We insure all of our valuables – home, car, jewelry, health, even our lives. It’s a practice that keeps us financially protected from life’s unexpected challenges. Yet time and again, shippers believe that basic marine carrier coverage actually assumes “all risk.” Most see additional coverage as an unnecessary contribution to the bottom line, especially if it adds to the final cost per unit, while others find processing claims information for damage too burdensome when recouping losses.
Unfortunately, when losses do occur, and they will, carriers turn to the good old Hauge/Carrier of Goods by Sea Act (COGSA). Developed during WWI, COGSA protects vessel owners by limiting their liability to $500/shipping unit. Further, the law provides 17 situations under which shippers have no legal recourse against the carrier, known as the Hague/COGSA defenses:
- 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;
- Fire, unless caused by the actual fault or privity of the carrier;
- Perils, danger, and accidents of the sea or of other navigable waters;
- Act of God;
- Act of war;
- Act of public enemies;
- Arrest or restraint of princes, rulers, or people or seizure under legal process;
- Quarantine restrictions;
- Act or omission of the shipper or owner of the goods, his agent or representative;
- Strikers, lockouts, stoppage or restraint of labor from whatever cause, whether partial or general – provided that nothing herein contained shall be construed to relieve a carrier from responsibility for the carrier’s own acts;
- Riots and civil commotions;
- Saving or attempting to save life or property at sea;
- Wastage in bulk or weight or any other loss or damage arising from inherent defect, quality, or vice of the goods;
- Insufficiency of packaging;
- Insufficiency or inadequacy of marks;
- Latent defects not discoverable by due diligence; or
- Any other cause arising without the actual fault and privity of the carrier without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception 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.
Kind of makes you wonder what IS covered…
I recently experienced the pain of this realization with one of my favorite clients. For years, this customer swore up and down that additional, proper cargo insurance was wasteful and unnecessary because the company hadn’t experienced any significant cargo losses. Lo and behold, inclement weather resulted in a whopping $50,000 loss on a single shipment.
Based on their annul cargo volume and value, $50,000 would have insured every single shipment over the next 10 years. It’s safe to say they incorporated full coverage insurance through Green Worldwide because we provide easy claims processing and guided coverage.
Remember, not all freight is created equal, so it’s important to evaluate the coverage that’s right for your supply chain.
