Concealed Damage Freight Claim: How to Handle It Properly

Concealed damage freight claims are no fun! In fact, they are commonly known as the most frustrating type of freight insurance claim. It's challenging to prove who's responsible for the damages. And in the end, no one wants to pay for the claim.

Unfortunately, though, damage happens. Even with advanced technology and increasing regulatory practices, losses are inevitable at some point. There is just simply no single way to eliminate freight damage occurrences or even to monitor for them around the clock.

However, that doesn't mean that there is nothing you can do to mitigate them a bit!

In this blog post, we're going to look at how concealed damage freight claims work, how you can mitigate risk, and how you can work towards a positive resolution for all parties.

What are Concealed Damage Freight Claims?

Concealed damage freight claims occur when freight is damaged or lost during transit but it is not notated on the Proof of Delivery (POD).

This is different from other types of freight because the goods are concealed in their packaging from start to finish. The carriers may not even see the freight directly itself, since it may be packaged at the warehouse before they even pick it up. The final party might then sign for the package, without seeing that it's damaged until after the fact.

Since the freight is concealed the majority of its trip, it can be challenging to figure out at what point it was damaged and thus who's responsible for it. That's where concealed damage freight claims start to get complex and nuanced.

What Causes Concealed Damage?

Thanks to advanced tracking and monitoring technology, damage and loss are a lot less common than they used to be. Still, the shipping process isn't perfect, as technology malfunctions and humans make errors.

Some common causes of concealed freight damage include:

Temperature changes in trucks
Malfunctioning temperature controls in refrigerated trucks
Dropped or fallen packages during loading and unloading
The manufacturer may not have provided all of the goods
Shipper may not have packaged correctly
Inappropriate handling of goods during loading, unloading, and movement
Part of shipment was stolen
RFID chips were incorrectly assigned

When Should You Submit a Concealed Damage Freight Claim?

As of 2015, the National Motor Freight Traffic Association (NMTA) requires that consumers (or the last party in the supply chain) submit a concealed damage claim within five days of delivery.

If you are the final party receiving the goods, you'd usually submit the claim to the carrier who brought the package to you, unless you have evidence of the responsible party. They can then do their own digging to see if any of their transportation partners or the original shipper might be responsible for the damage.

What if I Submit a Claim After 5 Days?

You can still submit a claim after the five-day time frame, but you'll need obvious and strong proof that the damaged or missing items were a result of the carrier's negligence or inaction.

You can offer this proof up to nine months after delivery, but it gets harder and harder to prove with each passing day. We recommend submitting a claim as soon as possible after delivery, especially within the five-day timeline, for the best possible chance of getting reimbursed for your freight.

Who is Responsible For the Damage?

In general, your third-party logistics provider has the responsibility to ensure accurate and safe transport of the freight. That usually means most concealed damage freight claims will land on the 3PL shipper.

However, it can be a real challenge to prove that it was the carrier's fault. The freight was concealed from start to finish, so it's up in the air who's responsible.

And if you (the receiver) sign the Proof of Delivery (POD) without notating any damage, you've just assumed responsibility for that freight. You're essentially saying you're accepting the package as it is, and there wasn't any damage upon receiving. That's why it can be even harder to prove damage after you've signed the POD—and especially after 5 days.

Although signing the POD presumes that the shipment was delivered in good condition, everyone knows that's just a presumption. It isn't until you actually open the concealed freight that you know for sure whether or not it was damaged. Still, who's to say where the damage happened?

The responsibility of damage isn't entirely on the receiver, but it is the receiver's responsibility to prove that it was caused by the carrier or shipper.

How Do I Submit a Claim?

Most third-party logistics providers allow for online claim processes. You used to have to send in a handwritten complaint, which would take weeks—if not months—to work out. With email, online chat, and even transportation apps, it's easier than ever to fill out a claim, provide pictures, attach the Proof of Delivery, include the tracking number, and work to prove your claim.

The most important part of your claim is the documentation. You want to treat the claim like you would any other insurance claim or even a lawsuit. Because there is so much uncertainty with concealed freight, you need pertinent evidence to prove "beyond a reasonable doubt" that it was the fault of the carrier.

