Tips For Successfully Mitigating ClaimsWritten by Neal Willis
To help ensure your chances of receiving a successful outcome to your claim filing, it is important to remember that per NMFC guidelines it is the duty of a shipper to mitigate the costs of a claim, whenever it is reasonable to do so. This essentially means that, as a shipper, you must do your part to help minimize any potential financial loss due to damage and/or loss. Mitigation is usually done by selling the damaged item at a discount, selling usable parts from the unit, selling the item or parts of the item for scrap, or by repairing the item rather than replacing it completely. Comparing the cost of repair and refurbishment to the cost of replacement and choosing the least cost alternative normally satisfies the mitigation requirement.
CLAIM ONLY THE DAMAGED PORTION OF THE FREIGHT DAMAGES IN SHIPMENT
There are cases where partial damage to a shipment can render the whole shipment a total loss, even though there may still be some good product left but, generally speaking, only the damaged portion of a shipment should be claimed in a claim filing.
REPLACEMENT vs. REPAIR
A qualified party, such as a manufacturer’s representative or certified technician, who is qualified to perform work/repairs on the item, will need to determine if the damage has rendered the item as a total loss, and they may be able to help you determine if the unit has any salvageable value. For this reason, in most cases where a shipment is refused as being damaged, a carrier’s first step is to contact the shipper to obtain authorization to return the unit.
Once the item is received by the manufacturer (or other party taking possession), it should then be determined if the damage has rendered the freight a total loss. If it will cost just as much to repair as it would to replace the item with a brand new one, then a claim for the full invoice amount should be warranted; however, if it can be repaired for less than purchasing a new one, then the unit should be repaired and only the cost of the repairs should be filed for in the claim.
The carrier will need the repair invoice to demonstrate the costs of repairs was what is being claimed. If, at the time of the claim filing, the cost of repairs is not known, you can always file for the full amount and amend the value of the claim amount later.
DETERMINE IF THERE IS ANY SALVAGE VALUE
If the item is a total loss, it may still have some salvage value in the form of parts or scrap metal. If any monies can be recovered from selling parts or the unit itself for scrap, when reasonable, this should be done. The amount recovered from the sale of the parts/scrap should then be deducted from the total value of the item, which gives you a new claimed amount that should cover making the claimant “whole”.
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