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The Quest
January 2011 - Issue 70
              
Inside this issue:
        
ISF enforcement:
Where we are now

Disaster in Japan; Avalon assists in aid, BCP reminder

CBP updates: Bond insufficiency, new address for mailing checks

FMCSA elimination of Cargo Insurance, BMC-32 takes effect March 21
 
CSA motor carrier
ratings now in force

 
New ACORD form changes how logistics providers
verify insurance

Revised Incoterm rules
take effect

UAE joins ATA
Carnet system

Claims corner:
Worldwide Coverage

 

        

                    

              
New ACORD form changes how logistics providers verify insurance
  
ACORD is a non-profit organization responsible for the publication and maintenance of standard insurance forms, such as applications, certificates and binders. These forms are widely used and supported in the insurance industry, and ACORD regularly monitors and revises these documents when necessary.

The ACORD form known as the certificate of insurance provides a summarized version of a policy and is commonly used to provide evidence of coverage in force. Logistics providers should be familiar with these forms when verifying the insurance coverage of carriers and subcontractors with whom they work. Recently, ACORD updated its forms to replace certain text regarding policy cancellation, as noted below:

 

Old Text

New Text

Should any of the above described policies be cancelled before the expiration date thereof, the issuing insurer will endeavor to mail ____ days written notice to the certificate holder named to the left, but failure to do so shall impose no obligation or liability of any kind upon the insurer, its agents or its representatives.

Should any of the above described policies be cancelled before the expiration date thereof, notice will be delivered in accordance with the policy provisions.

The biggest change, as noted above, is that the insurance company clearly has no obligation to inform certificate holders if a policy is canceled. With the new verbiage, most “policy provisions” only require that the first named insured be notified if a policy is canceled. Typically, even an additional insured does not need to be notified. As a result, the new verbiage will likely make it more difficult for brokers, forwarders, shippers and other interested parties to monitor whether a carrier or subcontractor’s coverage remains in force once any time has transpired since the certificate was issued.

It is important for logistics providers to verify the insurance of the carriers and subcontractors they work with to reduce their liability for negligent selection and reduce the overall risk of an uninsured loss. While a logistics provider or shipper could require a new certificate prior to each new shipment, this would be onerous and entail significant resource demands. One alternative could be a periodic requirement for evidence of insurance, such as monthly or quarterly, to provide statistical risk mitigation. The process would be less onerous, but would not guarantee the existence of coverage.

In conjunction with the elimination of the BMC-32 endorsement, Avalon understands the importance of logistics providers verifying motor carrier insurance and knows the increased burden this change may place on your business. We are exploring solutions to assist our clients in their efforts to properly qualify carriers.


    
For more information, please contact your local Avalon office or Andriana Davis at (847) 700-8087 or at adavis@avalonrisk.com. A list of our offices may be found at www.avalonrisk.com.
             
       

Avalon Risk Management
150 Northwest Point Boulevard | 4th Floor | Elk Grove Village, IL 60007
Phone: (847) 700-8100 | Fax: (847) 700-8116

www.avalonrisk.com

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