9 SEPTEMBER, 2025

Errors & omissions

---

Freight forwarder liability insurance in Malaysia protects SMEs and large corporates alike, covering costly errors, delays, and penalties in the export–import process.

Why freight forwarder liability insurance in Malaysia matters

Our fast-evolving Southeast Asian Economic Community means the customs clearance policies of ASEAN countries can be very complicated, making cross-border exports and imports a risky business. Mis-delivery, where cargo is delivered to the wrong destination, can be disastrous. And all you have to do is transpose just one letter in the zip code or street number and your cargo never reaches its final destination.

In some contexts, errors and omissions don't matter that much. In a freight forwarding setting it means costly shipment delays, reputation-ruining customs problems, and even stiff financial penalties. As a freight forwarder, whether it's for an SME or a large company, errors and omissions insurance is a wise choice. Here's what you need to know about freight forwarder liability insurance in Malaysia.

Take the wrong path, and your cargo — and costs — end up in the wrong place. Misdelivery is one of the costly risks freight forwarders face.”

Avoidable extra charges

A simple documentation error can leave you with avoidable extra charges in demurrage and detention (D&D), as we’ve seen for ourselves. In one case a wrongly issued e-Gate Pass sent a container to the wrong depot. The shipping company billed the insured forwarder, who was found negligent, RM8,100 in D&D charges. In another case the person in charge at the insured company missed a single digit out of a container number, a mistake that delayed clearance at the forwarding end and led to RM16,000 in penalties.

One missing digit, one costly delay. Documentation errors can mean thousands in penalties

About freight forwarding errors and omissions insurance

E&O insurance is usually an extension of a freight forwarders liability policy, something you choose to add onto the basic cover.

It protects freight forwarders, logistics firms and customs brokers, paying out to cover financial losses caused by mistakes, oversights and even negligence. A mistake can be as simple as an incorrect HS code, as basic as a lost permit or a typo in a form, but it can cause chaos. In a world where documentation errors happen all the time, miscommunication isn't unusual and regulatory compliance can be horribly complicated, freight forwarders E&O cover offers important protection.

What does errors and omissions insurance cover?

It's surprising how often people fill in the wrong commodity descriptions, mess up Bill of Lading and Air Waybills, forget essential certificates or don't make the right declarations for dangerous goods. You might accidentally fail to comply with ASEAN Trade in Goods Agreement requirements or wrongly classify restricted products. Maybe you make a booking error, or choose the wrong vessel or air cargo schedule. You might even forget to tell a client about a delay or change to their shipment.

Documentation errors can lead to shipment rejection, delays, and costly penalties. E&O insurance helps cover the fallout.

E&O insurance compensates for a range of mistakes including customs delays when cargo is stuck at the port because of incorrect tariffs, storage fees, fines for non-compliance with import and export regulations, legal defence costs, perished cargo and reputation damage. There are also some important exclusions: intentional misconduct, fraud, cyber-related mistakes, and existing disputes dating back to before you bought the policy.

More examples from our region

Imagine this. A Malaysia-based freight forwarder submits a shipment’s Bill of Lading with an incorrect weight. As a result Indonesian Customs and Excise rejects the cargo and your client's perishable goods start to spoil in port. The client makes a USD50,000 claim for lost income. In this case, E&O insurance pays out to cover the legal fees and settlement.

Here's another example. A freight forwarder arranges a shipment from Singapore to Vietnam. The freight forwarder is told the cargo will sail direct to its destination with no partial or trans-shipments. But the cargo ends up being trans-shipped, finally arriving three weeks late. The order is cancelled, the shipper loses the sale, and the freight forwarder is sued.

The difference between cargo insurance and errors & omissions cover

Cargo insurance is different from Errors & Omissions insurance. Cargo insurance protects against physical loss and damage to the cargo, including accidents, fires, and natural disasters. It covers theft during transit, sinking, collision, and improper handling but doesn't cover legal liability for delays and paperwork errors. Depending on the policy it can include risks before and after shipment. The cargo's owner, shipper or consignee is the main beneficiary, although as a freight forwarder you can arrange it for your clients.

E&O protects freight forwarders against financial losses caused by their mistakes or negligence, including errors in the documentation, legal action by clients for delays, mismanagement, incorrect declaration of cargo leading to fines and seizure, and the costs of legal defence for professional negligence. So basically, it protects freight forwarders and logistics companies, not cargoes.

Talk to us about E&O cover for freight forwarders and logistics professionals

Protect your freight forwarding business with cover you can trust. AA is here to help

Protect your freight forwarding business with AA’s freight forwarder liability insurance in Malaysia — cover you can trust against costly mistakes.