Imagine this scenario: you’re a freight forwarder or a shipper who has arranged a crucial international transport. The shipment arrives, but… it’s damaged. The consignee either rejects the goods or files a claim. Your first, completely logical reaction is to say, “I’ll compensate my client for the damage and deduct that amount from the freight I owe to the carrier.”

It sounds fair, doesn’t it? After all, the carrier is responsible.

However, this instinctive move can turn into a costly mistake that not only fails to solve the problem but also drags you into legal disputes with an unfavorable outcome. Today, at Cargofort, we’ll examine a real case from Bulgarian court practice that perfectly illustrates why this approach is so risky.

 

The Story: One Shipment, One Damage Claim, One Wrong Decision

A Bulgarian company (“The Forwarder”), acting as the principal, hired “The Carrier” to transport metal products from Bulgaria to Germany. Upon delivery, “The Consignee” discovered significant corrosion on the goods, made a corresponding note in the CMR waybill, and then refused to accept the shipment.

“The Shipper” of the goods filed a claim against “The Forwarder” for the damage, amounting to €1,800 (equivalent to 3500,00 BGN). “The Forwarder” did what many others would do – they paid their client for the damage and then deducted the same amount from the freight owed to “The Carrier,” paying only the remaining balance.

“The Carrier,” however, did not agree with this unilateral decision and filed a lawsuit for the unpaid portion of the freight.

What the Court Decided and Why: The Key is “Liquidated Claim”

The court reviewed the case and issued a ruling that might seem unfair at first glance but is perfectly lawful. It ordered “The Forwarder” to pay “The Carrier” the full outstanding freight (€1,800), along with all accrued interest and legal expenses.

Why? Because while the law allows for something called an out-of-court set-off, it is subject to strict rules. One of the most important rules is that the mutual claims must be liquidated.

A liquidated claim (or ‘liquid claim’) is one whose existence and amount are undisputed – either because the other party has acknowledged it in writing, or because it has been established by a final court judgment.

In our case, “The Forwarder’s” claim against “The Carrier” for the damages was not liquidated. “The Carrier” had never admitted liability for that amount. The fact that “The Forwarder” had paid their client does not automatically make “The Carrier” a debtor for that same amount. The carrier’s liability for damage must be proven and established through the proper channels.

The court made it clear: the obligation to pay freight and the liability for damages are two separate issues. You cannot offset one against the other at your own discretion.

The Bitter Result: Paying Twice

In the end, “The Forwarder” found themselves in the worst possible position:

• They paid €1,800 to their client for the damaged goods.
• They were ordered to pay €1,800 to “The Carrier” for the unpaid freight.
• They were also ordered to pay the accumulated interest and legal fees.

A single misstep, driven by logic but not by legal knowledge, cost them double.

Lessons for Your Business: How to Avoid the Trap

✔️ Never perform a unilateral set-off. This is the most critical lesson. Withholding amounts from payments due without the explicit written consent of the other party or a court order is an invitation to a lawsuit you are likely to lose.

✔️ Keep obligations separate. When damage occurs, the correct procedure is to:

• • Pay the due freight to the carrier within the agreed timeframe.
  • Simultaneously, file an official, written, and well-documented claim against them for the value of the damage.

✔️ Communicate officially. Notify the carrier of the problem immediately. Send them all relevant documents – protocols, photos, claims. Try to negotiate a settlement.

✔️ Consult with experts. Before taking any action, speak with your insurance broker or legal advisor. At Cargofort, we have extensive experience with such cases and can guide you toward the right steps that will protect your interests without involving you in unnecessary costs and litigation.

In transport and logistics, every detail matters. The right approach not only saves money but also preserves good partnerships and protects your reputation.

When transporting goods internationally, safeguarding your cargo against potential risks is crucial. Marine cargo insurance provides this protection, and at its core are the Institute Cargo Clauses (ICC) – standardized terms defining coverage levels. Recognized and utilized by insurance companies worldwide, including those in Germany with their DTV-ALL RISKS conditions, these clauses are essential knowledge for anyone involved in shipping goods.

What Are Institute Cargo Clauses?

The Institute Cargo Clauses are a set of standardized insurance terms developed by the Institute of London Underwriters. They outline the risks covered during the transportation of goods by sea and are divided into three main categories:

• Clause A (All Risks): Offers the broadest coverage, protecting against all risks of loss or damage to the insured cargo, except for specific exclusions.

• Clause B (Named Perils): Provides coverage for specific listed risks such as fire, explosion, vessel sinking, capsizing, or collision.

• Clause C (Named Perils): Offers the most limited coverage, covering fewer risks than Clause B, primarily major incidents like fire or vessel sinking.

These clauses are globally recognized and form the foundation of marine cargo insurance policies. In Germany, for instance, insurers use similar conditions known as DTV-ALL RISKS, which align closely with the ICC.

Why Are These Clauses Important?

Understanding the differences between these clauses is vital for cargo owners and freight forwarders to ensure appropriate coverage:

• Risk Assessment: Selecting the right clause based on the nature of your cargo and the risks involved in its transportation can prevent significant financial losses.

