First, more often than not, a carrier’s liability insurance will exclude indemnity for independent claims against the shipper. Although it may be termed differently by different courts, the legal doctrine that sprung from the 2004 federal court decision in Schramm v. Foster, and has been growing sharper in courts around the country, may usefully be called “negligent hiring.” In the eyes of the law, negligent hiring is an independent tort. It provides a plaintiff an independent claim against a shipper, where a shipper fails to exercise reasonable care and perform due diligence. In cases where a plaintiff brings claim against the shipper for negligent hiring (a claim independent of all claims against the carrier), more often than not, the carrier’s insurance policy will deny indemnity.
Second, even where a carrier’s liability insurance is available to a shipper, the protection it affords may provide little more than cold comfort.
Here is an example:
Let us say, the Smith Family is injured in a highway accident caused by a motor carrier. The Smith Family brings an action against the driver, carrier, and shipper. The Smith Family carries its burden, and secures a judgment for $25 million.