Case Study of
Forwarder Liability Insurance
** Disclaimer: Claim cases cited in this Fact Sheet are based on actual incidents to show how a freight forwarder can be exposed to the risk of loss and liability for damages. Please note that the parties named, place specified or extent of loss herein are modified to ensure confidentiality and the examples are illustrative only and not to be relied on to justify coverage in any particular situation.
Case 1 – Loss caused by subcontractor
ABC Logistic Company is contracted to deliver a 40 feet full-loaded container of electronic parts from a factory in Shenzhen to Yantian Cargo Terminal for an onward transit to Italy by sea. The land transit was subcontracted to another transportation contractor. Upon arrival, it was discovered at the consignee’s warehouse that 205 cartons of electronic parts were missing. Eventually, investigation revealed that the missing cargos might have been stolen during the transit from Shenzhen Custom to Yantian Cargo Terminal. Further, the driver of the subcontractor had fled.
Ultimately, ABC Logistic Company had to indemnify its principal for their loss of US$ 13,000.
Today, logistic operator will under various circumstances subcontract part(s) of the services to third party service vendors during the course of transit. Irrespective of whether or not the logistic operator is the immediate or direct responsible party for the liability resembled in this case, it is primarily liable for the loss caused by its subcontractors of all levels.
Case 2 – Wrongful release of goods
A shipment of 1 40 feet full-loaded container of toys was shipped from overseas to Hong Kong. In order to catch the peak season, the consignee requested the logistic operator to release the cargo before the original Bill of Lading arrived. In view of the long term business relationship with the consignee, the logistic operator did so as requested in the absence of the required document. Eventually, the consignee after having taken delivery of the cargo vanished and disappeared without paying for the cargo. The shipper thereby filed a claim of US$90,000 against the logistic operator.
In this case, the logistic operator released the cargo in the absence of a relevant document which was a sufficient proof of its negligence and was therefore obviously liable for the alleged claim.
Case 3 – Bodily Injury
A shipment of machinery was shipped from Guangzhou to USA whereas it was repacked in Singapore before onward transshipment. Upon unpacking the full-loaded container, a machine shifted its position which hit an employee of the consignee causing his injury. Upon investigation, it was found that the machine was not properly mounted to its position which resulted in the incident. The consignee subsequently filed a claim of US$100,000 against the
When the cause of the injury was found to be caused by the negligence of the logistic operator in performing its duty, it is liable for the alleged claim.
Case 4 – Custom penalty
A freight forwarder, in addition to arranging delivery of goods with own bill of lading, was also instructed by the client instruction to assist in custom declaration for import and export shipments. Due to an operational mistake, the freight forwarder received a writ of summon from the government against their alleged wrongful declaration of some shipments with a penalty of over HK$200,000. The freight forwarder reported the claim with documents
to their FFL Insurer AIG. Having evaluated the circumstance, AIG immediately instructed their lawyer to represent the freight forwarder for the case.
Based on all the facts and circumstantial evidences gathered, the lawyer proficiently defense for the freight forwarder and effectively bring down the penalty to only several thousand Hong Kong dollars and the case was finalized within short time.
Litigation with governmental authority on matters of such background is highly technical which requires expertise legal advisor of the field. Leverage on our global resources, AIG would be appointing the appropriate professional representing the Insured’s interest.