CFB Claims and Risk Management 1 — Questions and Answers
Question 1: What federal law governs carrier liability for freight loss and damage in interstate commerce?
- Sherman Antitrust Act
- Carmack Amendment (Correct answer)
- Federal Motor Carrier Safety Act
- Interstate Commerce Commission Termination Act
Correct answer: Carmack Amendment
The Carmack Amendment (49 U.S.C. § 14706) establishes the liability framework for motor carriers and freight forwarders for loss or damage to goods in interstate commerce.
Question 2: Under the Carmack Amendment, what is the standard time limit for a shipper to file a written freight claim with a carrier?
- 30 days from delivery
- 6 months from delivery
- 9 months from delivery or scheduled delivery (Correct answer)
- 18 months from shipment date
Correct answer: 9 months from delivery or scheduled delivery
The Carmack Amendment allows carriers to set a minimum claim filing window of 9 months from delivery (or scheduled delivery for lost freight), and most carrier tariffs adopt this standard.
Question 3: What type of insurance protects a freight broker when a carrier's cargo insurance fails to pay a valid claim?
- General liability insurance
- Errors and omissions insurance
- Contingent cargo insurance (Correct answer)
- Surety bond
Correct answer: Contingent cargo insurance
Contingent cargo insurance (also called contingent liability insurance) steps in to cover cargo losses when the responsible motor carrier's insurance is insufficient or denies the claim.
Question 4: Which document is most critical when filing a freight damage claim to establish that damage occurred during transit?
- Bill of lading with damage notations signed at delivery (Correct answer)
- Rate confirmation sheet
- Carrier's safety rating certificate
- Shipper's export declaration
Correct answer: Bill of lading with damage notations signed at delivery
A bill of lading with damage exceptions noted and signed by the driver at delivery creates a contemporaneous record proving the damage occurred during the carrier's custody.
Question 5: What does 'released value' mean when applied to a freight shipment?
- The carrier has waived all liability for the freight
- The shipper declares a lower value to obtain a reduced rate, limiting carrier liability to that declared amount (Correct answer)
- The freight has been released from a customs hold
- The carrier has agreed to full replacement value coverage
Correct answer: The shipper declares a lower value to obtain a reduced rate, limiting carrier liability to that declared amount
Released value is a declared value lower than the actual commodity value that qualifies the shipper for a reduced freight rate while capping the carrier's maximum liability per pound or per shipment.
Question 6: What is subrogation in the context of freight claims?
- A method for calculating freight charges based on commodity weight
- The right of an insurer, after paying a claim, to step into the insured's shoes and recover from the responsible party (Correct answer)
- A contract clause transferring broker liability to the shipper
- The documentation process required for hazmat shipments
Correct answer: The right of an insurer, after paying a claim, to step into the insured's shoes and recover from the responsible party
Subrogation allows an insurance company that paid a cargo claim to pursue recovery against the carrier or other negligent party that caused the loss, preventing a double recovery by the insured.
Question 7: If freight arrives with visible damage, what immediate action should the consignee take to protect their claim rights?
- Accept delivery and file a written claim within 30 days
- Refuse the entire shipment regardless of the extent of damage
- Note the specific damage on the delivery receipt or POD before signing (Correct answer)
- Contact the freight broker to authorize shipment rejection
Correct answer: Note the specific damage on the delivery receipt or POD before signing
Noting exceptions on the proof of delivery before signing is essential because it creates a legal record that damage was present at delivery and occurred during the carrier's care, custody, and control.
CFB Claims and Risk Management 1
What federal law governs carrier liability for freight loss and damage in interstate commerce?