Under Incoterms or other terms of sale, the seller takes out insurance for the benefit of the buyer. For other insurance claims (excluding the seller making a claim for the buyer), you should follow the guidelines below.
In the event of damage or loss to goods in transit, the consignee (or buyer) should follow these guidelines:
- carry out a thorough inspection of all the goods and note damaged or missing items
- take any steps necessary to minimise or prevent further damage
- make a note of any expenses incurred in carrying out the above for the insurer to reimburse
- keep as evidence the shipping container, packing materials, damaged merchandise and shipping documents
- contact the insurer (or broker if appropriate) so that a survey of damage can be arranged
The consignee should then file a letter of claim against the freight forwarder or carrier - this should include:
- its company name and (if applicable) voyage or flight number
- sea waybill or bill of lading or air waybill number (if applicable)
- date of arrival at destination
- description of cargo
- container numbers
- the amount being claimed
At the same time, the consignee should send full details of the claim to the insurer (through the seller, if you're using the Incoterms Cost, Insurance and Freight (CIF) or Carriage and Insurance Paid To (CIP)) - this should include:
- a commercial invoice
- insurance policy details and certificate number
- bill of lading or air waybill number (as applicable)
- standard terms and conditions of the carrier/forwarder
- any correspondence with the carrier/forwarder concerning loss or damage
- survey report
A similar procedure should be followed by the seller if, under the terms of sale, they carried the risk at the time of loss or damage.
If your insurers refuse to pay a claim when a covered cargo loss occurs, you can pursue claims against both them and/or the carrier/forwarder. If you pursue litigation on two fronts, costs incurred in the action against the carrier/forwarder are recoverable if the other action is successful. This is because the costs are seen as a direct result of the insurance company's breach of contract.