r Five Ways to Avoid E&O Claims When Writing Motor Truck Cargo (MTC) and Warehouse Legal Liability (WWL) Insurance

Transcription

1 Education ProgramS r Five Ways to Avoid E&O Claims When Writing Motor Truck Cargo (MTC) and Warehouse Legal Liability (WWL) Insurance sponsored by

2 Protecting Yourself From E&O Exposure When Procuring Insurance For The Domestic Logistics Insured or What Do You Mean I Don t Have Coverage For This? The most frequent E&O allegations are: o o o o o o o Failure to place or provide coverage. Failure to provide adequate coverage. Creation of a gap in coverage. Stating coverage exists when it does not. Failure to notify clients of cancellation, nonrenewal or new coverage restrictions. Failure to review or explain coverage, or advise clients about it. Failure to obtain excess coverage 1

3 This Industry is Here to Stay In 2014, trucks moved 9.96 billion tons, or 68.8%, of all domestic freight. The $700.4 billion in revenue accounted for 80.3% of all freight transportation spending. Trucking employed more than 7 million people, including 3.4 million drivers. Combination trucks logged billion miles in 2013, or an average of 69,000 per truck. Since Deregulation, the number of registered motor carriers has grown by 68 times to more than 1.3 million carriers. NOW YOUR INSURED Protect Yourself And Your Insured From Unexpected Problems If You Understand Your Client s Operations and His Liability Exposure You Can Provide The Correct Coverage 2

4 Who Are They, What Are They Liable For and What Are They Looking To Insure The Domestic Logistics Community Who Are They A) Motor Carriers B) Freight Forwarders C) Brokers D) Warehouseman E) Logistics Providers - 3PL -4PL 3

5 EXACTLY WHAT IS EVERYONE LIABLE FOR? MOTOR CARRIER Virtual Insurer Of The Goods Strict Liability Limited Defenses Act Of God, Public Enemy, Shipper s Act, Inherent Vice, Authority Of Law 4

6 TRANSPORTATION BROKERS The term "broker" means a person, other than a motor carrier or an employee or agent of a motor carrier, that as a principal or agent sells, offers for sale, negotiates for, or holds itself out by solicitation, advertisement, or otherwise as selling, providing, or arranging for, transportation by motor carrier for compensation. 49 U.S.C THE DUCK RULE If you walk like a duck and talk like a duck then you must be a duck "Broker" means a person who, for compensation, arranges, or offers to arrange, the transportation of property by an authorized motor carrier. Motor carriers, or persons who are employees or bona fide agents of carriers, are not brokers within the meaning of this section when they arrange or offer to arrange the transportation of shipments which they are authorized to transport and which they have accepted and legally bound themselves to transport. 49 C.F.R

7 WHAT CAN HE DO WRONG? Negligence In Providing Brokerage Services Failure To Require Insurance Failure To Properly Instruct Carrier Failure To Engage Regulated Carrier Engaging A Carrier With A Limitation Of Liability Assumed Liability Under Contract Failure To Perform Due Diligence? Recent Trends Obligated To Endure The Safety Of The Shipment? Identity Theft Issues WAREHOUSEMAN Duty of Care; Contractual Limitation of Warehouseman's Liability (1) A warehouseman is liable for damages for loss of or injury to the goods caused by his failure to exercise such care in regard to them as a reasonably careful man would exercise under like circumstances but unless otherwise agreed he is not liable for damages which could not have been avoided by the exercise of such care. 6

8 STANDARD OF CARE Reasonable Care is a Factual Case By Case Determination Depends on the standards of the community do you know your client s standard where they are located? What representations are made view the promotional material PRIMARY LOSS LIABILITY Liability for the initial loss due to failure to exercise reasonable care. Examples: 1. Failure to repair roof with resultant roof damage 2. Lack of Pest Control with infestation claim 3. Unlocked doors with theft 7

9 SECONDARY LOSS LIABILITY Warehouseman liability for failure to protect and preserve property after an initial non-negligent loss. Failure to notify customer of initial non-negligent loss to permit mitigation Recovery for Sue and Labor Expenses whose responsibility? LOGISTICS PROVIDERS Try To Give The Customer Everything It Needs For Supply Chain Management. Only By Reading The Contract Can You Understand What He Is Agreeing To Be Responsible For. Contract Damages and Penalties. 8

10 CONTRACT LIABILITY Do You Have Any Idea What He Agreed to? Does It Address Standard of Liability? Does It Address Measure Of Damages? Does It Remove Common Law Defenses? Is He Providing Accessorial Services? Does The Customer Control Salvage? These and many other things can be learned from reading the contract LIABILITY OF CARRIERS/BAILEES FOR ACCESSORIAL SERVICES Failure to Procure Insurance Required Under Contract Failure to Properly Process Goods Negligent Supervision Negligent Security Completed Operations 9

11 AVAILABLE INSURANCE COVERAGES Does Your Client Want Property Coverage or Liability Coverage? All Available Coverages Are Not Created Equal LIABILITY COVERAGE Motor Truck Cargo Warehouse Legal Liability Bailee Customer Goods Errors and Omissions Contingent Legal Liability 10

12 PROPERTY COVERAGE Personal Property of Others Direct Damage Endorsement Bailee Customer s Goods Contingent Cargo Property In Transit LIABILITY TRENDS THAT MAY NOT BE COVERED Identity Theft Seal Integrity or Breach of Chain of Custody Adulterated Products Loss of Warranty Diminished Value Consequential Damages 11

13 Don t Put In The Drawer and Wait for Renewal Monitor The Account and the Changes In the Operations and the Risk Pardon Me While I Self-Promote! Central Analysis Bureau Can Help With Your Motor Carrier Risk AVOID THE POTENTIAL RISK OF AN ERROR AND OMISSION CLAIM Understand The Operations Address All Of The Exposures Determine If The Insured Wants 1 st Party or 3 rd Party Coverage Review All Contracts All Policies Are Not Created Equal Shopping Price Without understanding the Differences Can Land You in trouble Is Your Client At Risk For New Uninsured Losses? Document, Document, Document Monitor The Risk 12

14 Remember Have Fun Out There Jean Gardner, Esq. Central Analysis Bureau x 215 jgardner@cabadvantage.com Hill, Rivkins, LLP jgardner@hillrivkins.com