1 in 10 Clothing Insurance Claims face non

Research from insurance broker Aon has found that up to one in ten claims fall outside standard cargo policies – meaning companies’ balance sheets could take a hit for the loss or damage of goods at the time when credit is scarce.

The top three most common gaps in cover for clothing companies in a standard cargo insurance policy include:

1. no brand protection in the event of damaged goods having a potential reduced or salvage value. Ordinarily insurers would deduct any reduced or salvage value from a claims settlement. However, where this can harm a brand’s reputation, a cargo owner may elect to have the goods destroyed and seek payment of the full invoice value
2. payment of the purchase invoice value, rather than the final sales contract value in the event of loss
3. cover for damaged items only, rather than an entire consignment in the event of
damage/soiling by stowaways or other ‘unauthorised occupants’ in a container or trailer. 

Aon is encouraging cargo owners to check their policies for potential gaps in cover. In response, Aon’s marine cargo policy has extensions and additions to cover common yet frequently excluded claims from the standard wordings. For example, cargo owners automatically obtain cover when reporting a claim up to 120 days after delivery, where damage is not apparent upon initial inspection of the goods. Also, companies can benefit from additions such as securing a share of the money recovered by their insurer from a third party. 

In addition to securing broad insurance cover, cargo owners should also focus on improving their risk management and reporting procedures to help prevent these incidents in the first place and ensure the successful resolution of claims. This includes:

– putting in checks for correct packaging for you and your suppliers;
– holding your carriers liable in writing, without delay, for loss/damage in transit;
– noting damage on delivery notes on arrival to evidence damage in transit. 

 

Guy Warburton, senior claims technician in Aon’s marine team, commented: “Tough economic times mean that cargo owners must ensure they have the best possible chance of claims being settled in the event of a loss. Furthermore, a big claim could affect your premiums going forward if you have a poor claims history and the insurers do not see evidence of a good risk management programme.”