Is that covered? Maybe—maybe not. Warehouse and logistics services are prone to risks, but insurance policies may not cover some risks inherent to the industry’s unique exposures.
Sam Rizzitelli, national transportation director, Travelers Inland Marine, is a warehouse liability and coverage expert. He cites many scenarios where non-standard coverages don’t match the liabilities—and the risk of exposure is high.
During the IWLA Warehouse Legal Practice Symposium, he and fellow panelists Eric Little, CPCU, vice president, Corporate Risk Management, and Zach Weber, transportation claims litigation, Travelers Inland Marine Claims, will present “Warehouse Legal Liability Coverage.” The event is June 18 & 19, 2014, in Chicago.
“We will focus on the exposures and coverage terminology and how claim scenarios play out,” Rizzitelli says.
According to Rizzitelli, the need for explaining terminology and coverages is a significant one in the ever-changing world of warehouse logistics. “There are a lot of new exposures to cargo liability loss. As the supply chain industry evolves and becomes more complex, the exposures also evolve and become more complex,” he says.
He specifically cites technology, regulations, cloud data, theft, fuel and energy costs, and identify fraud as new areas of concern. The more the industry advances, the more it opens itself to new risks.
“Insurance is no different from other industries. It needs to synchronize itself to the supply chain,” he says.
Take warehouse receipts for example. It’s not a new form of documentation to the industry, but the process has changed, from paper carbon copies to digital documentation in the cloud. The information changes and adapts to the technologies that are used to create the receipts.
“Recordkeeping is critical to any loss investigation,” Rizzitelli says. “Warehouses should have good records in place that are kept off premises in order to have the best possible understanding of what was in the warehouse at the time of loss.”
Warehouse receipts are a good piece of recorded evidence that Rizzitelli uses to calculate losses, but they’re not always accurate and may even be destroyed during a large loss. During an investigation, he balances warehouse receipts with documented inventory practices for a more complete picture.
“Human-error exposures will always exist, in some degree. You can never be 100 percent error free. With solid inventory management practices some operations don’t issue receipts, which may be fine for the operations, but not for some insurance policies that still require actual warehouse receipts as a predicate of coverage,” Rizzitelli says.
Never say never
There’s no guarantees to avoid risks. Rizzitelli’s solution is to identify exposures and develop risk-management strategies targeting these exposures. “I hope people leave this presentation with a better understanding of some of the most common disconnects occurring between today’s warehouse provider and their insurance in order to avoid as much as possible unexpected gaps in coverage at the worse possible time.”
Your warehouse may have more exposures than you think! Register now to attend the June 18 & 19 IWLA Warehouse Legal Practice Symposium in Chicago, Ill. Find out where you stand and how to ramp up operational policies to reduce your risk.