Transport Insurance

This code records costs relating to transport insurance. As a cost account, it normally carries a debit balance: debit entries increase the balance (recording new costs) and credit entries decrease it (for example, a credit note received from a supplier).

Real-world examples

Importer or exporter

A wholesaler importing high-value electronics takes out marine cargo insurance to cover shipments while in transit. Insurance premiums are exempt from VAT (they're subject to Insurance Premium Tax instead, accounted for by the insurer rather than reclaimed as input VAT), so a £620 premium is simply a debit of £620 to 5102 (Transport Insurance) and a credit of £620 to 2100 (Creditors Control Account) — nothing posted to 2201, unlike most other direct costs.

Domestic-only business

A business shipping only within the UK using standard couriers typically relies on the carrier's own built-in liability cover, which is usually capped at a modest amount per parcel under their standard terms, rather than buying separate transport insurance. 5102 often sits at nil unless a business is shipping unusually high-value or fragile goods, or handling international freight where the value at risk in transit is much higher.

Commonly confused with

Because code 5101 (Import Duty) sits right next to this one in Purchases & Direct Costs, it's a common mis-posting target. Code 5102 is specifically for transport insurance, while 5101 covers import duty — similar in nature, but keeping them separate is what makes the purchases & direct costs section of your management accounts meaningful rather than a single lumped total.

What a mis-posting here costs you

Posting to the wrong cost code here won't change total cost of sales, but it will distort gross margin analysis by category, making it harder to see which input costs are actually rising.

Other codes in Purchases & Direct Costs