Types of Freight Claims
Starting with the basics, there are four main types of freight claims you are likely to encounter:
The Carmack Amendment
Another fundamental piece of understanding freight claims is the Carmack Amendment. This Federal Law addresses the issue of liability between shippers and carriers. Under the Carmack Amendment, the carrier has strict liability for cargo that is in “its care, custody, and control”.
However, the claimant needs to establish three basic elements in order to meet their burden of proof. The claimant must establish that the goods were:
Once the claimant is able to prove that these requirements were met, the carrier is held liable unless it proves that it was not negligent as a result of these five exceptions:
Even if these exceptions are not met and the carrier isn’t able to prove it wasn’t negligent, there are still a few roadblocks to look out for. The Carmack Amendment only requires that carriers are liable but their liability may be limited. Therefore, if your freight has a higher value than the carriers stated coverage, you may find yourself underinsured.
The Difference Between Insurance and Liability
Carriers are bound by Federal Law to provide cargo insurance coverage for every shipment that they transport. While each shipment transported by common carriers is insured, many carriers have limited their liability in the event that there is a cargo claim.
Carriers will generally establish their cargo coverage as a set dollar amount per pound, or per package, of the cargo being transported, and their liability may also be determined by the commodity that you are shipping.
Establishing carrier liability is essential to recovering on a cargo claim and requires that the shipper is able to prove that the freight was:
Once that has been established, it is then the carriers opportunity to try to prove that they were somehow not negligent and that one of the exceptions under the Carmack Amendment applies.
Supplemental insurance can be obtained and will pay the difference between the cargo insurance coverage provided by the carrier, who is the primary insurer of the goods in transit, and the actual loss incurred by the claimant.
It is important to understand that carrier liability must be established by the claimant for both the primary insurer (the motor carrier) and the supplemental insurance provider to offer a claim settlement for loss or damage that incurred in transit.
Properly Packaging Your Shipment
Preventing loss and damages starts with proper packaging. Shipments must be properly packaged to ensure damage-free transportation. While there are many nuances to the different items that may be shipped, use common sense when packing your specific commodity.
You wouldn’t package ball-bearings the same as you would package glassware. Feel free to consult with a packaging specialist and don’t be afraid to spend an extra couple of dollars on packaging to ensure you’re not spending more after the fact.
If you are palletizing your shipment, the pallet will give the shipment a solid base to sit on and make moving the product on and off the truck easy and safe. When stacking your pallet, be sure your items sit squarely on the skid with no overhang. The weight should be evenly distributed with heavier boxes on the bottom, and packages stacked as closely together as possible. Make sure that the top surface is as flat as possible and secure cartons to the skid with banding or stretch-wrap.
Your freight also needs to be labeled appropriately and it should be easy to identify. Always follow these guidelines:
Best Practices for Receiving Freight
Be sure to use notations such as “boxes were crushed, wet, opened, punctured,” … “stretch wrap was not intact, pallets broken down…”
Writing “subject to inspection, count, verification…” doesn’t protect you in the case of a claim, so don’t skip this important step. Take the time to make sure everything is counted and looks to be in good condition while in the presence of the driver.
Filing a Claim
The first rule for filing claims is to do so as soon as possible. You typically have 9 months from the delivery date, or expected delivery date, to file a claim. If your delivery receipt is not noted as damaged or short, you only have 5 day to report to the carrier that you have discovered a problem with a particular delivery.
Here’s what you’ll need to file the claim:
The carrier should acknowledge the receipt of the claim and assign its’ claim number within 30 days of receiving it according to D.O.T. regulations. Every situation is different and the time required for resolving the claim may vary, but the claim should be paid, compromised, or disallowed within 120 days.
If your claim is denied, you have the right to file a lawsuit against the carrier. Should you choose to go this route, you will need to file within 2 years and one day from the date the carrier disallowed the claim. There are some exceptions to look out for which may require you to file sooner. It’s best to file as soon as possible to avoid any potential issues.
Common Reasons Your Claim May be Denied
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