Tropical Storm Andrea was a reminder that hurricane season is in full swing. Experts at the National Oceanographic and Atmospheric Administration (NOAA) said there is a 70 percent likelihood of 13 to 20 named storms over the next 6 months, including 3 to 6 major hurricanes. http://www.insurancejournal.com/news/national/2013/05/23/293144.htm
Hurricane Sandy was a wakeup call for the Trade Industry. It was the 5th costliest event in U.S. Insurance History with total insured losses at 18.8 Billion. Cargo losses sustained were also record setting. A major portion of cargo losses were uninsured. Shippers without insurance had no choice but to try and hold freight forwarders and carriers liable for the damage. Freight Forwarders and carriers are generally protected under international trade law for events considered to be caused by “Acts of God” or “Force Majeure”. The net result was a major financial loss for shippers who opted not to buy cargo insurance for their goods in transit.
What have we learned from all of this?
- Freight Forwarders should offer “All Risk” marine insurance for every contracted shipment.
- It is best practice to have your customers either accept or reject cargo insurance in writing. This will ensure you have provided good service to your customers and protect your own legal liability.
- Secure the proper E&O/Cargo Legal Liability Insurance to protect your company from cargo loss or damage. Even basic cargo damage claims like the ones resulting from Hurricane force cost money to defend, and legal fees can add up quickly.