Cargo Insurance

As an insurance broker UCL can provide its clients or other agents insurance coverage for transportation of the goods. For Rates and Coverage contact our office.
As a result of unfamiliarity with the liabilities and responsibilities associated with the transportation of goods, we have provided below some basic notions as to cargo insurances for both sea and air transportation.

• Ocean Carriers Liability
• Ocean Carrier Liability Claim Example
• Time Limitations For Filing a Claim


• Air Carriers Liability
• Air Carrier Liability Claim Example
• Time Limitations For Filing a Claim
  

Ocean Carriers Liability

One of the most common objections to purchasing insurance is, "But my carrier pays for my loss." No shipper should rely on carriers to reimburse for cargo damage because according to the Carriage of Goods By Sea Act neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from:

• Act, neglect, or default of the master, mariner, pilot or the servants of the carrier in the navigation or in the management of the ship;
• Act of God;
• Act of public enemies;
• Act of war;
• Act or omission of the shipper or owner of the goods, his agent or representative;
• Arrest or restraint of princes, rulers or people, or seizure under legal process;
• Fire, unless caused by the actual fault or privity of the carrier;
• Insufficiency or inadequacy of marks;
• Insufficiency of packing;
• Latent defects not discoverable by due diligence;
• Perils, dangers and accidents of the sea or other navigable waters;
• Quarantine restrictions;
• Riots and civil commotions;
• Saving or attempting to save life or property at sea;
• Strikes, lockouts, stoppage or restraint of labor from whatever cause, whether partial or general;
• Wastage in bulk or weight or any other loss or damage arising from inherent defect, quality or vice of the goods;
• Any other cause arising without the actual fault and privity of the carrier, or without the fault or neglect of the agents or servants of the carrier. The burden of proof shall be on the claimant to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage.

Ocean Carrier Liability Claim Example

In the rare event that the ocean carrier truly is liable for the damage, their liability is limited by the amounts stated on their bill of lading, which is typically $500 per package or customary freight unit.

Consider the following example:
A shipment of 25 cartons of shoes is shipped without insurance. The total value is $50,000. The survey at destination shows 15 cartons are damaged by an insured peril causing $30,000 worth of damage.

To get carrier reimbursement if there is a loss, the claimant must prove the following:

• What the loss is. It will be the shipper's expense to determine the cause of loss and the dollar amount.
• The loss occurred while the goods were in the carrier’s possession.
• The loss was a direct result of the carrier’s negligence.

Time Limitations For Filing a Claim

Failure to notify the carrier within the following time limits could lead to a claim for damage being denied. Please remember that the best practice is to notify the carrier as soon as possible.

Air Carrier Liability

According to the Warsaw Convention, air carriers also have limited liability. Below is a reprint of pertinent clauses from that Convention that outline the carrieris responsibility:

Article 18
The carrier is liable for damage sustained in the event of the distribution or loss of, or of damage to, any registered luggage or any goods, if the occurrence which caused the damage so sustained took place during the carriage by air.
The carriage by air within the meaning of the preceding paragraph comprises the period during which the luggage or goods are in charge of the carrier, whether in an aerodome or on board an aircraft, or, in the case of a landing outside an aerodrome, in any place whatsoever.
The period of the carriage by air does not extend to any carriage by land, by sea or by river performed outside an aerodrome. If, however, such a carriage takes place in the performance of a contract for carriage by air, for the purpose of loading, delivery or transshipment, any damage is presumed, subject to proof to the contrary, to have been the result of an event which took place during the carriage by air.

Article 20
The carrier is not liable if he proves that he and his agents have taken all necessary measures to avoid the damage or that it was impossible for him or them to take such measures.
In the carriage of goods and luggage the carrier is not liable if he proves that the damage was occasioned by negligent pilotage or negligence in the handling of the aircraft or in navigation and that, in all other respects, he and his agents have taken all necessary measures to avoid the damage.

Article 21
If the carrier proves that the damage was caused by or contributed to by the negligence of the injured person the Court may, in accordance with the provisions of its own law, exonerate the carrier wholly or partly from his liability.

Air Carrier's Liability Example

In the rare event that the air carrier truly is liable for the damage, their liability is limited by the amounts stated on their air waybill, as follows:

Consider the following example:
A shipment of 400 cases (100 kilos total weight) of consumer equipment is shipped without insurance. The total value is $75,000. The survey at destination shows 150 cartons (37.5 total kilos) are damaged by what would have been an insured peril causing $25,000 worth of damage.

In order to prove the carrier is liable for the damage, the shipper must be able to show the following:

• What the loss is. It will be the shipper's expense to determine the cause of loss and the dollar amount. In some cases, they will have to hire a surveyor to make the determination.
• The loss occurred while the goods were in the carrier's possession.
• The loss was a direct result of the carrier's negligence.

Time Limitations For Filing a Claim

Failure to notify the carrier within the following time limits could lead to a claim for damage being denied. Please remember that the best practice is to notify the carrier as soon as possible.