FILING CLAIMS FOR MARINE LOSSES - Food Resources Manual

Australia, Canada and Great Britain

Submit the original and three copies of the survey report to the Headquarters Office of the CI member who procured the food within 45 days of discharge. The CI member should forward the survey report to the donor.

European Union through Euronaid

Euronaid insures all goods from the moment they are taken over by Euronaid, up to the moment of delivery of the goods to CARE's main warehouse facility. The purpose of Euronaid insurance is to protect NGOs against financial consequences of shortages, damages or other misfortunes during the transport of goods. CARE will receive an insurance certificate which states the conditions of the insurance. The CARE country office should review the insurance certificate in order to understand the coverage terms. Country offices are expected to cooperate with underwriters when taking custody of the food.

Country offices must:

  • Notify the surveyor (appointed by Euronaid) when cargo is ready for inspection at the port named on the original Bill of Lading, or at the designated warehouse on a Through Bill of Lading or at CARE’s main inland warehouse.
  • Provide adequate documentation to hold the shipping company responsible for the shortages/damages in the survey report. This must be done in writing not later than three days after completion of discharge from the vessel.
  • Arrange for a survey of the goods upon delivery at CARE's main warehouse.
    Sign a Letter of Subrogation to the Insurance Underwriters.
  • Submit two copies of a Landing Report as soon as the food is delivered. The report certifies that the survey has been completed and a certain quantity and quality of food has been received at the discharge destination.

Upon receipt of the survey report and the claim lodged by CARE, the insurance company will assess the amount of the damages and/or losses sustained. Euronaid double checks the calculations and a small recovery fee is deducted for the insurer.

Following acceptance of the assessment by Euronaid, the settlement amount will be credited to the Euronaid Finance Division. Euronaid will then transfer any amounts due CARE to the country office. Claims are usually settled quarterly, however, approval of the claims by insurers can more than a year.

  1. Uses of Claims Settlements
  2. It is a requirement of the CEC that the funds obtained from claims collection are utilized for the purchase of food for the same program. Deviation from this must be authorized by the CEC.

  3. Reporting on Insurance Claims
  4. When Euronaid transfers the amount received in settlement of the claim to the CARE country office, the following documents are provided: a payment slip, a claim advice and a report on “Use of Refunds from Underwriters for Losses/Short weights/Damages of Food Aid Supplied by the CEC.”

    Country offices are also required to submit to the CEC a report specifying the use of claim amounts, to be received no later than six months after the amount has been credited to the account.

United States

  1. Transfer of Title to CARE
  2. Title to U.S. government food passes to CARE, unless agreed otherwise, as follows:

    Claims against shipping companies may be initiated for Title II, Section 416 and Food for Progress food once title passes to CARE and the shipping company is issued the Bill of Lading.

  3. Exceptions to Filing Claims for Marine Losses
  4. Claims must be filed against a shipping company for every marine loss EXCEPT:

    • When general average has been declared, i.e., a shipping company causes a deliberate loss or damage to goods in the face of an imminent peril to save a ship or other goods on board. The cost of the lost goods is shared by the owners of the saved goods. (Food Aid Lexicon, FAM, November 1993.)
    • When the loss is US$100 or less; or the loss is between US$100 and US$300 and CARE determines the cost of pursuing the claim would exceed the amount of the claim.
  5. Marine Losses Valued at less than US$300
  6. The CARE country office submits the original plus two copies of the Independent Survey Report to the HQ Procurement office within 30 days of discharge.

  7. Filing Claims for Marine Losses in Excess of $300
  8. Once a discharge survey report is submitted to a country office that establishes there are marine losses, country offices must begin the process of filing, pursuing and collecting claims against shipping companies.

    As CARE may be reimbursed for administrative expenses for claims filed against shipping companies, CARE Finance has established procedures which country offices must follow as claims are being pursued.

    The Procurement Office and CARE USA's shipping agent are primarily responsible for pursing marine claims against shipping companies and filing all reports and documents related to marine claims with AID and USDA.

    They are also responsible for all communications with country offices regarding additional documentation required for the handling, processing and settlement of marine claims.

    One claim should be filed for each voyage of the same vessel to the same port of discharge. If different types of food are shipped on the same ship and there is more than one Bill of Lading, still file only one claim against the shipping company. The claim will take into account the entire shipment.

  9. Computation of Ocean Carrier Claims
  10. Unless otherwise required by the donor, the monetary value of ocean claims can be computed using the following calculation:

    • Determine the local market value of food at the time and place the loss occurred or the FAS value of the shipment from the Bill of Lading.
    • Add freight and insurance for ocean transport as stated on the Bill of Lading.
    • Divide the sum by the net number of kgs in the shipment, to get the price per kg delivered.
    • Multiply the price per kg delivered by the number of kgs lost or damaged.

    The following are additional costs to CARE which may be included in the claim:

    • Special charges authorized by donor regulations.
    • Any costs incurred by CARE or the donor to reconstitute cargo damaged by the ocean carrier. Include as separate item.
    • If food is damaged and determined by a competent authority to be unfit for human consumption and then sold or otherwise disposed of pursuant to donor regulations, credit the claim by the monetary equivalent of the NET proceeds of the sale. If the unfit food is donated for some useful purpose, the donor may allow for a credit to the carrier per kg for the amount donated.
    • Salvage credits for unfit food which is destroyed, if allowable by the donor.
  11. Assignment of Claim Numbers
  12. As specified in the CARE Overseas Finance Manual, CARE must assign all marine losses relating to food a claim number in order to track them. Claim numbers are to be assigned as follows: MA - two digit country number - four digit sequential number starting with 0001 for each claim. For example, the 41st claim for CARE-Haiti would be MA - 46 - 0041.

  13. Notice of Protest
  14. For losses in excess of US$300, a Notice of Protest must be filed with the shipping company within 72 hours after completion of discharge of short or damaged shipments indicating that a loss has been determined and that the company is being held responsible.

    The notice should include:

    • Date of notification
    • Name of the vessel
    • Description of the cargo
    • Estimate of quantity lost or damaged.
  15. Submission of Discharge Survery Reports
  16. Country offices must submit the original and three copies of the discharge survey report by numbered, transmittal letter to the Procurement Office at CARE USA Headquarters within 45 days of discharge. The Procurement Office and CARE’s shipping agent will forward the report along with other documentation to AID and USDA.

  17. Loss Advice
  18. Along with the Discharge Survey Report, country offices must also submit a Loss Advice in quadruplicate to the Procurement Office.

    The report must contain :

    Loss Advice Information

  19. Claims Progress Memo
  20. The Claims Progress Memo is a report of progress being made in the settlement of marine claims. It must be submitted to the Procurement Office, in quadruplicate, by numbered letter, after any event which relates to a previously reported loss. Upon receipt of the Claims Progress Memo the amount of food previously reported in the Loss Advice will be adjusted based on the new information.

    Claims Progress Memos are to be numbered consecutively, by country, in serial number sequence.

  21. Summary of Required Claims Documentation
  22. The following Table summarizes the documents that must be submitted to the Procurement Office. There should be an original and three copies, and any documents not in English must be accompanied by English translations.

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