By Richard Kamppari Baker, Claims Director, World Insurance
If you have a claim under your cargo or liability insurance, salvage can always be a major headache for the forwarder.
When an accident happens, the merchant is upset. His cargo is damaged, but there also may be other implications to the supply chain. Often, he will prefer to abandon the cargo and re-order a new shipment. Such behaviour can be extremely costly for both him and even the forwarder.
The forwarder must make sure they try to get the cargo to destination before arranging any survey or inspection. If an incident happened in the port and the cargo is deemed damaged, the merchant will most likely not want his cargo. He may not want to spend time salvaging and believes this is the cargo insurer’s responsibility under subrogation.
This is not the case. The duty to mitigate/salvage is on the merchant – not the insurer. Subrogation is only after the insurers have settled the case. This misunderstanding may result in expensive storage/demurrage/disposal/labour charges that insurers are unlikely to compensate. Therefore, we would always recommend ensuring the cargo arrives at destination before any survey is undertaken.
Any delay may also prejudice the claim, especially if it involves perishables. The insurer’s surveyor may help, but if the merchant refuses to cooperate, this will be a total loss in a very short time. Whilst insurers will not override a decision by the health department to condemn cargo, often the discretion is on the insurer to decide. Perishables might be condemned for human consumption, but they will have a secondary market under animal feed, and this is where complications happen. There is still salvage, and it is not a total loss.
Ultimately, speedy action on finding salvage buyers will result in the claim being paid faster with less costs. It is also common for the merchant to make a salvage offer for cargo that might fall outside its original market, but they still have a use. This can make adjusting the claim even quicker and simpler.
Salvage is the number one reason for delay on claims adjusting, so it is imperative to involve the broker as soon as a dispute arises.
For questions or more information, please contact our claims specialist, Richard Kamppari Baker, at richard@worldinsuranceagency.com.