Editor’s Note: Rick Bridges is an insurance industry veteran working as an insurance broker for Roanoke Trade specializing in cargo insurance, credit insurance, training/education and sales support for New England and Canada. He works closely with many freight forwarders and customs brokers and also manages insurance and bond programs for various shippers associations and manufacturing groups. He is an approved Lloyd’s cover holder and holds underwriting authority for the Watkins Syndicate. Bridges is based in Roanoke’s Boston, Massachusetts’s office.By Rick BridgesAs many readers have noted, the past the AJOT’s insurance articles have provided many tools and processes that help to reduce the likelihood of cargo claims and to most effectively get claims paid. When it comes to any mature supply chain, any seasoned professional will agree that it’s not a question of ‘if’ a cargo claim occur; it’s ‘when’ a claim will occur. As long as weather, natural disasters, operator error, and equipment failures occur, claims will occur. Once the policyholder is paid for a claim, the action of the insured or shipper, the role of the insurance broker and underwriter does not end. This article will focus on the benefits of subrogation and the role of each entity as part of the subrogation process. Subrogation is defined, as the assumption by a third party of another’s legal right to collect a debt or damages. In the case of insurance this means that the insurer may choose to take action to recover the amount of a claim paid to a covered insured if there was negligence of a third party. Take the example of a consolidator crushing a crate due to improper use of a forklift. After expenses, the amount recovered from subrogation is then divided proportionately with the insured to cover any deductible for which the insured was responsible. Maximizing subrogation potential starts when chose your carriers. Cargo owners should consider subrogation within their own carrier selection guidelines and make sure this is included in written procedures for their employees and their agents. For various reasons you may have a limited selection of carriers, but if multiple options exist, a carrier with higher insurance limits and less restrictive terms and conditions may be the best option in the long run. Consider this scenario; your forwarder is selecting truckers to move your $3,000,000 turbine from the inland origin point to the port. One trucker can do it for $30,000 and they have a $500,000 cargo liability policy. A second trucker can do it for $33,000 and they have a $1,000,000 cargo liability policy. While the obvious choice may be saving $3,000, the experienced traffic manager should choose the latter. We’ll discuss the benefits of this choice later. While most carriers, including truckers, set forth terms and conditions with limitations of liability that are the industry standard, some may attempt to further limit liability to lessen their own insurance and operating costs. A traffic manager must be aware of this and include written procedures to handle or prevent these scenarios. Some carriers may attempt to have the shipper or forwarder sign a ‘waiver of subrogation’ that prevents the shipper or insurer from subrogating against that carrier even if damage was due to the direct negligence of the carrier. Not only does this eliminate any subrogation potential, but also there is less incentive for the carrier to ensure the cargo is handled properly as they may face little or no recourse if damage occurs. In our current economic climate more truckers and truck brokers are trying to get shippers and forwarders to sign waivers of subrogation on project moves. This could also be an indication that they are not specialist your cargo such as oversized or overweight piece so ask yourself the question of whether there is overall value in tendering a load to a carrier that seeks to waive its liability versus a specialist carrier that is capable of handling your freight without escaping