of June 19, 2023, introducing significant changes to the industry.
Law No. 14.599 introduces seven key modifications.
The new legislation seeks to update and streamline the rules governing cargo insurance for road transport security, while also enhancing legal clarity and market competitiveness.
Familiarize yourself with the key changes listed below.
Carriers must hire new mandatory personnel.
Carriers are required to purchase three distinct forms of cargo insurance.
- Liability insurance for civil damages resulting from collisions, ballast, overturning, shooting, fire, or explosions is known as RCTR-C.
- Civil liability insurance provides coverage for theft, misappropriation, extortion, or kidnapping that impact cargo during transportation.
- Civil liability insurance is designed to cover physical injuries and property damage caused to third parties by the vehicle used in road freight transportation (known as RC-V).
Integration into the Risk Management Plan.
The new legislation requires RCTR-C and RC-DC insurances to be linked to the approved Risk Management Plan agreed upon by the carrier and the insurance company. It also highlights that the contractor can ask for extra measures concerning operation and management, as long as they involve additional costs.
Arranging voluntary intermodal transport insurance.
This policy is designed for carriers who transport goods using multiple modes of transportation, such as road, rail, water, or air. The optional intermodal transport insurance provides coverage for load damage regardless of the mode of transport used during the journey.
Definition of the highest possible compensation limits for damages caused by excessive loads.
The new law states that the highest payment for damages cannot surpass the amount declared by the transport provider. It also sets out the maximum compensation limits based on the weight or quantity of the goods being transported.
Prediction of specific terms for insurance of hazardous cargo.
The new law requires insurance policies for dangerous loads to include specific terms outlining coverage conditions and safety measures for carriers.
Regulation of insurance for international land transport
International land transportation insurance targets businesses that offer services between Brazil and the Mercosur nations, which include Argentina, Paraguay, and Uruguay.
The new law requires that this insurance coverage complies with the regulations set by the Agreement on International Terrestrial Transport (ATIT), which is a treaty governing land transportation among participating nations.
Freight Insurance Discount Offer
The new Law no 14.599 prohibits the consignor, carrier, or transport cooperative from subtracting administrative and insurance fees from the driver’s freight.
Key factors to keep in mind for legal professionals.
Legal professionals in the transportation sector need to be aware of the implications of the new law, with a focus on key aspects to address.
- Customers must be guided on the requirement of RC-DC insurance.
- The new law requires that RC-DC insurance must provide a minimum coverage of R $ 100,000 per load unit.
- Assistance in choosing the insurance company that provides the most favorable coverage and pricing terms.
- Freedom to negotiate prices can create competition among insurance companies, potentially leading to lower prices.
- The ban on freight discounts could result in more cases being brought to court as shipowners and carriers may turn to legal action to challenge the charges.
- Insurance in SUSEP must be purchased from an insurer authorized by the Superintendent of Private Insurance according to the law.
Final recommendations
Lawyers specializing in Transportation Law must understand and adhere to these changes as they could lead to new challenges and possibilities.
It is crucial to consider the additional regulations set by competent organizations like the National Land Transport Agency (ANTT) and SUSEP. These regulations will specify and oversee the operational and technical elements of cargo insurance.
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