• Cost Efficiency: Balancing the level of coverage with insurance premiums helps in managing costs effectively.

• Contractual Clarity: Clearly defining the terms of coverage in shipping contracts avoids disputes and misunderstandings.

Practical Use Cases

• Clause A: Ideal for high-value or sensitive goods requiring maximum protection, such as electronics or perishable items.

• Clause B: Suitable for moderately valued goods or shipments through relatively safe routes, like raw materials.

• Clause C: Best for low-value, non-fragile goods where minimal coverage suffices, such as bulk commodities

 

Further Reading

For a deeper understanding of cargo insurance and its nuances, you might find these articles helpful:

• What is valuable to know about “Cargo Insurance” in 2022?
• Unveiling the Hidden Dangers: The Consequences of Inaccurate Declared Information in Cargo Insurance

Official Institute Cargo Clauses Documents

For detailed information, you can refer to the official ICC documents:

• Institute Cargo Clauses (A)
• Institute Cargo Clauses (B)
• Institute Cargo Clauses (C)

By familiarizing yourself with the Institute Cargo Clauses, you can make informed decisions to protect your shipments effectively, ensuring peace of mind in your logistics operations.

Sources:

https://www.lmalloyds.com

https://www.munichre.com/content/dam/munichre/mrwebsitesnmu/documents/NMU_Institute_Cargo_Clauses_2009.pdf/_jcr_content/renditions/original./NMU_Institute_Cargo_Clauses_2009.pdf

https://www.sedgwick.com/blog/marine-insurance-why-institute-cargo-clauses-matter/?loc=eu

With the merger, customers get even more optimized and personalized services from one center

Claims Trans, the innovative company for resolving complex transport cases and all types of claims for carriers, freight forwarders and other logistics companies, becomes part of Cargofort. Thus, Cargofort, as a leading technology company that provides specialized insurance solutions to the logistics market, will be able to offer its customers even more optimized services from a single hub. This merger makes the new company one of the significant players in the logistics industry, as it combines the offering of expert services with solid international experience in claims/case handling and insurance in transport and logistics.

“The acquisition of Claims Trans is a key move in our growth and development strategy through which we are expanding our business and strengthening our presence in international markets. Resolving problematic transport situations should be easy and intelligent, and this has always been our focus. Our goal is to optimize the processes and communication of the parties involved in a case by relying on mediation, a professional tone, and software that supports these processes, which benefits not only our customers but also their logistics partners. In terms of logistics insurance, our mission is to make it easy, intuitive and fast for our insured clients. The logistics industry needs this – understandable, accessible, easy-to-use insurance that includes transparent and streamlined claims management,” said Marian Atanasov, CEO of Cargofort.

The merger of the two companies

provides an even larger team with solid experience and more personalized and expert customer support. The services offered by Cargofort are expanded, which in addition to specialized premium insurance with a focus on:

✅ Carrier’s liability insurance (CMR)

✅ Forwarder’s liability (including under the CMR Convention)

✅ Cargo insurance (Cargo in transit)

✅ General insurance lines for transport and logistics companies

A wider range of specific services are now included in the Transport and Logistics sector: 

🚚 Claims management in transport & logistics

📄 E-CMR (ELECTRONIC WAYBILL and its implementation in Bulgaria)

📝 Creation and optimization of transport contracts

🎓 Trainings and seminars for companies

Among the main benefits for customers of the union are:

• Providing digital insurance expertise in transport and logistics as an insurance broker through the proprietary platform “Cargofort App”
• Professional resolution of transport cases and claims
• Development of the electronic consignment note (eCMR) offering and integration in the Bulgarian logistics industry

Customers also get:

• Specialised advice in transport law
• Drafting and optimization of transport contracts
• Conducting practical trainings for logistics companies to prevent and optimize problem-solving processes
• As an added value for the benefit of all stakeholders in the logistics industry, the Cargofort team creates useful content by sharing its own unique experiences in relation to case studies, industry trends, and useful practices on the company’s website and social media.

Transport and logistics companies can find out more about the benefits of Cargofort’s premium cover insurance products and transport claims management services at https://cargofort.com/ 

The merger of Claims Trans and Cargofort makes a very strong statement for the development of the company by offering its expert services for the benefit of clients not only at home but also abroad.

About Cargofort
Cargofort is one of the leading companies specifically specialized in transport insurance in the country. Its core strength is its use of technology to offer smart solutions in logistics insurance and this has positioned it as an innovator in the industry. It has a team of professionals with many years of experience in insurance, logistics as well as transport law. Thanks to their expertise and professionalism, clients get the coverage they need to protect their business, specialists they can rely on in every situation, successful claims payouts and resolved cases. All of this results in cost savings and loss containment, adds focus on the important things and business development, along with more peace of mind for Cargofort customers.

