broker loss and damage claims

Transportation brokers frequently find themselves in tough spots. They are put there by their shippers who sometimes seemingly believe that they are entitled to transportation services that are risk free. The scenario is pretty simple and transparent: cargo gets damaged, and the shipper basically sends a message to the broker to cover the shipper's loss, even though the broker did not own the transportation equipment and had no control over the carrier's operations. The shipper knows that it can probably get another broker who will agree to cover its losses, the broker knows that, and so the broker makes good on the loss, through a selection of various methods.

The broker typically has a contract with the carrier. If the cargo is damaged, the broker will claim that the carrier has breached its agreement with the broker. The carrier may or may not agree, which is an important point to get clarified. Frequently the more important question concerns whether the carrier has the wherewithal to pay the damage. Carriers have cargo insurance to cover loss and damage claims, but their insurance companies will frequently deny the claim based upon one or more of the numerous exceptions to coverage contained in the insurance policy.

So you've got a shipper waiting to get paid or otherwise compensated by the broker, and a broker which is waiting to get paid by the carrier, and a carrier which is waiting to get its insurance company to accept and pay the claim. That's why brokers hire carriers who have cargo insurance damage.

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