Freight forwarder's liability consists of two parts:
- responsibility for freight forwarder's own mistakes;
- responsibility for damage caused by subcontractors.
The customer (or his insurance company) often claims damages directly from the forwarder because they are contracted: this is much easier than looking for the actual culprit. In addition, in case of domestic transportation, the freight forwarder has unlimited financial responsibility for the cargo accepted for transportation. It is not uncommon for a freight forwarder who does not have sufficient funds to compensate for tens or hundreds of thousands of dollars, which may be impossible to achieve and lead to bankruptcy. The client runs the risk of having difficulty compensating for damages and losing a reliable partner.
For forwarders who value their reputation and stable position in the market it is important to insure their liability in case of cargo loss of or damage, as well as other emergency situations that may occur during transportation. There are three main aspects to the advisability of liability insurance for freight forwarders:
- financial - protection of forwarder's own working capital.
- Image - creating the image of a sustainable, financially stable company, ready to take responsibility for the transportation of expensive cargoes.
- service - access to consulting, legal, survey, agency and other resources of the insurer.
Liability insurance policy that covers the majority of risks and has no pitfalls is an expensive product. Its cost can be estimated in millions of rubles a year, depending on the volume and type of transportation carried out by the forwarder.