THE PLACEBO EFFECT
I want to talk about cargo insurance for a while. Specifically, requests for endorsements you get from shippers that you really don’t need. The scenario is typical. You’re waiting to get loaded and the shipper asks for a certificate of insurance (COI) from your agent or insurance company proving you have the necessary cargo coverage. Oh, by the way, the COI needs to show the shipper is additional insured on your policy and that they are also a loss payee in the event, God forbid, there is a loss. You need to get moving, you have a schedule to keep, so you contact your agent who says “I don’t know. Some insurance companies don’t like doing that. Let me make a call and I’ll get back to you.” Tic, toc, tic, toc…Your phone rings. Your agent says he’ll have to request that your policy be endorsed…”send me the request from the shipper so I can forward it to the company.” You think, this is getting to be a hassle. All I need is a COI. I’ll soon be loaded and they won’t let me leave without one. Why the headache?
Your cargo policy is a form of liability insurance. It covers your legal obligation to the owner of the goods you haul while they are in your care, custody and control. There is no need for the owner to be additional insured or loss payee. They already have the required protection because that’s how cargo insurance works. In fact, endorsing the policy to do what it already does may result in confusion over what the policy actually says. Courts don’t like confusion. It tends to render otherwise clear policy language ambiguous. Insurance companies don’t like that because courts tend to rule against insurance companies when policy language is unclear. This may, or may not happen depending on a lot of factors. For example, freight brokers sometimes want to be either an additional insured or a loss payee, or both. This is really a stretch because first, they don’t own the goods you are hauling and second, once you take possession of the load, the broker has nothing more to do with it.
Still, there you sit in your truck, loaded but unable to move because the shipper needs two boxes checked off his checklist before you can go. So, Eastern Atlantic does what most other insurance companies who value their customers’ business do; we give in and issue two endorsements that don’t actually do anything. They are like the pills in an experimental medicine trial. One is the real pill while the other is a placebo. The people in the trial don’t know which one they get, but are told how good they are. Some people who get the placebo respond the same as those who take the real medicine. The shippers and brokers who insist on these endorsements are taking a placebo. The things we do to make them happy…
If you want to learn more about cargo coverage, or other insurance offered by Eastern Atlantic insurance Company please visit us on the web at https://easternatlanticins.com/find-an-agent/.
