Insuring Live animals in transit

Not sure how many of you would have handled proposals  for covering Live animals in transit, either within the country or overseas. Though not frequent in India, the need is always there and ever-growing. The animals usually transported could range from cattle, horses, pigs, poultry, smaller animals like mice, guinea pigs and rabbits of specialized breeds for the purposes of laboratory experiments and exotic animals purchased for zoos.

I had the opportunity of handling two such cases. One, where one of our valued clients who were manufacturers of poultry-feed were importing 7-day old chicks from Germany by air for the purpose of laboratory experiments. The value was not too high but then I had no prior experience in underwriting this type of cargo. Wait a minute, did I say cargo? Do live chicks fall under the term ‘cargo’? Cargo, as defined in dictionaries mean ‘goods carried on a ship, aircraft or other large vehicle’. Further ‘goods’ would mean ‘merchandise, possessions or things manufactured to be sold, as opposed to passengers’. So can the chicks or for that matter any live animal be classified as ‘goods’ or ‘cargo’? If the answer is NO, then whether the Institute Cargo clauses/Institute Air clauses or Inland Transit clauses apply?

I was confused but since there was pressure from the client to insure, took a common-sense approach. There was an invoice for purchase of the chicks, so valuation was not an issue. Insisted on a Veterinarian’s certificate stating that the chicks were in good health and could be transported by Air. As a matter of abundant precaution, informed the client that death of the chicks would be covered only if caused by an accident to the carrying aircraft and further, cover would cease, the moment the hold-doors of the aircraft were open. In other words, we did not cover the quarantine period or the inland transit to the client’s laboratory. Client agreed and the air transit passed off without any incident. In effect the Institute Air clauses were used but with a manuscript restriction of cover.

The second case before me was for inland transit. Here, a dairy farm was procuring milch animals in auctions and we were approached to cover the transits from various auction sites to the dairy farm. Again, we insisted on invoices substantiating the value of each animal, its identification marks and a Veterinarian’s certificate of good health and fit for transportation in an open truck. We added conditions in our quote stating that there should not be over-crowding of animals in a single truck and sufficient feed should be made available during the transit. Cover was of course restricted to Inland Transit Clauses-B. Death and permanent total disability to the animal, arising out of breaking of a foot, while loading/unloading or due to a peril covered under ITC-B were covered. Compensation was limited to 75% of the value of the animal for disability under certificate of a Veterinarian. This deal did not materialize as the client had difficulty in producing invoices for the purchase of the animals.

Subsequently did some research and figured out that insurance of live animals in transit was big business in many countries with certain markets specializing in this line of business. What we had considered in our underwriting using our own thoughts was not far off the mark but wider covers too are available.

Typically, cover is available in two forms –  1) Death or permanent disability of the animal in transit, howsoever caused which could mean disease, injury, illness or accident including putting down of an animal ( destruction) following a veterinarian’s certificate/recommendation. 2) Death or permanent disability of the animal in transit caused by any of the perils chosen and insured against. Extensions like removal of carcass, vehicle substitution too are available. Under both broad form and limited coverage, cover extends for a limited number of days after unloading within which, if any injury caused during transit leads to death/disability, the same would be considered as a valid claim.

On long sea voyages, it will be prudent to opt for the broad form cover including disease i.e. ARM or All Risks of Mortality cover. In case of inland transit of live animals, one important aspect needs to be considered. What if the carrying vehicle topples or meets with an accident and some of the animals escape ? They may die or cause third party liability and will need to be captured soon. Extensions to cover such eventualities too are available. In most cases, animals are moved by specialized hauliers/carriers who take the transit insurance and not the owners of the animals. In India, will this part be understood, in that contractual liability of a carrier can well be considered under a Transit insurance as long as the claim proceeds are not paid to the carrier? Do policies covering live animals have a deductible? Most certainly Yes. 

Would love to hear from readers of their experiences, if any with regard to this type of risk.