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Fast Fast Forward

Spilled Beans? No worries, Part 3

Maximize the process of salvaging your cargo loss

Maximize the process of salvaging your cargo loss


This is Part 3 of a 3 part series on Damaged Goods.  Read the first in this series. And the second, right here


Salvage has been an integral part of shipping since vessels began plying the waves.  Historians cite salvage contracts of vessels and cargo going back over 2,000 years.  Mitigation is a huge part of the insurance equation, benefiting all parties with an interest in the goods being traded.  Simply put: it helps keep cargo insurance costs low.

When a client submits a cargo claim: we send an adjuster and decide what to do with the damaged cargo. In the case of the spilled garbanzo beans highlighted in parts 1 and 2 of this series, the client already knew of a vendor who wanted to buy the salvaged beans and what they would pay for them. We agreed it was a good deal and, to everyone’s benefit, the claim went away. That’s the exception.

Interestingly, there are a number of paths to take. The client can handle what happens next to their damaged property, we can take the lead, or both parties can coordinate. In most cases, insurers like XL Catlin turn to salvors on behalf of their clients.

Among today’s mitigation tools of the trade, there are the traditional, tried and true salvors – professional salvage organizations each specializing in specific markets, from machinery to cargo. They offer comprehensive regional coverage throughout the world and, particularly from a marine perspective, specialize in specific commodities such as cars, coffee, etc.

We also have vendors on the cargo side that offer one stop shopping - from investigating the claim and documenting the loss itself, to providing us with the information we need to make the adjustment to our insured. Concurrently they also have the capabilities and expertise to salvage and sell any property by auction or an industry specific secondary market (food, pharmaceuticals, consumer goods, etc.).

There are the newer technology solutions, which came onto the scene some 10 years ago, that have really accelerated the salvage process. And technical innovations continue to play an increasing role in helping clients rebound quickly, and helping insurance companies provide a greater return for their clients.

One of the earliest ways technology has helped to maximize value for damaged goods is by utilizing eBay-style salvor platforms. These online auction sites deliver great value by virtually getting the whole world bidding on salvaged items. Those bidders that score the goods usually have to pay shipping to get the goods to them. Between supply and demand and market mechanics, our clients are able to get the fairest price for their goods because they are getting a large volume of people to know about, see and place a bid on them. Other technology tools, including notification apps and the like, will continue to streamline the claims process for clients and insurance companies to benefit further.

Saving the salvageable

XL Catlin was providing coverage for cargo consisting of Argentinian corn bound for Jordan aboard a Bulk Carrier Vessel.  On arrival in Jordan the discharge began, but it was discovered that the cargo in one of the holds had areas of black pockets indicating the presence of rot. Discharge was halted by Jordanian port inspectors and the entire contents of corn in the hold were rejected.  Later, insufficient ventilation was determined to be the cause.  The rejected cargo had an estimated value of close to $1.4 million.

Within 24 hours of notice of this claim, a local surveyor was assigned to inspect the damaged cargo.  To prevent any further deterioration of the corn, proper ventilation of the hold was restored.  Further investigation and discussions with the port inspectors determined that a portion of rejected corn could be accepted.

While our claims team’s documented the amount of the loss, inquiries were also made about the most efficient and profitable way to market and sell the salvaged portion of the cargo.  One immediate hurdle was the ruling of the Jordanian port authorities that the damaged cargo could not be discharged at the port under any circumstances.

Various avenues for salvage of the damaged corn were explored.  This included consultations with vendors who specialize in buying distressed cargo in the Middle East and using our client’s network of contacts.  Through coordinated efforts with the client and their broker, the XL Catlin Claim team received and accepted an offer from a buyer in Israel.  This yielded a net salvage recovery of $539,337 against a net claim of $933,937.   





"  You’d be surprised at what potential market opportunities there may be to help recoup some of the losses."


Taking Preservation Precautions

As this claim example shows, depending on the nature of the loss – whether it’s due to water, fire damage, a marine incident or train derailment– it is the preservation steps for recouping the damaged items that matter the most in salvaging as much value as possible for the affected goods. In fact, it is part of one’s cargo policy requirements to provide for immediate preservation steps, whether or not it is believed the items are recoverable at all or are a total loss.

  • The first step clients must take is to make every effort to preserve the goods as best they can, either through their own labor, or by using a contractor.
  • The second step involves the insurance company arriving, documenting all the items damaged, and noting the extent of the damage.
  • Our third step involves concurrently adjusting the claim itself and identifying what options and what value there may be in salvaging those damaged goods. Depending on what the goods are, we can then determine the best actions to take in terms of marketing and selling them for recovery.

What NOT to do when salvage happens

The #1 misstep in salvage mitigation involves reaction time – not immediately allocating resources to take the necessary mitigation steps to save as much of the product as possible. When a client thinks the items are damaged beyond use, they may take some photos of the incident and dispose of the stuff.  We discourage this greatly.

No matter how bad it looks, it is still important that loss mitigation steps are taken to preserve the damaged items as much as possible – regardless of how bad they think the damage is.  You’d be surprised at what potential market opportunities there may be to help recoup some of the losses.

Salvage benefits the insured in another way too.  The insurance company pays a lower claim amount.  This decreases the insured’s loss ratio, mitigating the chance of a premium increase at renewal or changed terms and conditions.

About the Authors

Andrew D’Alessio is XL Catlin’s Ocean Cargo Product Leader in the Americas. Andrew Bumstead is Large Loss Specialist for Marine, North America. Have the potential for some spilled beans of your own? Reach out to Andrew at to discuss our available insurance solutions.

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AXA XL is the P&C and specialty risk division of AXA.