Insurance coverage to protect your agency for your liability for loss or damage to the property of others is provided under the warehouse legal liability coverage form. With the onslaught of increased MTMC approval of $1.25 per pound, the potential MTMC re-engineering proposal that would increase your liability further and with corporate national account clients with higher valuations it has become increasingly more important to assure you have adequate coverage and limits to protect your company in the event of a loss.

The two primary issues to review are: How does my insurance policy trigger coverage? and, Are the limits on my policy adequate for current exposures?

COVERAGE
The proper coverage for insuring customers property in your care, custody and control is a warehousemen’s legal liability coverage form or inland marine coverage form. We still
witness many agents who have an insurance agent who has insured this coverage under a property policy form by increasing the limit of personal property. Personal property coverage is meant to insure your property and buried in the policy form is a specific
exclusion that excludes personal property of others while it is in your care, custody and control. Property policy forms will not provide correct protections for your warehousemen legal liability exposure.

Even within the warehousemen’s legal liability coverage form there is a tremendous variation in the coverage provided to cover your liability amongst various insurers. The broadest and best form in the industry is one that does not tie the liability that the insurer will pay to a storage contract, bill of lading or other contract of carriage issued by you or the van line. Many insurance policies have very restrictive Insuring Agreements which limits your coverage to a given amount per pound or per article or does not provide extended coverage for types of liability assumed under contract.

Our firm’s brokers endorse the Movers Choice product for moving and storage agents nationally. This policy form is the broadest available in the industry because the Insurance Agreement does not tie liability to a storage contract, bill of lading or other contract of carriage and does limit the liability that Movers Choice will pay to a given amount per pound or per article. If the insured is liable, and the loss is not specifically excluded, Movers Choice will respond up to the policy limits. This means:

If the mover does not cut a bill of lading for a move but is liable for loss, Movers Choice will respond.

If the mover accepts full value for goods (replacement cost), but fails to obtain proper valuation, Movers Choice will respond.

If the mover accepts full responsibility (beyond negligence) for property in transit or storage Movers Choice will respond.

If the mover issues a bill of lading or storage contract containing a deductible, Movers Choice will respond.

A problem that we witness if the agent’s insurer ties coverage to the bill of lading is when an SIT shipment has converted to permanent storage and you have not converted the warehouse receipt or had the shipper sign for their valuation under your liability, and your insure denies coverage because a receipt or valuation was not provided to trigger coverage. Most van lines provides coverage for shipments under SIT, however, when an SIT shipment converts the permanent storage warehouseman is responsible for coverage after the conversion date.

At this point, the liability of the van line terminates. The van line sends notice to the shipper and carbons the agent 30 days prior to the conversion date. At this time the agent is responsible for issuing a warehouse receipt to the shipper. If your insurance policy ties coverage to the warehouse receipt and one fails to be issued then you will be uninsured for a claim. If the shipper then claims they wanted full replacement cost (and that’s what they had under SIT) you could be held liability for that full replacement cost value for an uninsured loss. this is just one example where the Movers Choice program would protect the agent for this loss over more restrictive insurance policies. Movers Choice would have responded to this claim at full replacement cost coverage.


LIMITS
Once you are assured that you have placed a warehouseman’s legal liability form that is broad in coverage, care must be taken to assure that you have adequate limits to protect your liability in the event of a large loss. MTMC is reapproving warehouses currently with the $1.25 per pound valuation, even if your warehouse has not been through an

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inspection you are liable at this new limit. To calculate the limit you require complete the following.

1. How many pounds of $.60 valuation do we have? ____# of pounds x $.60 (if you don’t’ know how many pounds you have, how many vaults do you have? ____ # of vaults x 1250 pounds x $.60 per pound).

2. How many pounds of declared value do we have? _____ # of pounds x $1.25

3. How many pounds of non temp Government storage do we have? ____ # of pounds x $1.25.

4. How many pounds of replacement cost coverage do we have: ____ # of pounds x $5.00 per pound.

5. How many customers have selected an actual valuation and what is the total of all of those valuations? $____________total.

6. What is the seasonal maximum that I may have over the policy year and cushion you would feel comfortable with excess of the above limits? $___________

Total #1 - #6

Once you complete this exercise you can be assured that the limit of liability you have is adequate to protect your company.

For more information on warehousemen’s legal liability and how to protect your company, Lisa Paul can be reached at Paul Hanson Partners Insurance Specialty Solutions at (800) 852-1968.