About Claims Trans

Claims Trans is an innovative claims handling company in the transport sector established in 2018. It handles the control of all transport cases and claims from the moment the situation arises – until its full resolution. Since its inception, it has successfully resolved more than 4000 cargo cases, won numerous court cases in transport law, conducted numerous seminars and trainings on damage prevention. Claims Trans’s expert team with highly specialised experience in logistics claims resolution has over the years succeeded in setting a new standard for the resolution of highly complex and material cases, relying on mediation and commercial negotiation. This in itself leads to a different dynamic and a calm tone of discussion between the parties involved in the supply chain.

The modern e-commerce landscape is fraught with unpredictable variables, from shipping delays to damaged goods, making cargo insurance not just a choice but a necessity for retailers. 
 

Here are key reasons why e-commerce retailers should consider cargo insurance:

 

1️⃣ Protection Against Financial Losses

E-commerce businesses, especially those dealing in high-value or fragile items, face a significant risk of financial loss during transportation. Cargo insurance provides a safety net, covering the cost of lost, damaged, or stolen goods, thereby protecting your bottom line.

 

2️⃣ Cost-Efficiency in the Long Run

While some retailers may hesitate, believing insurance premiums outweigh potential losses, the opposite is often true. The cost associated with replacing lost or damaged high-value inventory, not to mention the potential impact on customer satisfaction, can far exceed the cost of annual insurance premiums.

 

3️⃣ Adaptability to the Value and Fragility of Goods

Cargo insurance is not a one-size-fits-all solution. For high-value and delicate products, insurance that covers the entire journey, including last-mile delivery, is invaluable. Conversely, for low-value goods, opting for coverage that excludes last-mile services might be more cost-effective, highlighting the flexibility of cargo insurance to meet specific needs.

 

4️⃣ Peace of Mind for You and Your Customers

Knowing that your goods are insured creates peace of mind, allowing you to focus on growing your business. This assurance can also be extended to your customers, enhancing their trust in your brand, knowing their purchases are protected against unforeseen circumstances.

 

5️⃣ Industrial Wisdom and Tailored Solutions

Not all e-commerce retailers will have the same insurance needs. Learning from your industry peers and analyzing what others are doing to mitigate risks can provide valuable insights. For more tailored guidance, partnering with a trusted logistics consultant or insurance broker, like CARGOFORT, can help you navigate the complexities of cargo insurance, ensuring you have the right coverage to match your specific business needs.

 

In a world where the unexpected has become the norm, cargo insurance stands as a critical defense mechanism for e-commerce retailers. By safeguarding against losses and providing flexibility to adapt to different types of goods, cargo insurance ensures that retailers can operate with confidence, secure in the knowledge that their interests, and those of their customers, are well protected.

CARGOFORT

Welcome to the present time, where the digital transformation of cargo insurance is revolutionizing the world of logistics. Innovative technologies are reshaping the landscape, streamlining processes, reducing risks, and fostering seamless communication among supply chain stakeholders.

At Cargofort, a digital insurance broker founded on technology principles, we have embraced this digital revolution. We recognize that digitization is not just a buzzword, but a fundamental shift that is already shaping the industry. With API connections and the integration of artificial intelligence, we are at the forefront of this transformation from day one, leading the way in risk management and claims handling.

 

Exploring the Benefits of Digitalization where this revolution makes a significant impact:

 

1️⃣ Unveiling Transparency at Your Fingertips

Embedded platforms and data analytics take center stage, bringing end-to-end insurance processes to life. Through these advanced technologies, stakeholders gain access to secure transaction records, reducing paperwork and streamlining claims processing. This transparency allows for better collaboration and informed decision-making, paving the way for more efficient and effective operations.

 

2️⃣ Simplifying Processes for All

With user-friendly interfaces and intuitive digital platforms, the complexity of cargo insurance is simplified. Businesses of all sizes can manage policies, secure quotes, and access necessary information independently. The elimination of cumbersome procedures and intermediaries streamlines processes, saving valuable time and effort.

 

3️⃣ Embracing Proactive Risk Mitigation

Real-time tracking and monitoring capabilities are the game-changers in risk management. Digitization enables businesses to assess risks, detect and address potential disruptions in their supply chain in real time. With proactive risk mitigation, businesses can ensure continuity, protect their assets, and maintain a competitive edge.

 

4️⃣ Revolutionizing Claims Handling

Digitalization has revolutionized claims handling, enhancing the efficiency and accuracy of the process. Advanced technologies, such as automation, data analytics, and AI, enable faster claims processing, improved accuracy in assessing damages, and seamless collaboration between insurers and claimants. This results in quicker settlements, reduced administrative burdens, and enhanced customer satisfaction.

 

In the present time, Cargofort continues to be an industry trailblazer, embracing technology to provide innovative solutions. Our dedication to digitalization has allowed us to adapt seamlessly, shaping the future of cargo insurance in the present.

 

Embrace the digital revolution and unlock new possibilities with cargo insurance. Join us on this transformative journey and stay tuned for more insightful content as part of our Cargofort Insights series, where we dive deeper into the exciting world of digital transformation in the cargo insurance industry.

CARGOFORT