October 24, 2016 | Errors and Omissions, Industry Insights
When Mistakes Happen, Know You’re Covered: E&O Insurance for Customs Brokers
A customs broker’s daily operations involve attention to detail, extensive documentation and keeping abreast of constantly changing rules so that your business remains in compliance. Yet unintentional mistakes and inadvertent errors can and do happen, particularly in a business environment where requests from clients are for “yesterday”. The opportunity for errors is further heightened in the hustle and bustle of today’s new normal for transportation intermediaries.
What type of things can go wrong? Everything from failing to follow instructions, incorrect classification of goods, improper quote charges, and unauthorized release of goods, to improper document preparation, failure to properly clear goods upon entry, failure to collect documents and failure to timely or properly file an ISF. These are but a few of the errors on a long list that can negatively affect the business transactions that take place on behalf of a client. If a client suffers a financial loss because of an error or omission, you can end up facing a professional liability claim and litigation that can be quite costly to your bottom line. Even if the allegations are meritless, the legal costs to defend the claim and potential settlement amounts can negatively impact your business without the right insurance coverage in place.
Errors and Omissions (E&O) insurance is designed to address the type of potential professional liability losses customs brokers and freight forwarders face as a viable way to manage the financial impact when a claim is made. Remember, for most, unfortunately, it’s not a matter of if such an event will occur – it’s a matter of when. Additionally, the fact is, that it really doesn’t matter if you actually made a mistake or not, the customer is looking for someone to remedy their financial loss and they’re going to pursue whatever avenue is available to them to recover their losses. If it’s a customs-related loss, the likely target of their efforts will be the customs broker.
E&O insurance provides you with the legal defense and settlement (if awarded) per the policy terms in the event a customer files a claim against your company alleging damages as result of the services you provided. When deciding upon the insurance program to purchase, it’s important to consider several key factors, including the financial strength of the insurance company, continuity of coverage from year-to-year, and claims handling services for the program you choose. Also, the key is that the coverage you choose addresses risks specific to your operations, finances, and the amount of liability you’re comfortable taking on without insurance. What’s more, E&O policies are not the same, and policy terms differ from one insurer to another.
For nearly 25 years, Roanoke Trade has been providing our E&O insurance program to professionals in the transportation industry. Our program can be customized to address your specific operations so that you secure comprehensive protection in the event of an E&O claim. In addition, integral to our program is assisting custom brokers, freight forwarders and transportation intermediaries in mitigating loss. For more information about our E&O solutions, please contact one of our professionals at 1-800-ROANOKE (800-762-6653).