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Claim Reviews
Professional Liability Insurance
These sample claims illustrate how valuable a Professional Liability policy is in managing your business risks. Logistics companies spend years building value in their business, but your company could find itself in one of the following disastrous situations. Make sure you have adequate coverage to protect your investments.
Improper selection of carrier
Property broker
An aircraft engine was transported from France to New York. The property broker then arranged for the engine to move from New York to Miami via truck. The carrier did not properly secure the engine to the truck as the property broker had instructed. On the way to Florida, the engine incurred damage. The importer receiving the damaged engine sued the trucking company, but the small company couldn’t pay the importer and went bankrupt. The importer then sued the property broker for improper selection of a carrier. The property broker’s Professional Liability policy paid the claim amount minus the deductible.
Claim amount: $100,000
Deductible: $25,000
Cargo release error
Freight forwarder
One freight forwarder overlooked e-mails instructing him to release an order of toys being held in his warehouse. The purchase order was about to expire by the time the freight forwarder saw the e-mails, and the only way to correct the mistake was to send the toys via expedited service. The shipper was unwilling to pay additional fees for the expedited services, and sued the freight forwarder for the additional cost. The case was taken to court to determine whether or not e-mail was an appropriate way to send a release order. The court decided that e-mail is an acceptable form of communication between a shipper and freight forwarder, and the case settled for $25,000. The freight forwarder’s Professional Liability policy covered the settlement amount minus the deductible, and his first dollar defense endorsement paid for the legal fees.
Claim amount: $30,000
Settlement: $25,000
Legal Fees: $7,000
Deductible: $10,000
Misclassification of goods
Customs broker
An importer wanted to ship silicon manganese from China and consulted his customs broker to arrange the shipment. The customs broker, unsure of what silicon manganese was, asked the importer for a description. The importer said it was artificial stone, a duty free commodity. A few weeks later, the importer arranged for a second shipment of the same goods, and the customs broker sent the shipment under the same
duty- free classification as the first. Customs then issued a “notice of action,” saying that silicon manganese from China should have a 3.9 percent duty rate in addition to being subject to an anti-dumping duty of 150 percent. The importer was charged the difference in duty, and then sued the customs broker for that amount. The customs broker was appointed an attorney under his Professional Liability policy and the case was taken to court. The customs broker alleged that the importer was dishonest about the description of the goods and had he known the correct description the misclassification error would not have been made. The case was settled out of court and the customs brokers’ Professional Liability policy with first dollar defense covered the settlement amount and legal fees minus the deductible.
Claim amount: $1,426,680
Settlement: $127,500
Legal Fees: $30,000
Deductible: $5,000
Avalon offers a Combined Transit Liability (CTL) policy to protect logistics companies from their liability by providing defense and issuing settlements
legally obligated to be paid under a bill of lading and contract terms. The CTL policy contains base coverage of Errors & Omissions (E&O) insurance and
Cargo Legal Liability. The policy can also be tailored to include 11 coverage options. For more information on Avalon’s CTL coverage, or to submit
an application, click the links below:
For further information, contact your local Avalon office or Kim Beiswanger, Product Manager at Avalon's corporate headquarters. Kim can be reached at
her direct line: 847-700-8076 or at kbeiswanger@avalonrisk.com.
To view a directory of Avalon’s office locations, please
visit our Web site at
www.avalonrisk.com.
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