Insurers can’t deny common-sense claims
Q As a broker, we hired a carrier to transport a multishipment load. One shipment was damaged severely in transit; the carrier notified the consignee, who directed that the load be taken to a repair shop, where it inadvertently was received without notice of damage. Although every party to the transaction admits the shipment was damaged in transit, the carrier’s insurer now has denied the claim because the bill of lading issued by the driver contained a provision that said absolutely no claims would be handled if the driver procured a clear delivery receipt at time of delivery. What should we do?
A Unfortunately, you and your customer may be dragged into a lawsuit as a result of this obvious injustice. All too frequently, cargo insurers look for the most preposterous reasons to deny claims so that they can keep their clients’ premiums and not suffer loss. Some will use any pretext to deny a claim that all parties admit is valid. In my opinion, this clearly is such an abuse.
There are cases that hold that the bill of lading is a contract and that its terms and conditions bind all the parties. With respect to the effect of a clear delivery receipt, though, under federal statute and well-developed case law, the absence or presence of a receipt in good order at time of delivery is only a rebuttable presumption of the cargo’s condition. Here, everybody admits the cargo was destroyed in transit, and the inadvertent failure of the salvager to note the damage on the delivery receipt does not change the provable and admitted facts.
If all parties agree to what happened, failure to note damage doesn’t matter.
Aberrant language inserted on a carrier’s bill of lading cannot trump Carmack, the applicable federal statute. There has to be an expressed, signed and written waiver by the parties to do that. The importance of a clear delivery receipt and the rebuttable presumption relates to concealed damages where there is some real issue over whether the shipment was delivered in the condition in which it was tendered. That issue does not exist in your case, and I do not believe any court would suspend common sense and let the insurer off the hook on this kind of argument.
There are two things to be learned from this case:
(1) Not all cargo insurers are equal. It is “buyer beware” for shippers and brokers when buying cargo insurance or accepting certificates of insurance; and
(2) In contracting, it is important to incorporate the terms and conditions of the standard truckload bill of lading or the uniform bill of lading into the contract providing that the parties issue nonconforming bills of lading or shipping documents as receipt for goods only. Neither the shipper nor the carrier should be playing a game of “gotcha” by inserting unconscionable language that was not contemplated by the parties. Dock hands and truck drivers are fact witnesses, not contracting officers.
Unfortunately, as long as some insurers can get away with these tactics in denying claims, your only recourse will be suit. Someone should open a blog on this type of outrageous conduct.
*The Carmack Amendment, 49 U.S.C. 14706, governs cargo claims.
*Only a signed written contract waiving Carmack will trump its application.
*Obtaining a clear delivery receipt at time of delivery is important in establishing a presumption of good order.
*The inadvertent failure of a receiver to note damage at time of delivery is of no consequence when all the parties agree to the extent of the damage and that it occurred in transit.
