March 28, 2014 | Industry Insights

Errors & Omissions Insurance for Freight Forwarders

Share This:

What is Errors & Omissions Insurance?

As a freight forwarder, you serve as the intermediary between your clients and various transportation services. You send products from one destination to another, which often can involve many carriers (air freighters, trucking companies, rail, and ocean liners) and a laundry list of requirements and regulations throughout the entire process. Clients depend on your experience and expertise to arrange for custom clearance when crossing frontiers, negotiate the best routes and deals, arrange for proper packaging of goods, and to handle all the daunting details and documentation that come with transporting product. Well-ordered and accurate documents are essential for freight forwarders and are required for a successful export order and receipt of payment for delivery. You need to know exactly what documents are required and when. You also guarantee that the products will get to the destination as per the agreement and in good condition.

Yet things do go wrong, which is not at all surprising considering the multitude of things that a freight forwarder is typically tasked with doing. This can include having incomplete shipping documents, improperly labeled or packaged items, misdirected freight, non-receipt of advanced documentation, failure to insure cargo when instructed to do so, among many other issues. One example that we give to illustrate how things can go wrong involves a freight forwarder that arranged for the shipment of textiles from New York to Israel. The freight forwarder was advised that the shipment was to go directly to Israel with no trans-shipments or partial shipments. The goods, however, ended up being trans-shipped through both London and Rotterdam, showing up at the final destination three weeks past the agreed-upon day. This delay caused the order to be cancelled and the shipper lost the textile sale. The freight forwarder was sued for loss of market.

What’s more, because of the inherent complexity of the supply chain, increased regulation and greater demands and expectations from shippers, claims against freight forwarders alleging damages due to an error or mistake are becoming more likely. Even if an allegation is meritless, the cost of defending against such claims can be significant.

Why Your Business Should Have E&O Insurance

Errors and Omissions (E&O) insurance is specifically designed for domestic and international freight forwarders to address the type of professional liability exposures you face in your line of work. One of the most important investments in protecting your business, an E&O policy will protect you from claims that your client may file against your company should you or one of your employees make a mistake which causes your client to suffer a financial loss. The coverage is designed to pay for legal liability to customers for negligent acts, errors or omissions and defense costs.

One particular area vulnerable to costly E&O claims involves improper procurement of marine cargo insurance for your clients. When a customer’s cargo is lost or damaged in transport, he typically expects the loss to be covered by marine cargo insurance about which you had advised him. If the loss is excluded or not covered under the scope of the policy, the customer will look to you to the cover loss. The client can hold you responsible for failing to point out the exclusion or limited coverage and the fact that more expansive or alternative insurance (typically more expensive) was available to close the gap. It’s important, therefore, to not only explain the type of marine cargo insurance available to your client, including any and all exclusions (along with documenting your communication), but also to work with a professional marine insurer that can offer additional solutions for your customers while protecting your firm with E&O insurance in the event of a dispute or allegation.

At Roanoke Trade, we spent 20 years refining and enhancing our E&O program to meet the specific needs of the professionals who comprise the transportation industry. We can customize your freight forwarder E&O program based on your operations to provide the broad protection required to help stem financial losses associated with the defense and settlement of actual or alleged errors or omissions claims and litigation. We can also provide you with a competitively priced Shippers Interest Policy that allows you to offer your clients the insurance they require. This coverage directly insures your client’s cargo against physical loss or damage, providing them a better option than solely relying on the carrier’s liability insurance.

Share This:

Related


How Vulnerable is Your Company to an Attack by Cyber Criminals?

As featured in Forward Magazine At the AirCargo 2022 conference, a question was posed to the audience: Who has cyber insurance? Only 20% of the audience raised their hands! This is concerning because cyber-related crime is at an all-time high and still growing fast. The current data around cybercrime is alarming. By April of 2021, […]

Cyber Security, Industry Insights

2024 NCBFAA Scholarship & Application Announcement

Roanoke Insurance Group is delighted to once again sponsor  a $5,000 scholarship to students intending to join the trade industry. The National Customs Broker and Forwarder Association of America (NCBFAA) offers this $5,000 scholarship award yearly and will be presented to the winner at the NCBFAA annual conference in April 2024. The topic for this […]

Events, Industry Insights

Roanoke Appoints a New Regional Vice President and Head of Sales

Roanoke has appointed two key leaders to new roles, effective November 1, 2023. Please join us in congratulating Patrice Lafayette for accepting the position of Regional Vice President, Western Region, and Grant Goldsmith, who has accepted a position as Head of Sales. Patrice has been a steadfast leader of Roanoke’s Western Region for more than […]

Industry Insights

Sign up for our latest articles and events.

Roanoke is the leading provider of insurance and surety solutions for transportation and logistics providers. In fact, we are recognized as the most reliable source for U.S. customs bonds.

Contact

If you have any questions or need help, feel free to contact with our team.

800-762-6653

US CORPORATE HEADQUARTERS

1501 E. Woodfield Road

Suite 400W

Schaumburg, IL 60173


CANADA CORPORATE HEADQUARTERS

390 Bay Street

Munich Re Centre, 22nd Floor

Toronto, ON M5H 2Y2

Solutions that Go the Distance.

© 2024 Roanoke Insurance Group Inc. A Munich Re company

Better Business Bureau logoCoverholder at Lloyd's logo