Damage Claims - How much money do you leave on the table?

Products damaged in transit tarnish retailer`s reputation. To make the matter more complicated - customer`s cooperation and help are needed to recover the damages from the carrier.

We created a very efficient damage management system to reduce customer dissatisfaction and recover 40% of the retail value from carriers. In just 8 months our recoveries surpassed $300K.

Efficient claims management process has three major components: (a) Understanding the claim process thoroughly (the process differs with carriers), (b) Educating customers on the procedures to be followed when they received a damaged item, (c) Regular following up with carriers on pending claims.

Let me share a few important things that one must keep in mind while implementing a claims process.

a. Steps to effectively file claims
  • Always be on top of the procedures involved in filing claims, the process differs with each carrier. For example: With FedEx we can file claim and check for the status online whereas other LTL carriers require us to fax over claim form, with FedEx we need to file a claim within 21 days for ground shipments whereas with Roadway we can file claim anytime within 12 months provided the carrier is notified of the damages.
  • With a few carriers like UPS, only the shipper can file a claim and If you are not the shipper then you need a waiver form signed from the shipper authorizing you to file claims.
  • The receiver must always note damages on the POD or the safest way is to refuse delivery and notify the retailer within 48 hours.
  • Submitting pictures on damaged goods is very important when a delivery is accepted; this is the only effective way to prove to the carrier that a claim is required and shows the extent of damage.

b. Regular follow ups
Whenever a claim is filed one need to regularly follow up until the claim is paid, re-filing a declined claim is also possible with few carriers. The stages that a claim goes through at the carriers end after its filed are:
  • Acknowledging a claim
  • Assigning an adjuster
  • Reviewing the documents submitted
  • Inspect the package if required
  • Finally approve or disapprove the claim

c. Steps to follow after a claim has been paid
Once the carrier approves a claim for a specified amount, we need to keep the case open until the payment has been cleared at the bank.
  • It is very important to provide the carrier with the right mailing address for the claim checks to be sent to, a lot of times the checks are mailed but never received.
  • Understanding the time taken by each of the carrier to resolve claims is important, this will help us conveniently track and close open claims issue.
Our biggest effort always have to be towards reducing the damage rate, at any time our target should be to have < 2% damages per sku. This can be done effectively through corresponding damages with your sales reports, identifying problematic sku’s and working with manufacturers to improve product packaging.

If our advices help you or you found another great way to manage claims - please let us know.

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