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What happens when carriers refuse to pay for cargo loss?

On Behalf of | May 3, 2019 | Transportation Law |

Depending on your business type and the details of your contracts with the various entities along your supply chain, you could have a variety of legal and informal options available to reclaim losses due to cargo damage. It would be next to impossible to make a generalization about a goods-loss incident, but there are a few situations that come up more frequently than others.

Moving cargo, especially internationally, usually involves several third-party companies. Sometimes this helps accelerate the process and sometimes it provides a fundamental service. Almost every one of these parties would be bonded or insured in some way. These assurances could help cover you in the case of a loss.

One of the most common scenarios is that the freight forwarder would assume some or all of the responsibility for your loss. If the forwarder cannot convince the carrier to pay you, funds usually come from one of the most commonly misunderstood forms of insurance in the logistics business: contingent cargo liability.

Freight forwarders, as explained on Chron, often carry some type of contingent cargo policy. This would allow them to step in and cover material losses you incurred due to actions taken or omissions made by carriers they contracted. Depending on the terms of your contract, they may not be strictly liable for your losses. However, it is often in the best interest of someone in the forwarding business to maintain reputation by quickly mitigating your losses in a satisfactory manner.

If you were not in a situation that involved a freight forwarder, or if nobody seemed to want to take responsibility for your loss, you could have other options available. For example, you could have an option to sue one or more parties for a material or immaterial breach of contract. Of course, every situation is different. Please do not take this as legal advice. Is only meant as a general discussion of the topic.

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