How to Handle A Freight Claim

Freight claims are an unpleasant reality in the trucking industry. From improperly loaded freight to accidents, there are several reasons why a consignee may come after you to reclaim their cargo’s monetary loss. Prepare yourself for this eventuality and know your rights.

Carmack Amendment

In 1935, Congress passed the Carmack Amendment which states how to handle freight claims for interstate shipments. According to this law, the consignee has 9 months to submit a claim against the carrier. The carrier is then liable for the cargo loss unless they can prove the freight was damaged in one of the following ways:

  • Act of God – Such as a force of nature

  • Act of the public enemy – Such as a terrorist attack or riot

  • Act or Default of the Shipper – Freight improperly loaded or damaged by the shipper

  • Public authority – The government seizes the freight

  • The inherent vice or nature of the goods –The freight is time sensitive, like produce or newspapers

Contact Your Insurance Agent

Once you receive a freight claim, it’s time to go into action. Ignoring it won’t make it go away. In fact, ignoring it is the same thing as admitting fault. At this point you have 120 days to pay the full claim, compromise with the consignee, or refute the claim. Contact your insurance agent to let them know what is going on. You also want to verify that your policy covers the charges, in case things don’t go your way.

Review Your Freight Broker Agreement

Go over your Freight Broker/Carrier Agreement as well. Sometimes there is a clause stating that the Freight Broker has the right to offset claims on your open receivables. This means if you are hit with a $10,000 claim and you have $30,000 in open invoices with the Broker, the Broker will keep $10,000 out of your invoices to pay the claim. Reviewing your Freight Broker Agreement gives you a better understanding of what your debtors will do if you need to pay part, or all, of the claim.

Request Documentation

However, before we get to the payout, you still have the opportunity to prove the damaged freight isn’t your fault. To get started building your case, you’ll want to request the load documentation from the consignee. They had to collect specific documents in order to submit the freight claim against you. Generally, the list includes the Bill of Lading, Proof of Delivery, original invoice, invoice of damages, and petition of payment. Compare their documents to yours and look for inconsistencies.

Pay attention to the claim’s date. Normally, the consignee need to submit claims up to 9 months after receiving the damaged freight. If they submit the claim later than that, you may have some legal wiggle room.