As an Ocean Transportation Intermediary  (Freight Forwarder or NVOCC) each time your office staff or agent completes a transit document, issues a Bill of Lading, subcontracts and accepts merchandise from your clients you have liability exposure for your professional duties.

NVOCC’s may purchase Legal Liability Insurance to protect your company against liability which may be incurred while cargo is under your care custody and control, moving on your Bill of Lading.  Although your liability may be limited by your Bill of Lading (in most cases US$500.00 per package under COGSA), there are the associated costs of Attorney fees.  Furthermore, your company may be held responsible for court judgments in excess of your stated liability depending on the circumstances of the claim. Should damages occur, the Legal Liability Insurance would protect your company under the terms, conditions and up to the limits of the policy.

Freight Forwarders are subject to claims for Errors and Omissions ( E & O) and for those NVOCC’s that operate as Freight Forwarders as well, you are afforded complete coverage with a combined cover including Legal Liability and Errors and Omissions, Warehouse Legal Liability and Errors and Omissions. 
This protects you and your staff against claims as a Freight Forwarder for breach of duty or by reason of any negligent act, error or omission for which the insured is legally liable.
Insurance companies offering Legal Liability coverage normally practice cost controls, which include the payment of claims that are clearly the fault of the insured by settlement without legal proceedings.  Should damages be deemed not to be the direct fault of the insured, insurance companies may option to contest a claim in court.  Attorney fees and judgments against the insured are paid by the insurance companies up to the limits, terms and conditions of the policy.  These policies have varying limits/deductibles and are tailored to your particular company.

Costs associated with this type of coverage are nominal and vary depending on the type of program.  Some policies offer premiums based on estimated and actual GFR (Gross Freight Receipts) while others charge based on the number and size of containers shipped under your freight documents.

Remember, the primary function of Legal Liability Insurance is to protect your company from the liabilities of your actions as a Freight Forwarder, NVOCC and/or Customs Broker.  This coverage does not replace marine cargo insurance which protects cargo from loss or damage that may arise from transit. Oftentimes, companies confuse these coverage's.