What You Sign and Haul
A The broker should not have tendered you a load containing clothes if it knew you did not have cargo coverage for these items. Your broker confirms he holds contingent cargo insurance, but it refuses to file a claim because it will affect his insurance rate. The broker argues that your indemnity includes all items handled regardless of your policy limitations and whether or not it accepted your policy under the contract insurance provisions.
The situation may be unfair, but owing to the language you signed, you will have an uphill legal battle getting your money back.
All too frequently, brokers and other intermediaries accept virtually unlimited cargo liability as an incentive for shippers to do business with them. By clever contracting, they push full liability onto their subcontracting carriers for unadjusted claims. Brokers keep their shippers happy, meanwhile, by deducting the full dollar value of each claim from carriers at no cost to themselves.
In defense of brokers and other intermediaries, the cargo insurance crisis and the gaping holes in coverage encourages this practice. Shippers want prompt and adequate claims resolution and get it by having brokers take responsibility for the liability.
If you are thinking about entering into long-term relationships with brokers for a wide variety of commodities, my advice is simple: Watch what you sign and watch what you haul. For example:
If you dont have theft coverage for clothes and electronics, for example, provide in your contract that you will not handle or be tendered those commodities.
If the broker insists on being named as an additional insured on your policy, insist upon a provision that states that your maximum exposure for loss or damage is limited to the coverage afforded by the policy.
If, as in this case, the broker is purchasing excess coverage, then consider asking to be named as an additional insured on that policy as well. (Often, if the shipper or brokers insurer pays off on the claim, the insurer will sue you if you dont otherwise address the issue.)