Managing Freight Liability

Freight liability and understanding how it work is essential if you are sending goods around the world. The following article provides information to help you gain an insight into the workings of freight liability. We at Bromwall are keen to help you and provide very competitive marine cargo insurance

Facilitating the movement of or transporting others’ property has many inherent risks, particularly if the property is extremely valuable and it is being moved across international boundaries. Unexpected problems and issues can pop up when shipping and forwarding cargo across great distances.

The constantly fluctuating nature of freight contracts further affects those in the transport industry. Contracts can change with each new client, presenting new risks to be managed and new gaps in cover to be plugged. As the owner or manager of a business in the transport and logistics industry, addressing and combating your vast liability helps shrink your exposure and ensure a profitable future.

Common Gaps in Cover

Because contracts can change with each client or shipment, liability risks are variable. Most freight liability policies are bespoke and try to encompass the entirety of a business’ risks.

When constructing your bespoke policy, look for any of the following gaps in your freight liability policy:

Liability outside the scope of standard trading conditions

Businesses in the freight and logistics industry will typically use established trading conditions as a baseline for writing contracts and determining liability, such as freight forwarders using the British International Freight Association (BIFA) conditions. However, additional liability may exist outside the bounds of a standard industry contract. For example, if a freight forwarder is also providing warehousing during the shipment, he or she should consider using conditions from the United Kingdom Warehousing Association to figure out additional liability. Determine whether your business’ liability extends beyond the limits of standard conditions and whether your insurer can cover this liability.

Liability accepted under bespoke customer contracts

Depending on the contract terms with your customers, you may be unnecessarily accepting large portions of liability. Read contracts carefully before signing and know your obligations. Crafting a bespoke policy can help eliminate surprises in your customer relationships, but it can also create damaging trading conditions that are buried in your contract terms. Make sure all parties involved know their obligations under the agreed-on contract.

Errors and omissions, including breach of duty

Coordinating and transporting customers’ shipments requires possessing and providing detailed knowledge on complicated issues such as customs and shipping regulations. Secure cover that includes errors or omissions and any breach of duty. This can protect your business in situations involving shipments delivered to the wrong location or incorrect advice that causes your customers financial loss, clerical errors and more. Without proper cover, your business could be liable for hefty liability claims.

Common Covers

You should also secure additional common covers as part of your bespoke policy, including:

  • Employers’ liability is required if you have employees.
  • Public liability protects against claims arising from injury or damage to third parties.
  • Products liability indemnifies your business if you incur expenses related to damage or injury which arises from supplying products or goods.
  • Pollution liability provides protection if you pollute water, the land or the atmosphere.
  • Managing Freight Risks
  • Because your business is liable for shipments of third-party goods, diligent risk management is central for managing your liability. A sturdy, bespoke freight liability policy is ineffective unless paired with a concerted risk management effort.

You can never completely eradicate your risks and liability, but you can drastically reduce them. Adopt the tips enumerated below as part of your existing risk management strategy:

  • Explain your business’ trading conditions to your customers before they sign a contract.
  • Obtain written instructions from your customers to encourage transparency and good recordkeeping.
  • Establish clear procedures for issuing and releasing documents.
  • Manage any subcontractors with clearly worded contracts.
  • Follow stringent procedures to ensure cargo security.
  • Adhere to guidelines and regulations for handling dangerous goods.
  • Comply with insurer processes for submitting an insurance claim.

Freight liability policies can differ greatly. Seek out specialised advice to help fashion a bespoke policy to cover your business’ unique risks. Trust the insurance professionals at Bromwall to craft a policy for your business that helps ensure you can keep delivering cargo dependably for years to come.

Contact Bromwall today, to learn more about your marine insurance needs visit our marine cargo insurance page.

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