Your carrier likely also has advanced digital tracking with strong documentation tools, so they can see where the damage might have occurred on their end. The best 3PLs have customer service departments who want to help you figure out where the damage happened, so you can get compensated accordingly and appropriately.

How is the Claim Paid Out?

Concealed damage freight claims should be paid out like any other freight claim. The responsible party should pay for the damage.

But, as we've said, responsibility isn't always easy to figure out. No one along the transportation chain is eager to raise their hand to take the blame and pay for the claim. And if the receiver can't prove who caused the damage, it's a bit of a standoff.

If the receiver can't 100 percent prove the carrier caused the damage, but the carrier also can't disprove the damage, there might be some sort of courtesy settlement. The common settlement is 1/3 of the claim value. The rationale is that the damage could have been from the shipper, carrier, or consignee. Three "responsible" parties mean the carrier would pay out a third of the damage.

This is becoming increasingly infrequent, though, as advanced tracking technology is making it easier to prove where and how the damage occurred.

Tips For Concealed Damage Freight Claims

Contact the carrier immediately. The sooner you submit a claim, the more likely you'll prove damage and attain the claim payout.
Inspect the freight before you sign the Proof of Delivery. Notate any potential issues like broken boxes, packaging, or shrink-wrap.
Break down the shipment right away to inspect the freight.
Take lots of pictures of the damage.
Document everything.
Submit a claim directly with the carrier. Don't take the driver's word that they will alert the carrier or file a claim for you.
See if your third-party logistics provider will take pictures of freight along the way with advanced technology tracking processes.

Final Thoughts

Shippers and consumers want to know that they'll be taken care of in the case that something happens during transport. You want your carrier to work for you, not against you.

That's why we make our claims process easy to fill out and prove, and we hear your concerns with care and understanding. Learn more about the unique customer-driven process at Redwood Logistics.

FAQs

What is a concealed damage freight claim?

A concealed damage freight claim is a claim filed when freight is damaged or missing in transit, but the damage was not noted on the Proof of Delivery (POD). Because the goods were packaged and not fully visible during the move, it can be difficult to pinpoint when the damage happened or which party is responsible.

How soon do you need to file a concealed damage freight claim?

A concealed damage freight claim should be submitted within five days of delivery, according to the NMFTA requirement cited in the article. Filing quickly improves the chance of reimbursement because evidence is fresher and the chain of responsibility is easier to trace. Waiting longer makes the claim harder to prove, even if it is still possible to file later.

Can you still file a concealed damage claim after five days?

Yes, a concealed damage claim can still be filed after five days, but it requires strong proof that the carrier’s negligence or inaction caused the damage or loss. The article notes that evidence can be presented up to nine months after delivery, but the longer you wait, the harder it becomes to prove responsibility.

Who is responsible for concealed freight damage?

Responsibility usually falls into a gray area, but the third-party logistics provider is generally responsible for ensuring safe and accurate transport. If the receiver signs the POD without noting damage, that can make it harder to assign fault. In practice, the receiver often has to prove whether the carrier, shipper, or another transportation partner caused the issue.

What should you do before signing the Proof of Delivery on concealed freight?

Inspect the freight before signing the Proof of Delivery and note any visible problems, such as broken boxes, damaged packaging, or torn shrink-wrap. If possible, break down the shipment right away and document anything suspicious. Once the POD is signed without damage notes, proving concealed damage later becomes much more difficult.

What documents or evidence do you need for a concealed damage freight claim?

The most important evidence for a concealed damage freight claim is documentation. That typically includes photos of the damage, the Proof of Delivery, the tracking number, and any supporting details that show the damage was caused during transit. The stronger the documentation, the easier it is to prove the carrier was responsible.

What causes concealed damage during shipping?

Concealed damage can happen for several reasons, including temperature changes in trucks, malfunctioning refrigerated equipment, dropped packages, poor packaging, theft, incorrect RFID assignment, or rough handling during loading and unloading. In some cases, the manufacturer may not have shipped all the goods in the first place, which can also complicate the claim.