Insurance Contracts and the Resulting Duty to Verify Carriers’ Insurance Policies

In recent years, insurers offering coverage for losses arising from assigning a transport order to a fraudulent carrier have significantly tightened the criteria for granting such protection. In most cases, insurers’ actions consist of:

• imposing on the insured very specific – and often very detailed – obligations that condition the existence of insurance coverage (these requirements can stretch across 2–3 pages!),

• narrowing the scope of protection by introducing liability limits – i.e., limiting liability for this category of losses to a strictly defined amount, e.g., EUR 10,000 per occurrence and in the annual aggregate.

A large proportion of these insurer requirements regarding what verification steps must be taken is sensible. Indeed, performing many of these checks can help detect attempted fraud and prevent losses.

However, some of the requirements included in insurance contracts seem to be introduced solely to make compliance so burdensome or time-consuming that the insured will not be able to meet them—and as a result, the likelihood of receiving indemnity becomes very low.

In my view, one such requirement—whose main purpose is not to prevent loss—is the obligation to confirm the authenticity of the insurance policy presented by the carrier directly with the insurer that issued it.

Simply checking whether the policy number exists, whether it was issued to the specific entity, and whether it is valid still seems technically feasible—especially since two Polish insurers allow such verification via their websites.

WHY DO I BELIEVE THAT POLICY-VERIFICATION OBLIGATIONS IN INSURANCE CONTRACTS ARE NOT NECESSARY TO GUARANTEE COVERAGE?

This opinion is mainly driven by two factors:

• Fraudsters rarely counterfeit insurance policies
  • When criminals impersonate an existing transport company, they typically use the actual document set of the legitimate carrier available on the market. In such cases, the insurance policies are almost always real and valid (although used without authorization). Counterfeiting does occur, but only sporadically (and with a downward trend in recent years). In such fraud scenarios, more effective verification methods include confirming that the person contacting you on behalf of a carrier is genuinely linked to it — e.g.:
    • thoroughly checking the email address,
    • verifying the phone number,
    • reaching out to independently sourced contact details (email/phone) of the real company.
  • When fraudsters take over an existing transport company (gaining control of freight exchange accounts, bank accounts, etc.), they also gain full access to the real insurance policy. Having “invested” in acquiring the company, they aim to make as few mistakes as possible — so policy counterfeiting happens even less frequently. Even if the existing policy is insufficient for their needs (e.g., too low a limit or lacking certain extensions), they far more often extend coverage by purchasing a new policy or amending the existing one rather than forging documents.
• The way these obligations and sanctions are formulated allows insurers to deny claims solely due to a failure to verify the policy in the exact manner prescribed. In other words: even if the policy was genuine—something that can be confirmed after the loss—the insurer may still refuse indemnity. It is obvious that if the issuing insurer confirms the authenticity of the policy after the event, it would have confirmed it before the event as well. Therefore, if the freight forwarder’s insurer denies coverage only because the verification occurred later, it is reasonable to conclude that the true purpose of this contractual clause is not fraud prevention but rather drastically limiting the insurer’s liability.

Of course, this should not be generalized. There are insurance contracts on the market where the policy-verification requirements are written in a practical, achievable way. For example, some require verification only when assigning the first transport order to a new subcontractor, and the verification may be performed by phone or via the insurer’s website.

On the other hand, recently some insurers have introduced clauses requiring verification before every single transport order (e.g. “The verification described above must be carried out each time, regardless of how many times the Insured contracts the same carrier.”).

For this article, I reviewed several recent incidents involving various fraudulent carrier entities. Policy forgery occurred in only 2 cases, both involving foreign entities. In all remaining cases, the policies were genuine. The issuing insurers, both before and after the events, consistently confirmed the authenticity and validity of these policies “in principle.”

In cases where the policy was forged:

• the forgery concerned only a single detail—meaning that if someone had contacted the insurer and confirmed the policy number, carrier details, limit, or coverage period, they would have been told that everything matched,

• the fraud itself could have been detected simply by verifying contact details and calling the real company being impersonated.

SHOULD POLICIES BE CHECKED?

As a rule, yes—the insurance policy should always be read and assessed to ensure:

• the territorial scope is appropriate,
• the type of cargo is covered,
• the limit is adequate,
• necessary extensions are included (e.g., theft, gross negligence).

It remains good practice to request proof of premium payment (all installments due at the time of assigning the transport) and verify that the amounts and dates match the policy.

If the person performing verification has enough time (which is doubtful given the dynamic nature of freight forwarding 😊), or if certain policy provisions raise doubts, contacting the issuing insurer by phone or email can be a good additional step.

However, it must be remembered: confirming the policy does not guarantee that the subcontractor is a 100% reliable carrier.

Fraudsters continually adapt their tactics and make fewer mistakes. In the vast majority of fraud-related losses, the insurance policies presented were both valid and authentic — yet the cargo still disappeared, often with total values reaching millions of euros.

WHAT TO DO IF SUCH AN INSURANCE CONTRACT HAS ALREADY BEEN SIGNED?

1. Understand the exact obligations imposed on you. Especially:

• how the verification must be carried out,

• which information must be confirmed,

• how often verification is required,

• how to document these actions for the insurer (❗️).

2. Implement internal procedures

These procedures must compel freight forwarders to comply with verification requirements and ensure the ability to prove that the obligations were fulfilled.

3. Prepare for delays

Expect long wait times—sometimes several days—for a response from the subcontractor’s insurer.

This means either:

• starting your carrier search many days in advance (yes, I know how unrealistic that sounds), or

• limiting urgent transports to subcontractors who have already performed services for you and were previously verified according to the policy requirements.