TT Club, a worldwide freight transport and cargo handling insurer, applauds equipment-sharing agreements as an effective use of resources but warns of possible liability risks if appropriate insurance cover is not in place. The first of TT’s new ‘Risk Bytes’ series of advice documents provides guidance.
The benefits of good neighbour agreements are generally recognized and successfully used by freight handling companies and others in the supply chain. Sharing infrequently used equipment allows for more operational flexibility and substantial cost savings. They are often reciprocal arrangements that are not necessarily formally outlined in well-defined contracts.
“In such circumstances the casual nature of the arrangement, though often workable and agreeable to both parties, can lead to potential risks where liability and responsibility in the unfortunate event of an incident or breakdown may not be clear,” stated TT’s Mike Yarwood.
He further added, “It is these circumstances that we are seeking to help operators avoid with our recently published ‘Risk Byte: Good neighbour agreements’.”
This is the first in a series of ‘Risk Bytes’ provided by TT to its members and anyone involved in the global supply chain. They are intended to offer a picture of the risks associated with day-to-day operational hazards that may not be recognized or, if acknowledged, aren’t sufficiently covered by appropriate insurance policies.
The goal of ‘Risk Bytes’ is to clarify complicated risk concerns by offering simply consumable information and guidance.
This first ‘Risk Bytes’ topic outlines provisions that should be made in a formalised written contract, providing clarity on where the risk and liability tests during the operation of any shared asset and allowing for thorough due diligence to be carried out prior to the agreement being signed.
“Of course, we recommend checks on financial stability and whether sufficient and appropriate insurance cover is in place. But we are also offering advice on adequate staff training, health and safety provision and include a readily recognised case study of a typical asset sharing operation,” concludes Yarwood.
