Cargo Insurance Claims Can Get Very Complicated
When you are shipping goods from one place to another, one of the most complicated things to understand is that of cargo insurance claims.
One of the first things that needs explanation is that a claim has nothing to do with whether or not the carrier was negligent but is dependent on the fact that the carrier is in breach of contract. The basis of a contract for transportation is that the carrier agrees to move an item from one point to another and in return the shipper agrees to pay the carrier a fee for doing it.
In this agreement it is implicit that the goods will arrive at the destination in good condition. If the goods are lost or damaged, then the carrier is in breach of contract. Now, in order to succeed in a claim, the first thing that has to happen is that the shipper needs to be able to prove the condition of the goods at the point of pickup by the carrier, the damaged condition at the destination, and the amount of damage that has occurred. Once this has happened, the burden of defence then becomes that of the carrier.
Now, at The Insurance Broker, we need to point out that there is a difference between cargo insurance and cargo liability insurance. The carrier will have cargo liability insurance which is limited to the extent to which he is liable. That may sound a little complicated, but what it means is that the carrier’s liability is limited to the amount that he has in his terms and conditions. This is often described by weight and can be so much per pound or kilo. This may be something as low as $1 USD per pound, or even less.
The problem here is that if the carrier is shipping your item of an electronic masterpiece that is worth £50,000 but only happens to weigh 40lbs you can immediately see that the amount of compensation that you can recover is infinitesimal compared with the value of the item. This is why you need to purchase cargo insurance that will cover the full value of your goods if they are lost or destroyed in transit and result in you needing to make any cargo insurance claims.
Another thing which you need to keep in mind when dealing with any sort of claim for loss or damage is that different legal principles and rules will apply depending upon the method of transportation. Motor, rail, domestic water, sea freight, domestic air, or international air all have different time limits for filing claims and different deadlines for initiating lawsuits if a claim is disputed.
It gets more complicated. Many carriers work in more than one mode. You might have a carrier that collects and takes your goods to a warehouse, then on to a ship or a plane, and then by road again to the destination. Therefore, it is necessary to know in which mode the carrier was operating at the time any damage or loss occurred. If you need to file a claim for loss or damage it has to be within the appropriate timescale for the particular mode that the goods were in. This means that you need to look carefully at the carrier’s terms and conditions in order to ensure filing the claim according to them.
There could also be a case where another shipper causes damage. For instance, if a cargo is not packed correctly and something leaks out causing damage to other cargo in transport, then what would usually happen is that the carrier reimburses the shipper of the damaged items and then recovers the money from the other shipper.
What all this means is that you need to read terms and conditions very carefully when shipping goods.