Margaret Struhanyk-Senior Marine Claims Adjuster-CNA (Continental Casualty Company)
The CargoCover policy is an "All Risks" policy which provides insurance to protect the shipper against physical loss or damage to their cargo from external causes, subject to policy terms and conditions (some of which are exclusions). It is not necessary to prove that the carrier is liable under this policy.
Declaring a value to a carrier is not the same as purchasing all-risks insurance for merchandise in transit. In the absence of allrisks insurance, if there is a claim against a carrier, the shipper has to prove that the goods were lost or damaged while in the carrier's possession and that they were liable for the loss. This may be time consuming and difficult. The carrier will only settle claims for which they are liable. They will not, for example, settle claims which result from acts of God, or force majeure. Allrisks insurance will respond to those types of losses, and there is no need to establish liability on the part of the carrier, only that the loss or damage occurred during the insured transit. In addition, and perhaps surprisingly, declaring values to a carrier may result in higher charges than the CargoCover policy rate!
The CargoCover policy should not to be considered as contingent insurance, i.e. additional insurance over and above the carrier's liability. Shipments should be insured as per the policy Valuation Clause, for the full invoice value, freight costs, insurance premium, and any other costs plus 10 percent (CIF+10%). This will ensure that your clients are reimbursed fully for any insured claims. If the value insured is only the portion over the carrier's liability, then the insured is considered a coinsurer and assumes part of the risk. Claims will be proportioned accordingly.
An "All Risks" policy pays first. After a claim is settled, the insurers, through their recovery agents, will seek recovery against the carriers. It is important that your clients check their shipments immediately on delivery and mark the delivery receipt with any exceptions, e.g. "carton torn". If there are no notations, the carrier can deny liability and the insurer's ability to recover may be lost. Letters of Intent to claim should be sent to all carriers immediately or the carrier may deny liability because of late claim notice. Monies recovered from the carriers will reduce your loss ratio; higher loss ratios may result in higher premiums.
Don't worry about the carrier's liability and go through the claims hassle with the carrier. Insure all your shipments for full value through CargoCover and let your insurers deal with the carriers.
|SUMMARY OF BENEFITS|
|Cargo Insurance||Carrier's Liability|
|Claim settlement is based on the invoice value + freight charges + 10 percent mark-up||Claim settlement is based on the weight of the shipment or invoice value (if declared and agreed by the carrier)|
|Coverage is all risks including acts of God, terrorism, strikes, civil commotions, etc.||Carrier pays only if he is legally liable for the loss. Carrier is exempt from acts of God, terrorism, strikes, civil commotions, etc.|
|No need to prove fault on the part of the carrier||Carrier must be proven liable|
|Coverage is door-to-door irrespective of the number of carriers used||A claim must be filed against each carrier individually|
|Claims are handled quickly||Claims against carriers can be lengthy|