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The importance of loss prevention
Customs brokers and freight forwarders are often unaware of their liability for cargo damage, government fines and errors in documents. Avalon Risk Management’s
Combined Transit Liability (CTL) program protects logistics companies by providing seamless coverage through a single underwriter for all professional and legal liability needs.
The base CTL program includes Errors & Omissions Insurance and Cargo Legal Liability, but can also be tailored to include multiple coverage options such as Expanded Regulatory Defense which provides defense (costs for direct fines and penalties from) any government agency and First Dollar Defense so your deductible does not apply to attorney fees, only settlement amounts. For more information, please review our
CTL brochure or complete our
CTL application for a no obligation quotation.
Avalon and our sister company, Lincoln General Insurance Company, have the only “Preferred Provider” designation from the National Customs Brokers and Forwarders Association of America (NCBFAA) as both an insurance broker and company. Through our partnership with the NCBFAA, we are able to offer discounted rates to members and Certified Customs Specialists (CCS) and the ability to network with industry experts.
Andrew Kaplan is an international trade attorney with years of experience defending customs brokers and freight forwarders in litigation matters. Andrew recently published an article for the NCBFAA highlighting the importance of loss prevention and is reprinted below for our Quest readers.
An ounce of prevention
By Andrew D. Kaplan
Since 1984 I have been representing customs brokers and logistics providers. Quite frankly there is little if anything that would surprise me at this point. About 75 percent of my cases are on the defense side. My point to you is that in at least 50 percent of the cases steps and procedures could have been taken in advance that would have either prevented the claim or suit or put you in a far better position to defend same or bring about an acceptable resolution.
Why are such steps and procedures not taken and implemented in advance?
- Most of you do not give thought to your various forms of exposure, the fact that you perform a large variety of functions with each one
having different consequences and governing laws and procedures as to each.
- Loss prevention does not generate revenue which of course is the number one priority. However, proper and detailed loss prevention can act
as a major savings which equates to increased profitability.
- The general feeling is “Since I have insurance I have nothing to worry about.” Many of you have learned the hard way that
such statement is far from reality. In addition, bear in mind your deductible, whether you are required to pay all or a portion of the
Loss Adjustment Expenses which include legal fees, whether there will be coverage issues, and perhaps most importantly the fact that any
claim(s) will serve to increase your premium(s) going forward.
Would you rather pay for an oil change now or for a new engine later? Who is going to charge more money, the gas station or the mechanic? Suffice it to say that there is a great deal to consider and hopefully this article will at least plant the seed.
Have you given thought to the following:
A. What is your responsibility(s) to third parties as
opposed to your customer;
B. Are you utilizing your Terms and Conditions of Service in a manner in which they will be upheld by the Court? Are third parties made aware of the existence of such Terms and Conditions of Service?;
C. Under what circumstances may you exercise your lien rights when monies are owed to you? Do your lien rights apply to merchandise of third parties? Are you able to exercise your lien rights only in connection with monies due and owing with the shipment(s) in question or as to all monies past due and owing to you whether related to the subject shipment(s) or others?
D. Are the BL(s) which you prepare and/or issue up to date and in compliance with Federal Law?;
E. In those situations wherein you operate as an outport broker/forwarder or those where you retain an outport broker/forwarder, how do you go about limiting your liability as to the ultimate customer?;
F. Do you have in effect a written Agency Agreements with those agents you conduct business with domestically or
abroad?;
G. In connection with the providing of marine/cargo insurance to your customer, based upon their request, are you in fact acting as an insurance agent or insurance broker and subject to applicable insurance laws and regulations?
Do you have adequate types of insurance in place and sufficient policy limits? What are your obligations to your insurer upon learning and/or suspecting you may be the subject of a claim/or lawsuit and also, in those instances where a formal claim or lawsuit has been filed against you?
Do you perform ongoing education as to your employees and perhaps yourself?
Do you arrange for periodic in-house audits to catch any errors that may have occurred before any relief may be time-barred?
Do you believe that you have taken those steps necessary to prevent and/or minimize claims against you and also, to preserve your rights as to collection of monies owed and related issues so that you are on the offensive?
(None of the above is intended to serve as legal advice as all legal issues are unique and an attorney should be consulted as to any and all legal issues)
Andrew D. Kaplan has been representing Customs Brokers and Logistics Providers and their insurers and surety(s) for over 20 years and has handled well over 1000 claims on their behalf. He is a frequent guest speaker at the NCBFAA Annual Convention as well as local associations and is the primary author of the existing NCBFAA Terms and Conditions of Service.
THE LAW OFFICES OF ANDREW D. KAPLAN, P.A.
1450 Madruga Ave. – Suite 302
Coral Gables, FL 33146
Telephone: (305) 668-4397 Fax: (305) 668-6682
E-mail: adk@andrewkaplanlaw.com
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