Multiple options of add-on cover are available to add to the freight forwarders liability policy by paying an additional premium amount. The freight forwarders insurance policy covers the liability of the freight forwarders in case of damage to goods in transit. It also covers contingent cargo. Various other kinds of risk are mitigated by including the following extensions in the freight forwarder insurance policy.
Professional indemnity insurance:
It covers any negligent act of the freight forwarder or breach of contract. It also covers the error or omission committed by sub-contractor, employees, or agents. For example, the consignment of goods is delivered as per cash on a delivery basis. At the time of delivery, the freight forwarder released the goods without collecting the cash, and that too in the absence of required documents i.e. bill of lading. Later the consignee disagreed to make any payment against the consignment and there was no proof of delivery of goods which resulted in financial loss for the consignor and later he sued the freight forwarder for his negligent act. If the freight forwarder has professional indemnity insurance then it covers the claim. Hence the defense cost is borne by the insurer under the policy.
Third-party liability insurance:
Third-party liability covers any bodily injury or third-party property damage arising out of the operations. The policy also covers the legal liability or claims arising from an accident while performing the services. . It also covers the consequential loss suffered by the third party. The insured should take all the possible measures to avoid loss or damage.
For example: At the time of unloading of consignment, one of your employees unintentionally damaged some cargo because of an accident, a slip, or a fall which also caused injury to the third party. The policy covers the claim against third-party liability if it includes the extension.
Loss of documents extension:
The policy covers the loss of documents in transit or in the custody of the insured under loss of document extension. All the costs and expenses incurred by the insured. This helps to restore or recover the lost document will be borne by the insurance company. This extension is important for expensive shipments as the customs duty or the bills imposed on a consignment during an export or import assume a hefty cost. A freight forwarder or the consignor bears the cost of fines or penalties in case of lost documents.
Fines and duties liability insurance:
This insurance will cover unintentional breaches of any regulation which resulted in fines or penalties imposed by an authority on freight forwarders during transit. It does not cover the freight tariffs. A freight forwarder should abide by the compliance required to carry out the trade.
Different insurance companies have a different set of add-on covers. One needs to study the policy wordings and check with the insurer about the coverage. They also have to identify which add-on cover is essential as per their business operations. The magnitude of risk plays a key role in identifying the requirement of add-on coverage. As a freight forwarder, one should always buy freight forwarders liability insurance and include additional coverage for complete risk mitigation.
JL Logistics Limited signed a contract of delivering the container of olive oil from Dubai to India. There was no proper seal and checking of the container at the time of loading. When the container arrived in India, it was light, thus raising an alarm in the mind of the consignee about the leakage. The consignor filed a case against the freight forwarder for the loss. A freight forwarder gets the blame for the negligence. Freight forwarder insurance policy covers such a case only if error and omission cover is a part of the policy. However, the cover did not include it at the time of policy purchase. Hence it resulted in claim rejection.
Thus, include extensions in your freight forwarder insurance policy that are highly required in business operations. For a freight forwarder, it is important to include professional indemnity insurance coverage, third-party liability cover in freight forwarders liability insurance policy.