The processes by which functional and financial responsibilities for a loss or damage claim are resolved are well-established in both statute law and jurisprudence, and in insurance company procedures.
These processes are meticulously applied by the insurance industry, and by carriers when facing a claim. To attempt to work outside well-structured and time-proven processes will surely lead to delays and dissatisfaction.
Note: for information and advice on the legal aspects of cargo claims, seek advice from a lawyer. Copper Run is not a law firm, and no information or advice provided by Copper Run personnel or contained on this website should be construed as legal advice or opinion.
Basic Claims Principles
There are 4 over-arching principles that guide cargo claims filing, investigation, and settlement:
- At any and all times, the person who has care, management and control of the freight is the person who is responsible for the condition of the freight, and is therefore, barring specific over-riding circumstances, the person who is liable in the event of loss or damage to that freight. In simple terms, this “person” is the carrier. This basic concept is supported by statute and case law, and by insurance industry practices and procedures.
- Notwithstanding the above, a claim can be denied if it can be shown that the loss was caused by any of:
- An act of god
- An act of the public enemy, riots, or strikes
- An act of public authority
- A defect or inherent vice in the goods, including in their packaging and preparation for transport
- An act or default of the owner, shipper
- The paperwork surrounding the shipment, and most particularly the Bill of Lading and the information recorded and signed for on the Bill of Lading, are normally determinative regarding the cargo that was shipped, its condition when it was loaded, and the terms agreed to regarding the shipment.
- Claims must be submitted within specified time limits, or the claim is considered to be ’time-barred’ and can therefore be denied without consideration. While 6 months is a typical time limit, there are many cases in which a shorter limit is specified – one such case would be an extremely short time limit specified in the ‘fine print’ on a Bill Of Lading.
The claims process always starts with a claim by the owner / shipper / receiver against the carrier.
The Freight Broker’s Dilemma
Given these basic principles, laws and practices, a Freight Broker, such as Copper Run, technically has no rights, no status, no responsibility, and no role in a claim situation. Remember, there is no point at which a freight broker has either care, management or control of the freight, or an ownership interest in the freight.
As a result, a freight broker cannot purchase primary cargo insurance (Copper Run does carry secondary contingent cargo insurance) in the way a carrier does, nor can a freight broker make a claim against a carrier or a carrier’s insurance for compensation for a loss or damage experienced by one of the freight broker’s customers.
Strictly speaking, when a loss or damage occurs on a shipment arranged by a freight broker, the freight broker has no status, and is therefore merely an uninvolved spectator.
BUT: Copper Run is NOT content to be an Uninvolved Spectator
While we understand and respect the legal and procedural niceties of a claim, and we work within the accepted structures, we do not believe that our customers expect us to be an uninvolved spectator, especially at a time when support is needed. So we do get involved:
- We can’t file claims ourselves, but we can, and we do, prepare them for our customers to file
- We can’t accept or process claims for losses, but we can, and we do, make sure they get sent to the right people who can accept and process them
- We don’t automatically have status in the process, but we can, and we do, request that our customers grant us that status, so that we can communicate directly with insurers and adjusters on our customer’s behalf
- We can’t pay out or receive money for a loss, but in the case of small claims we can, and we do, act as an intermediary between the parties, and we propose and pursue, and usually achieve, a fast financial settlement for our customers, including by means of off-setting invoicing adjustments;
In short, unless our customer tells us not to get involved (which does happen, but only very rarely), we inject ourselves into the process, we get involved, we communicate, we facilitate, we cajole, we negotiate, and we get claims resolved for our customers. This is part of our Value-Rich service package.
The Absolutely Key Importance of the Bill of Lading
When properly completed, a Bill of Lading for a shipment provides an agreed description of the cargo that was shipped, it’s condition at the time of loading, a record of the chain of custody for the cargo, and a description of the condition of the freight as it’s custody was transferred from party to party. This is one reason the Bill of Lading is a legally-required document, and why the law requires that the information on the Bill of Lading must be correct. The Bill of Lading is a contract between the shipper and the pick-up carrier.
In particular, in the case of a loss, a Bill of Lading that has been properly maintained will indicate who had custody of, and therefore the responsibility for the care of, the freight at the time of the loss and at the time the loss was discovered. Unless there are complicating issues (e.g., hidden damage, inability to count contents, unsuitable packaging or securement, incomplete shipper’s instructions), it will be the custodial person, e.g., the carrier, who will bear responsibility for the loss and it’s cost.
- Be very meticulous – a Bill of Lading that is improperly completed may limit or even eliminate a carrier’s liability, even in an otherwise obvious claim situation. If freight arrives at your dock with damage, never, never, never sign for the freight as being received free and clear – always write a description of the damage right on the face of the Bill of Lading, and then sign your description.
- If a carrier’s driver isn’t allowed on the dock to observe the freight as it is being loaded, then the driver can’t count the amount of freight being loaded, nor can the driver observe the freight to spot nay obvious damage. As a result, the driver can’t be asked to sign for the amount of freight or the condition of the freight. The driver has the option of writing “SLC” on the Bill of Lading, which stands for “shipper’s load and count”. If a shortage or damage is subsequently discovered, it becomes very difficult to blame the carrier, since the carrier’s agent (the driver) did not make or agree to a count or to condition in the first place.
- It is always best to seal a full load, preferably with a high-security seal (they cost less than $2 each, and are a must on C-TPAT loads). Remember to write the seal number on the Bill of Lading. The shipper should seal the van, and the receiver should break the seal – the driver should not be involved with the seal at any time, other than to verify the seal number. If the trailer is sealed, there can be no en-route opportunity for loss or theft. Moreover, any shortage at delivery means the missing freight was never put in the van. It is much easier to settle a provable short-ship situation than a disputed loss/theft situation.
- If a truck arrives at its destination with a broken or missing seal, the carrier may have a big problem, and every question is a fair question. In this case, photograph, count and record everything as it comes off the truck, with the participation of the driver. Proving that something was missing is very easy if the count starts from before the truck is unloaded, but it is almost impossible once the freight has been spread around the warehouse.
- FYI: if a government official chooses to break a seal in order to open and inspect a sealed van en-route, they are trained and required to apply a new seal when their inspection has been completed, and to record their identification and the number of their replacement seal on the Bill of Lading. This maintains the integrity of the seal and the chain of custody.