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ins. co responsibility for destruction of freight

Discussion in 'Insurance' started by Michael Ludwig, Mar 7, 2014.

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  1. Michael Ludwig

    Michael Ludwig Well-Known Member

    What you have here is a real dog's breakfast. Responsibility for destruction would be a policy endorsement between the carrier and his insurer. It could be either, or it could be both. That is something that you as a broker would have no knowledge of unless you had a copy of the policy and the knowhow to read and understand what a policy actually says. Any more it takes a Philadelphia lawyer to read one.
    On the other hand, the carrier is not/was not at all obliged to destroy the product. The very moment the product was rejected and an intent to claim was filed, that product became the sole property of the carrier, and he has every right to salvage the goods. Under penalty of law, the owner of the goods is required to assist the carrier in affecting that salvage for the highest possible return. Then the issue of branded product comes into play. If the owner of the goods does not want his/her labelled goods available to the public, they have two options ... 1) request that their label be removed from the product and returned to them prior to salvage. The owner of the goods would have to pay for the removal of the labels. Or 2) the owner of the goods could simply state that no salvage on the goods is available to the carrier which essentially negates the claim altogether. The one caveat to this would be if the carrier signed a specific document detailing that in the event of partial or complete loss, product salvage is not available to the carrier. However, no carrier would be able to sign such a document without the express consent of their insurers, and we all know insurance companies do not like to give away their money, so that's pretty much a non-starter from the get-go. Were a carrier to sign such a document without the insurance company's consent, the insurance company would simply disallow the claim leaving the complete cost to the carrier.

    To solve the problem of drivers"forgetting" to stop at meat inspection, you simply call an all-drivers meeting and take the first driver that did it out to the midle of the parking lot and put a bullet behind his ear. This instills quantative positive memory retention in the rest of the drivers. Of course I am joking here, but USFDA, USAG, and CFIA have absolutely no sense of humour or irony when this happens. Transbrkr is right ... you have to hold hands. There's no other way around it.
  2. transbrkr

    transbrkr Member

    Thank you very much for the information.

    We have been doing these shipments for about 10 years, maybe 8 per year. We have never had a problem at Detroit, but this is the second time at Champlain, NY. The last time (a different carrier) the driver forgot to stop, and dyas later he had to go back to NJ, pick up the load and bring it back to Champlain, NY, and then redeliver. No problem, the carrier was very professional in recognizing that it was his fault, and he absorbed all costs related to that.
    This time however, there is a lot more $$ involved. Im assuming the carrier's insurance should cover this under "Errors and Omissions"?

    As far as I know, there was no documentation to sign at the shipper regarding penalties if they didnt stop at USDA, but they do get a copy of the USDA form (9540) which expires within 72 hours, and all the instructions are clear from us on stopping there, and to call and advise of arrival. (another point is that we listed the time frame that they are open and the driver passed through at 1am..without calling them beforehand as instructed)

    And lesson learned...we will now hold their hands, check and DOUBLE check every step of the way!....and advise the shipper to have the driver sign documents.

    Will certainly let you know how it all turns out in the end..

  3. transbrkr

    transbrkr Member

  4. MikeJr

    MikeJr Moderator Staff Member

    Meat Inspection occurs after you are clear of the border.

    There could be other places, but fairly popular:
    Detroit MI - Santemp Company
    Niagara Falls NY - Piatkowski Meats

    MOST of the exporters that require this inspection require the driver picking up to sign (on behalf of the carrier) that the shipment will stop at this location and list the penalties for not doing so: return to the border at carrier expense, etc...

    Talk to your shipper and see if they have any documentation to assist you.
    Several times we have had to ask carriers to turn around and go back to these locations as the driver forgot to stop. Of course we discuss all the parameters of similar shipments at the time of booking and even offer a lengthy and detailed instruction sheet for border clearance. It's also handy to offer your carrier a MAP on where exactly they need to go.

    It's difficult in this situation, you will learn from this one and prevent similar occurrences. We just call meat inspection at the moment that the carrier advises they are there to confirm the truck is on site and being inspected. We also learned from having to ask carriers to 'go back' to inspection.

    Let us know how this one turns out, keep well.
  5. transbrkr

    transbrkr Member

    I have a simlar situation:
    Transport was supposed to stop at USDA Meat Inspection...and didnt. It was written all over the documents and its not the first time they did it for us (we are the broker).
    25 days later...meat inspection asks whatever happened to the shipment, they never saw it.
    We called the transport...the driver "forgot" to stop at Meat Inspection (Dont ask HOW he could get through doesnt make sense..)
    Anyway, at first we thought it could be brought back to the border, but USDA has decided they want the shipment destroyed. Value $15,000.
    Im assuming the transport company is liable for this, because it was their error?
  6. lowmiler88

    lowmiler88 Site Supporter

    Ultimately it is whoever sold the product because they are tracking the lot #, date code etc and it is there responsibility till it is actually delivered to the DC for whoever the retailer is or direct to store. Now that being said if they are not tracking the product because the government does not require this (highly unlikely with food) then it is up to the seller whether or not they care what happens to the product and at that point then the trucking company should be able to keep the product. We have controlled (tracked) product and other product that is not controlled if a carrier damages the uncontrolled product they own it and can take it home if they like, they just cannot sell it.
  7. How would the shipper be responsible at this point ? the freight has been at a warehouse 2700 miles away ( the carriers choice of warehouse ) for 4 months now waiting for the claim to finalise. I would assume then with the insurance company telling our carrier to destroy the freight , they would be responsible for doing this ?
  8. lowmiler88

    lowmiler88 Site Supporter

    it is whoever sold the product responsibility to ensure it is destroyed as far as all the costs that would be up to the insurance company to deal with or whoever did the damage if they did not want the insurance company involved. Make sure there is a proper Certificate of Destruction usually whoever does waste removal for the warehouse can provide this service.
  9. we have a carrier that damaged freight. The commodity is food product, so it does need to be destroyed.

    Is it the responsibility of the carrier or the insurance company to organize and pay for the destruction of the freight ( plus the storage bill where the freight has been held for 3 months while the claim went through )

    The ins. company is telling our carrier they must destroy it and pay for everything - but this doesn't seem correct to me.

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