With the power outages and massive flooding in the wake of Sandy, it is imperative that manufacturers, shippers, consignees and insurers quickly form a team of professionals to assist with mitigating or limiting damage and salvaging cargo decimated by the Superstorm.
Power outages for even short durations can lead to significant damage to perishable goods such as frozen and refrigerated foods. They also can lead to spoilage of less conventional cargo such as vaccines, which require precise temperature controls. The slightest fluctuations in temperature or humidity can render pharmaceutical products unfit for human consumption. When power is lost, the clock is ticking – mitigation efforts must commence quickly. The sooner surveyors and salvors can inspect perishable cargo, the higher the likelihood that losses can be avoided or minimized. A network of experienced surveyors, salvors and logistics professionals can make the difference between saving a business and an inevitable bankruptcy. A team of experts with their logistics network can assist in minimizing risk and moving goods to safety before it is too late.
Flooding and Water Damage
Exposure to fresh and salt water can quickly destroy cargo such as metals, bulk items, produce, grains, electronics and fabrics. Rust and mold contaminate commodities with unrelenting speed, leaving little time for decision making. While some losses are recoverable – for example, certain cargo items can be cleaned, repackaged and sold – once mold and mildew set in, vermin infest, or metals oxidize and corrode, it is virtually impossible to undo the damage.
By acting quickly with a team of experienced cargo professionals, affected manufacturers, shippers, consignees and insurers can lessen the burdens that these losses place on their businesses. Losses may be unavoidable, but they can be minimized through the rapid response of experienced and connected professionals.
There are many facts and variables to be considered when evaluating whether insurance policies cover cargo losses. For instance, some policies expressly exclude certain cargos such as munitions, antiques or currency. Others exclude losses caused by fire, lightning, explosion, and the interruption or failure of the public power supply. Other common exclusions include windstorms, hail, floods and earthquakes. Experienced professionals can offer invaluable assistance in navigating and interpreting the applicable Cargo Clauses and the amendments and endorsements specific to a policy.
After Sandy, inevitable delays caused by port closures, gas shortages, impassible routes and numerous other transportation and logistics issues are occurring at the most inopportune time – just before the holiday season. It has become increasingly difficult for stores to stock their shelves in the wake of the storm. For many, the timing of Sandy has narrowed the window to accomplish year-end goals. Businesses are rushing to meet the needs of their vendors and expedited shipping costs are cutting into already narrow profit margins. However, alternative shipping arrangements can be negotiated and missed deadlines and late deliveries can be offset by credit risk insurance.
Finally, when losses occur and insurers indemnify, there are windows of opportunity to hold an accountable party liable. Subrogated recovery actions are useful in recouping losses. In this regard, it is of the utmost importance to react quickly and preserve physical and electronic evidence. Litigation hold procedures should be implemented while demands are made, investigations are performed and settlements are explored. If litigation is necessary, statutes of limitations must be followed.
In sum, it is critical that clients act quickly to address the issues arising from cargo damaged by the Superstorm. Wilson Elser’s Insurance & Reinsurance Coverage practice is experienced in evaluating these kinds of claims and available to assist.