Concealed Damage Claims

By Jim Bramlett - May 24, 2012 - No Comments

A client asked for my help after a claim was denied due to concealed damage.  I researched the rules and regulations regarding concealed damage and there are some important nuances for those who have to deal with freight claims.  Concealed damage, by its very name, is when damage occurs to a shipment and there are no outward visible signs that damage has occurred.  In other words, the boxes (if the product is in a box) are not torn, dented or otherwise altered to suggest damage.   Obviously this can apply to crates, drums, or any other packaging type material.

The biggest difference with normal loss and damage claims and concealed damage claims is that the claimant has 15 days in which to file a concealed damage claim and 9 months on other claims.  The reason for that is that the longer the claimant takes to file a claim, the more susceptible the product is to damage while in the claimant’s control.  Also, the burden of proof rests with the claimant as to carrier fault in concealed damage claims.  Carriers can and will reject concealed damage claims for improper packaging, suspicion that the product was damaged before transit and lack of timely filing (within 15 days).

In this particular case with our client, they had taken photos of the shipment before tendering it to the carrier and used proper packaging.  The claim was denied because there was insufficient evidence of liability on the part of the carrier. The claim has been appealed because the photos were not submitted and adequate description of the packing provided to the carrier.  Granted, when it comes to burden of proof, it can still be a very sticky item.  Photographs can’t always depict the quality or lack thereof of protection.  I’m not certain how this will turn out but wanted to provide a few pointers to prevent these sticky issues in the first place.

It’s good to take photographs of shipments so that you have evidence of the condition of the product prior to tendering to the carrier.  However, in addition to photographs, noting the non-visible packing material is equally important. By all means, when there is a problem, make certain you retain both exterior packing and interior packing materials.  You must have evidence that you properly packaged and cared for the product to survive its expected trip in a general commodity environment.  Make absolute certain that you note any and all packaging discrepancies on the delivery receipt.  Those discrepancies can and should include rips, dents, markings, water stains, shifting around on pallet, torn shrink-wrap, etc.  If at all possible, open and inspect the contents of the shipment prior to signing the delivery receipt.  If the driver insists on signature before opening, at least have the driver present when you open and if you discover any damage, inform the driver that you will be noting the delivery receipt, even after original signature.  Having a driver as a witness will go a long way to the burden of proof.

Finally, immediately notify the carrier’s claim department followed up by sending their claim form, copy of the original bill of lading, the delivery receipt and invoice for the cost of the product to support the claim amount.  Carriers do not intentionally try to skirt claims.  However, they have to ensure they protect themselves from anyone trying to ship a damaged article to try to get reimbursed for a problem the carrier didn’t cause, or to damage an item after receiving it, only to claim the carrier did it while in-transit.  Visible and concealed damage claims will happen.  You obviously want to work with carriers who are fair and have operating procedures to minimize claims.  But, when they happen, you need to know exactly what is required to ensure a smooth transaction.