Tag Archives: facilities management

Logistics Management Errors & Omissions

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:

  1. the development and preparation of studies, process analysis, evaluation studies, transportation or routing analysis and re-engineering studies
  2. the design, development, modification, maintenance, licensing, sale, operation or use of logistics or supply chain management algorithims
  3. the design, development, modification, maintenance, coding, integration, licensing, sale or operation of software used in logistics or supply chain management
  4. logistics management
  5. truckload management
  6. shipment management
  7. inventory management
  8. transportation management
  9. records retention and management
  10. vehicle location and tracking
  11. supply chain coordination and management
  12. facilities and warehouse management
  13. data processing and electronic data interchange
  14. computer network access management, administration and support
  15. internet access, connectivity and support
  16. intranet or extranet access, connectivity, management and support
  17. training and supervision, and selection and oversight of vendors, service providers and subcontractors, including carriers, consolidators, brokers, agents and freight forwarders.

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.