A Toronto-based transportation lawyer is calling on brokers and carriers alike to take a closer look at cargo insurance policies as the all-important documents continue to evolve.

“Things have changed. There are different types of wordings that apply in different policies,” says Kim Stoll, a transportation and insurance partner at Fernandes Hearn LLP.

Offering examples during an online presentation for the firm’s annual seminar, Stoll described gaps including older liability policies that lack definitions, exclusions that limit coverage, and references to specific supporting documents.

“Obviously not everything is covered,” she says. “Read these things now from front to back.”

Those who secure the policies should understand where the protection begins and ends. The changing language could be costly for fleets under the mistaken idea that they’re fully covered.

Liability limits

Direct damage policies, for example, could include liability limits such as the amount of coverage per container. Payments might be denied altogether in the absence of a bill of lading, shipper invoice, or manifest.

“Containers stored overnight in a yard may or may not be covered,” Stoll adds. Other restrictions might cap the support at $50,000 per container.

“If you’re unattended, there are a lot of words that go with that,” she says of the limits of liability that relate to parked equipment.

Maybe there won’t be any coverage unless all openings are closed and securely locked, with the keys removed. And will the requirement for a secure yard accept commonly used berms rather than a chain-link barrier?

Endorsements or extensions, available at an added premium, might be needed to cover cargo during loading or unloading activities, or to protect against losses when equipment is stored for up to 30 days, she says.

But a policy’s underlying exclusions could deny coverage because of failing to comply with the bill of lading, shippers invoice, or manifest. Concerned underwriters might want to revisit the wording here, she says.

Going to court

Defence obligations are another key factor within the liability policies. A relatively small case that goes to litigation may last 10 years. If defence costs are included in the limit, the $1 million in coverage might dwindle to $500,000 once a ruling finally emerges.

Looking to court cases, Stoll says insurers may not be using every tool at their disposal when it comes to collecting information.

“The most underutilized tool is the examination under oath. This is quite the weapon,” she says, noting that many insurers rely too heavily on statements alone.

“You have to, as an insured, remember to read everything,” Stoll says. “And brokers, please make sure you go through all of these.”