We insure a trucking company whose fleet consists of several trucks with refrigeration equipment. The client specializes in transporting food items that need refrigeration.

We insure his company under both commercial auto and motor truck cargo policies. The motor truck cargo policy includes coverage for damage to goods caused by mechanical breakdown of the refrigeration equipment.

Recently one of the drivers delivered his shipment to the appropriate customer. However, the person at that location did not — for whatever reason — accept the shipment. So, the driver returned the truck to the terminal.

While sitting at the terminal, the refrigeration equipment broke down and the food spoiled. We turned in a claim to the marine carrier for the food. They have denied the claim saying that the recipient of the shipment is liable for the damage, because their employee would not accept it.

We do not believe that legal liability has anything to do with this case, and would appreciate your opinion.

Illinois Subscriber

While it may ultimately be decided that the loss of the cargo is the fault of the recipient for not accepting the shipment, that point is immaterial as far as the property claim is concerned. Whether or not the recipient is liable for this loss could be a matter for a court — not the marine insurance carrier — to decide.

The marine insurance contract is with the trucking company. If the cargo meets the definition of "covered property" and the peril is covered by the policy, the insurer should pay the trucker for the lost cargo. If the marine carrier wants to pursue subrogation against the recipient, that can be done. But again, legal liability has nothing to do with the payment of this property claim.

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