4 Ways to Increase Your Freight Claim Amount - All While Mitigating Your Losses
When you file a freight claim, you are legally required to take reasonable measures to mitigate the losses – and any carrier is quick to remind you of that.
But, make sure that your reasonable measures are just that – reasonable. And while you’re at it, make sure that you get paid for the expenses that you incur to mitigate these losses.
This freight claim is costing you money – so while you’re mitigating the freight claim damages to the carrier, make sure you get reimbursed for expenses incurred while doing so. (Click here for a full filing instructions.)
Mitigation: Claim Only the Damaged Portion of the Shipment
Add to Freight Claim: Labor Costs
Depending on the product, you may need to sort through the damaged shipment for individual products that are undamaged. You may also need to test the products to see if they are still in usable condition.
Did you spend a considerable amount of time sorting or testing the damaged products? If so, it is reasonable to claim your labor costs when filing your freight claim.
Mitigation: Repair, Rather than Replace
Add to Freight Claim: All Repair Costs Involved
Carriers typically expect you to repair a product rather than making a full replacement. In this case, they would reimburse you for your repair costs.
Keep track of all of the costs associated with the repair. Parts, labor, and shipping costs for parts ordered in are all fair game.
Mitigation: Salvage When Possible
Add to Freight Claim: Full Value of Shipments That Cannot be Salvaged
Some types of products should be written off entirely, even though some of the product appears to be salvageable. Food, drugs, or other products for human consumption are treated differently under the law than other product damages.
For example, Section 342(a)(4) of the Federal Food, Drug and Cosmetic Act - 21 USC states that “A food shall be deemed to be adulterated ... if it has been prepared, packed, or held in insanitary conditions whereby it may become contaminated with filth, or whereby it may have been rendered injurious to health.”
To provide a practical example, in Atlantic Mut. Ins. Co. v. CSX Lines, L.L.C., 432 F.3d 428
(2nd Cir. 2005), a container of concentrate that would be used to make Pepsi spent part of its trip submerged in seawater. Despite tests showing that seawater had probably not penetrated the container, the quality manager could not be sure that the container had not been contaminated.
Due to this and other evidence that showed a chance of contamination, the court deemed that Pepsi could not use the product without fear of contamination.
The definition of “insanitary conditions” can cover a wide variety of instances to which your
product may have been subjected. If product seals have been broken, if it has been subjected to insanity conditions, or if it was in any situation where it could have been contaminated (whether or not the product actually was), then you should destroy the shipment and claim the full value of the goods.
Mitigation: Salvage When Reasonable
Add to Freight Claim: The Full Value of Shipments that Aren’t Reasonable to Salvage!
Remember, you are expected to mitigate the losses when reasonable. For example, in their March 2012 digest, Transportation & Logistics Council Inc. advised one shipper to claim the value of an entire palette of bottled beverages, although some individual bottles were undamaged. In addition to the contamination risks discussed above, it would have been unreasonable to salvage the product. This is because the bottles were to be sold to a retailer in bulk units; while some individual bottles were intact, the bulk packages were not, and would therefore be unfit for sale. If your product is now worthless to any potential buyers, your freight claim should reflect that.
Update: As one of our readers pointed out, the courts have ruled that the carrier cannot claim the salvaged shipment or a salvage allowance if the claimant finds that no salvage value exists. Therefore, if your shipment has not retained any salvage value, you should be able to claim the full value of the shipment.
Disclaimer: The information on this blog is for personal reference only. This is not official legal advice. We accept no responsibility for consequences resulting from the use of this information. For official legal advice, talk to a certified professional.