Summary: As many warehousing operations are moving into Fourth Party Logistics, the coverage provided under the general liability policy might not be enough to cover all exposures. The Logistics Management Errors and Omissions Liability Policy will provide coverage for most of those gaps that are in the general liability policy.
Within the warehousing industry, a business owner might find themselves offering services to their clients that are not usually covered under the warehouse policy or the general liability policy. Coverage for these services can only be found under a professional liability policy.
A general liability policy usually contains some type of professional liability exclusion. Specifically, the insurance carrier will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury or property damage". Clearly, if there is no bodily injury or property damage but rather an economic loss, this type of loss would not be covered as it does not fall within the coverage definition.
Logistics Management Errors & Omissions Liability Insurance is designed to cover those exposures that fall outside the general liability policy. This policy will pay on behalf of the insured those amounts in excess of the deductible that the insured becomes legally obligated to pay as damages from claims as a result of a wrongful act.
Wrongful act means any actual or alleged act, error or omission in the rendering of or failure to render "Contract Logistics and Supply Chain Management Services." Services also means those services you are qualified to perform as a Consolidator, Customs Broker, Freight Forwarder or the policy can be endorsed with special wording regarding other services related to supply chain management. Service is further defined in the policy as:
The policy does contain some exclusions. These include pollution, operations owned by insured and fines or penalties levied against the insured. There are also some exclusions regarding operations that apply to specific operations such as a freight forwarder.
The policy form is a "claims made" policy. Claims must occur within the period and report no later than 60 days after policy period unless it is agreed upon by the insurance carrier that an extended policy period is agreed upon.
As many warehousing operations are moving into Fourth Party Logistics, the coverage provided under the general liability policy might not be enough to cover all exposures. The Logistics Management Errors and Omissions Liability Policy will provide coverage for most of those gaps that are in the general liability policy.
Mike Lopeman holds the position of Division Vice President Sales at Artex Risk Solutions, Inc. where he is involved in marketing various Artex programs. These include single parent captives, group captives, rent-a-captive programs and 831b captives. He has been a featured speaker at numerous insurance industry functions.
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