By Ana Blazek
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26 Jun, 2024
I hope you’re doing well this week. I thought I’d take a minute to touch base about freight legal liability insurance. As I review data rolling in from last year, it’s clear just how important it is for companies offering logistics services to have the right coverage. Consider the following: According to the World Shipping Council, ships transport about 226 million containers each year, with cargo valued at more than $4 trillion. Shipping companies lost an average of 1,382 containers between 2008 and 2019. Nearly double that amount, the highest in seven years, went overboard over a two-month period from November 30, 2020, to January 31, 2021, trade magazine American Shipper reported. This increase in losses can be attributed to things including container ships getting larger each year, thus carrying more cargo, winter winds being historically strong, and product demand surging as people spent time at home during the pandemic. Container ships are getting bigger every year , which means they're carrying more cargo. Winds last winter were stronger than usual. In fact, going back to 1948, last winter had the second strongest winds on record. At the same time, demand surged for products as people spent more time at home during the pandemic. So why are freight legal liability policies so important? They kick in if a client has elected not to purchase cargo insurance from you and/or they have their own insurance policy--and in this instance, their company is subrogating yours. Alternatively, freight legal liability comes into play if a client does not purchase cargo insurance and chooses to have none in place, thus accepting the risk for the full commercial value of their goods should something happen to their shipment. In all cases, the client would receive a limited reimbursement per their mode of transportation. A freight legal liability policy will cover the logistics provider from the following: Damaged goods based on the terms and conditions of the HBOL Subrogation claims by client’s insurer Errors or omissions made outside of your oversight Warehouse damages pre- and post-shipping (only if the client purchased coverage and has a warehouse) Motor truck cargo loss or damage (only if the client purchased coverage and owns trucks) The big picture is this: a freight legal liability policy covers you in the event you’re held legally liable for a shipment you handled by air, ocean, rail, or truck. This differs from freight cargo insurance, which one must purchase if they want 100% of the value of their goods protected. I hope these are helpful insights into how a freight legal liability policy can protect your assets. If you’d like a quote or would like to discuss this in more detail, feel free to reach out. Hope to connect with you soon.