The CMR insurance premium depends on whether the policy is set up per vehicle or on freight turnover, the chosen liability limit, the number of trips and the routes, the type of cargo carried, the deductible and the carrier's claims history. Using this data, the insurer estimates the expected claims cost and offers either a fixed annual premium or a premium rate on turnover.
What is the premium paid for?
CMR insurance does not insure the cargo; it insures the carrier's liability towards the cargo owner. The insurer covers the compensation the carrier is obliged to pay under the CMR Convention. Article 23 of the Convention limits this compensation to 8.33 SDR per kilogram of gross weight short. For a fully loaded 24-tonne truck, the maximum liability is roughly 200,000 SDR. If a declaration of value or a special interest in delivery has been entered, the limit increases, which also directly affects the premium. The limit calculation is explained in the entry on the 8.33 SDR limit.
What policy models are there?
| Model | Premium basis | Suitable for |
|---|---|---|
| Annual policy per vehicle (licence plate) | Fixed annual amount per tractor unit | Carriers with a stable own fleet |
| Annual turnover-based policy | Rate on annual freight revenue; advance premium at the start of the year, adjusted at year end to actual turnover | Carriers and forwarders using hired vehicles, with fluctuating trip numbers |
| Per-trip policy | Single trip | Occasional international carriers, special high-value cargo |
In the per-vehicle model the calculation is simple, but as the fleet grows each new licence plate requires an endorsement. In the turnover-based model the year-end declaration must be accurate; under-declaration can lead to a dispute about underinsurance when a claim arises.
Factors that determine the premium
- Liability limit: The per-occurrence and annual aggregate limit. Choosing a higher limit instead of the standard CMR limit increases the premium.
- Number of vehicles and trips: The total transport volume exposed to risk.
- Geographical scope: Cover for Europe only, including the CIS, or including the Middle East and Iran is priced differently. Routes with high theft and accident statistics are more expensive.
- Cargo type: Electronics, pharmaceuticals, cigarettes, alcohol and ready-made garments increase the premium because of theft risk; refrigerated and ADR cargo because of claim severity. Some cargo is excluded from the policy.
- Claims history: The loss ratio of the last three to five years. Frequent small claims are as influential as a single large one.
- Deductible: The higher the amount the carrier retains for each claim, the lower the premium.
- Additional cover: Refrigeration unit breakdown, theft while parked, loading and unloading, use of subcontracted carriers, domestic transport.
- Operational quality: Vehicle tracking system, secure parking rules, driver training and contract terms.
What information should be prepared for a quote?
- Vehicle list, or last year's and next year's estimated freight turnover.
- Breakdown by country and route, annual number of trips.
- Types of cargo carried and the maximum cargo value per trip.
- Claims list for recent years: date, amount, cause.
- Whether subcontracted carriers are used.
What can be done to reduce the premium?
The most effective ways are setting the deductible at a reasonable level, insuring high-risk cargo under a separate policy and documenting measures that reduce the loss ratio. Reporting claims on time and in full also determines the following year's price; rules such as entering reservations at delivery are covered in the entry on CMR claim notification. The situations in which the policy cover does not apply are explained in the entry on when CMR insurance does not pay.
Common mistakes
- Looking only at the premium amount without comparing limits, deductibles and exclusions.
- Not declaring trips carried out by subcontracted carriers to the policy.
- Continuing to carry a cargo type that has been excluded from cover.
Tracking policy renewals and endorsements in one place is covered under policy management, and structuring the cover on the CMR insurance page.