YOUR CARGO ARRIVED DAMAGED! HOW TO FILE CLAIMS

Don’t procrastinate. Take immediate action! You may have fewer than 3 days.

This is a step-by-step guide to making the insurance claims process as simple and painless as possible. If your shipment arrived damaged during the importing process, following these relatively easy and practical steps will protect your financial interest and maximize your chances of successfully collecting on your damage claim against any carrier.

Because you are obligated to help your insurance company determine who is responsible for the loss, you must take the following precautions immediately!

1) Note exceptions!

Make a note on the truck waybill / delivery order in as much detail as possible. For example, if you see damage to your shipment: “10 cartons crushed with holes and water damage, some dried and some still damp, content exposed.”

2) A Picture is Worth a 1,000 Words

The old adage still holds true. Grab your smartphone and start snapping some pics of your cargo. Try to get as much detail as possible. Even taking videos to describe what you see is great evidence as well.

3) Keep the evidence

Do not discard damaged goods, packaging, and / or container seals until a surveyor has had a chance to investigate the loss or until you’ve received confirmation from your insurance company that it is suitable to do so.

4) Perform salvage!

Importers are obligated to limit the damages; segregate the good stuff from the bad. In other words, do not let water damage spread to otherwise undamaged cargo. If only the outer packaging is wet and damaged, salvage the content and repack it. Keep the old packaging!

5) Put everyone on notice!

Immediately send everyone involved in the supply chain a notice that your shipment arrived damaged, even if you do not know the total extent of the damage.  Doing this extends the time frame allowed to get the actual claim processed and submitted.

If this is not done, the carrier(s) is within its right to deny the claim, pending timelines laid down in their terms and conditions. By doing this, you are, in effect, reserving your right to possibly file a claim at a later date. Download and complete a “preliminary claim form” on letterhead and send it to the:

• Trucker that delivered the cargo
• Warehouse where it was picked up
• Exam site, if the shipment had been examined
• Ocean or air carrier that transported the goods
• Freight forwarder that arranged the transportation
• The supplier that you purchased the cargo from, because you never know!  There may have been a note about an issue when the goods were initially picked up!

If purchased under the Cost, Insurance & Freight (CIF) terms of sale, the supplier hopefully fulfilled his obligation and arranged for insurance coverage with a reputable firm and should at this point provide you with the contact details of that insurance company to process the claim.

(Forget about putting Customs on notice for damages that may have occurred during an exam;  they are not liable for anything.)

6) Notify the insurance company

Hopefully, you protected your investment and obtained cargo insurance, either by yourself or through your forwarder.  They should be notified right away. The insurance company will demand that you take the above steps as well, or they will have grounds to deny the claim!

Then, they may dispatch a surveyor to visit your facility to gather as much evidence about the loss as possible, in order to properly determine how much to pay out, but also to give them the chance to push other parties in the process to be responsible for parts of the loss.

Keep all physical evidence until the surveyor or insurance company confirms, in writing, that it can be destroyed.

7) Tally up your loss

Calculate the actual loss to prepare the final claim against the insurance policy or, if not insured, to start filing the claim against the carrier(s) directly. Remember to include the cost of freight, duties and taxes proportional to the loss as well.

8) Complete the claim

• Complete Claim form.
• Gather all the supporting documents as outlined
• Submit the claim

Then, simply send it to the insurance company and they will handle it from here. They will settle with you under the terms of the policy and go after the carriers to cover their losses.

If your vendor arranged the insurance they should have provided details of the insurance company’s local agent and possible surveyor for you to speak with.  Remember, you are subject to the terms and conditions, including any deductibles, that were originally negotiated by the vendor.

However if your shipment is not insured, this is where the “real fun” starts:

• Send the claim to the same folks with whom you filed the preliminary claim form.
• Each party will do its own investigation and either deny the claim or settle it under their limit of liability, if it can be proven that the damage occurred while the cargo was under their care. Be aware that they may deny the claim for a host of possible valid reasons: insufficient packaging, inherent vice, etc.
• Note that this process can take months and, in some cases, years. Keep following up.

The liable party is usually determined by examining the various delivery documents that are signed by each party (including waybills, delivery orders, and bills of ladings) as the shipment is handed over between truckers, warehouses, air or shipping lines as your cargo moves from origin to destination.

It is assumed that any damage must have occurred in the custody of the first party that was handed back a signed “received” delivery document with damages noted on it.

If your shipping / receiving department blindly signed the waybill without making notes then they are saying, in effect, that the goods arrived in “good order and condition.” The carrier (and the insurance company) would then be able to deny any liability and reject your claim outright!

Good luck as you sail down the perilous river of claims processing!

P.S. If you file a claim with any of the major carriers (such as UPS, FedEx, DHL, etc.), their first response will most likely be to reject immediately, putting the burden on you to be persistent.  If this happens, go right back with your evidence.  If the 2nd time doesn’t work, the 3rd time, as the old adage goes, might be the charm.