Question
Many air freight forwarders are selling a surface freight service to shippers that is represented as air freight. Because the shipments move on Friday's across country or shorter distances via motor carriers overnight, the shippers never know the difference.
Besides the fact that the freight forwarders are committing fraud this can have significant ramifications with an insurance carrier and can increase exposure.
I was recently hired by a carrier who hauled a shipment between two airport terminals for an air freight forwarder. The air waybill signed by the shipper listed no declared value for a shipment of computers worth more that $ 100,000.
The cargo insurance policy issued by Lloyds of London has an exclusion for computers. The motor carrier didn't find this to be a big deal because of the notation "NDV" (No declared value) on the air waybill.
A declaration on an air waybill may relieve a carrier of liability on air freight under what are called the Visby Rules. It will not work to relieve the motor carrier of liability on a surface freight shipment unless the carrier meets very strict requirements provided for in the Interstate Commerce Act.
We are still investigating this one to see if the client met the requirements under the Interstate Commerce Act to limit his liability.
PLEASE READ YOUR INSURANCE POLICIES VERY CAREFULLY.
Answer
Opie,
Sorry I didn't see this sooner. I find this alarming for a couple reasons. Although the Lloyds may have been a manuscripted cargo policy, there may have been a filing. Was there a filing made? If the carrier made a filing, I believe the coverage may be afforded if the motor carrier was legally liable to the third party. Now, I'm not saying that if pressed and Lloyds pays the claim that they may not attempt recourse.
Also, today's motor carriers MUST be extremely careful with their business contacts. There is so much fraud out here that one slight oversight and you could be out of business.
I appreciate you stressing "Read Your Policy". But you need to add...READ YOUR POLICY BEFORE YOU HAVE A CLAIM. I've been advised by some insurance experts that the first place to start reading is in the exclusions section.
I'd like to read that particular policy if possible. I've got an excellent consultant (considered expert witness in many insurance cases) if you're interested. Just give me a ring. If there's coverage, he can usually find it.
Keep me posted on this one.