I have recently been involved in considerable insurance related litigation for several logistics clients. Additionally, I have written an article for The Transportation Lawyer on compelling cargo insurance coverage, and prepared a presentation for the Transportation Law Institute, on the issues of cargo/casualty insurance coverage and the ever escalating issues of shippers attempting to pass along indemnity obligations to their transportation/logistics services provider. All of this work convinces me that these issues are escalating in importance to all of my clients, and logistics providers in general. It should be noted that these issues are becoming much more complex than at any time in my professional career. Part of the reasons for this increase in complexity include:
- More exposure to liability for actions of a logistics company due to the courts belatedly catching up with the nature of third-party transactions and assigning broader responsibilities than the law has recognized for the past fifty years.
- Shippers attempting to pass along risk factors that have not heretofore been the responsibility of third parties or carriers, and but for a contractual agreement would not be the responsibility of the third party.
- Insurance companies offering more indemnity/defense products to third parties than ever before…some of which are not yet tested and not of predictable certainty even with their underwriters. (That is not to imply that these products are not very worthwhile, so long as you work closely with your agent in tailoring them and your counsel in reviewing them.)
- Misunderstanding among all parties to a typical logistics project as to responsibility for associated risks, and attempting to deal with those risks by sometimes conflicting provisions as to indemnity clauses, subrogation and protections afforded by various methods to include “insurance certificates”, “insured”, “additional insured” and “additional named insured”.
- Logistics companies failing to impose the same discipline toward risk management review and contracting as they might for software or EBITDA factors.
- AND BY FAR, the worst of these factors is for any party to a logistics project to be put to sleep by the phrase, “this is just our standard contract”, …said the spider to the fly.
In the interest of brevity I will not attempt to discuss these issues here, but for the admonition that “an ounce of prevention is worth a pound of cure”. I will follow this email with a more detailed discussion of some of the distinctions recently discussed at the Transportation Law Institute, and I will forward to each of you my article on compelling cargo claims coverage, when published in the December issue of The Transportation Lawyer.