The final step in establishing the actual value of a loss is to determine exactly what was damaged or lost, and whether it there is partial or total loss. Having already determined the limits on the valuation and the per-unit cost of the cargo, proving the extent of the damage will permit calculation of the value of the loss.
If there is a total loss of the cargo, then the value of the loss is equal to the applicable valuation of the cargo shipped for insurance purposes, as determined by the documentation applicable to the cargo, and subject to the cargo liability limits in effect for the shipment.
In some cases total loss is obvious, for example when a shipment is stolen and is not recovered, or when the shipment is completely lost in a fire whose cause was unrelated to the cargo itself, or when the cargo was clearly damaged beyond repair in a serious accident where the trailer’s structural integrity was breached.
In other cases, there may be a total loss that is not immediately confirmable, but that becomes clear during the claim adjustment process. An example of this might be plastic food packaging that becomes contaminated as a result of the events of an accident. Another example might be goods manufactured to a physical specification that, as a result of shifting or upset during an accident, no longer meet the specification’s physical tolerances. By definition, these types cases will required detailed investigation and documentation, as well as discussions with manufacturers and/or purchasers.
In most claims cases, the loss will be partial, rather than total. In a partial loss case, only the value of the portion of the cargo that is actually lost can be included in the value of the loss.
A partial loss can occur in several ways. For example;
- Cargo shifted in a van, but only part of the shipment moved: there is damage to some or all of the cargo that shifted, but no damage to the cargo that did not shift;
- The trailer roof had an undetected leak, and it rained: the part of the shipment closest to the leak suffered water damage, but cargo located further from the leak suffered no damage;
- There was damage to the outer packaging of a product, but the product itself was not damaged: in this type of partial loss case, the claim would be for the cost of inspection and re-packaging.
Whether a loss is total or partial, there may be a salvage value in what remains of the cargo. For example, manufactured parts that have come out of alignment may no longer be suitable for their intended purpose, but might still have value in the scrap metal market. Or the contaminated plastic food packaging that is longer suitable for food may be usable for a non-food application.
So part of the process of proving the value of a loss could well include proving the value of what, if anything, is salvageable.
There may also need to be a discussion as to who retains the salvageable items, and therefore how the salvage value is accounted for in the claim settlement. This is particularly true if the damaged cargo is branded for the consumer market.
Claims are usually relatively straightforward to resolve if all parties co-operate. Alternatively they can be very difficult to resolve if even one party wants to play outside the lines. And if there is going to be a point of contention, it often related to proving the value of the loss. In each case, Copper Run will work with our customer, who is almost always the shipper, the receiver, or the owner of the goods, to keep information flowing, to keep lines of communication open, and to ensure that issues of process do not become roadblocks to resolution.
There are several important elements of co-operation:
The shipper / receiver / owner of the goods must be prepared to provide all relevant documentation concerning the cargo.
The carrier must be prepared to provide information and documentation regarding the handling and flow of the cargo while it was under his care, management and control.
Whenever at all practical, the receiver should receive the damaged cargo, and should set it aside in a protected location. Until the claim is fully resolved, the damaged cargo should not be used, or repaired, or in any way tampered with or altered without the written approval of the carrier or its insurer. If circumstances demand disposal of the product, then this should only occur with the prior agreement of all parties.
The damaged cargo must available for inspection by the carrier’s and/or insurer’s representatives during normal business hours.
The claimant should be able to assess whether the damage is repairable and, if so, provide an estimate of the cost of such repairs. If repairs will bring the damaged cargo back to its original condition, then the value of the claim becomes the cost of the repairs.
However, before repairs are made, the carrier or its insurer must agree to the repairs in writing, or the value of the loss will be compromised, and may not be able to be accurately determined. If the cost of the repair is greater than the value of the product, then the repair will almost certainly not be approved.
It is incumbent on the claimant to cooperate with mitigation efforts, and damage repair is potentially an important element of mitigation.
If it is determined that the damaged cargo has a salvage value, then the claimant has a choice:
- If he wishes to retain possession of the damaged cargo or to have it destroyed, then he must
be prepared to have the amount of the claim reduced by the salvage value.
- If he is willing to relinquish possession of and rights to the damaged cargo, then the salvage
value will be to the account of the insurer or carrier.
Mindful of the importance of co-operation, Copper Run, in the case of a total loss, will waive our freight charges to the customer.
In the case of a partial loss, Copper Run may propose a partial offset in freight charges as part of sourcing a truck to carry replacement freight.
However, Canadian law specifies that in many cases freight charges must be paid in advance of a claim being settled, so sometimes payment of an actual freight charge is deemed necessary to the settlement of the claim.
Once the freight charges have been paid, then all or a portion of the freight charges, as applicable, can be included in the claim. Even in cases where the carrier has waived the freight charges, it is not unusual for an insurance company to insist that they be paid, and then re-claimed as part of the settlement, to ensure that there is no legal taint on the settlement.
In the case of small claims, certainly those under $1,000, it is very common to quickly arrive at an agreed financial settlement, and to make corresponding payments or invoicing adjustments.
All of the claims structure and process still applies, but it applies in a manner that the parties are willing to agree is acceptable under the circumstances. Arriving at such an agreement often requires less than a week, especially when there has been a free and transparent exchange of photographs and information.
Copper Run has experience as a facilitator who can guide the parties to a mutually agreeable fast settlement of small claims.