Following these six tips can help protect your business from damaged freight claims denials.
1. Clearly indicate all damage on the delivery receipt and/or bill of lading
- Note all damages - Indicate all freight damage on the bill of lading not just one item. A well-documented receipt may result in a reduced claim.
- Be specific - Describe the type and severity of the damage (e.g. 7 damaged engines, 8 boxes with water damage, and dents in plates due to freight shifting). Also note if the damage will make the product unusable to any purchaser along the supply chain.
- "Subject to Inspection" is NOT a valid notation - If there are concerns about unseen damage, notate "Damaged" and conduct a thorough inspection as soon as possible.
- Refuse the freight if necessary - If the driver will not let you sign or check for damages, refuse the freight. Make sure that you are aware of the product disposition and that the shipper is notified of the issue.
2. Notify the transportation provider
Follow up directly with the transportation provider. If damages are noticed after the delivery, the transportation provider must be notified within 15 days. Document how the product was handled during the intervening period and why the damage was not identified at the time of delivery, the claim will more likely be denied if the transportation provider is notified of damage after 15 days of delivery.
3. Immediately prepare a claim file with all relevant information
It is best to have a complete document set when filing a freight claim, including:
- Original Bill of Lading
- Completed freight claim form
- Product invoice/sales invoice
- Proof of delivery/delivery receipt
- Carrier freight bill
- Repair cost invoice (if applicable)
- Detailed description of loss or damage
4. Dispensation of damaged freight
The damaged freight should be available for inspection or pickup if the delivery was completed. The receiver should hold the freight until the claim is resolved or there is an agreement to dispose of the product. All stakeholders must agree to this process, including the cargo insurance carrier.
- The consignee can accept the freight and sign the POD as damaged/short and hold the freight until the freight claim is resolved.
- The consignee can refuse the freight and have it shipped back to the shipper where the shipper will hold the freight until the freight claim is resolved.
- The transportation provider will usually not hold onto the damaged freight during the freight claims process. If they do, storage charges will often accrue if they cannot return the product to the shipper or if there is no timely dispensation.
5. Get a Replacement Order
Transportation providers know that most shipments are time sensitive and consignees cannot wait for the claim to be complete before receiving a replacement order. In many cases if you receive a replacement order prior to initiating the freight claim, the new freight charges can be included in the claim. This is especially important if the shipment needs to be expedited.
6. If denied, know your options
There are many options a freight claimant has after a freight claim is declined:
- Submit additional documents - Show that your claim is legitimate and that the consignee is prepared to fight the denial.
- Engage your vendor/shipper - They want satisfied customers and may have additional documentation to prove the claim or influence with the transportation provider.
- Work with the transportation provider's sales department - They will often overrule the claims department if the shipper or consignee is a large customer.
- Contact a regulatory agency - There are regulations in place regarding cargo claims. It is important that the correct agencies are engaged.
- Go to court - Transportation providers and their cargo insurance carriers loathe litigation and will often settle prior to court.