[Title 32 CFR 751.25]
[Code of Federal Regulations (annual edition) - July 1, 2002 Edition]
[Title 32 - NATIONAL DEFENSE]
[Subtitle A - Department of Defense (Continued)]
[Chapter Vi - DEPARTMENT OF THE NAVY]
[Subchapter E - CLAIMS]
[Part 751 - PERSONNEL CLAIMS REGULATIONS]
[Subpart B - Demand On Carrier, Contractor, or Insurer]
[Sec. 751.25 - Types of shipments and liability involved.]
[From the U.S. Government Printing Office]


32NATIONAL DEFENSE52002-07-012002-07-01false751.25Sec. 751.25NATIONAL DEFENSEDepartment of Defense (Continued)DEPARTMENT OF THE NAVYCLAIMSPERSONNEL CLAIMS REGULATIONSDemand On Carrier, Contractor, or Insurer
Sec. 751.25  Types of shipments and liability involved.

    (a) Codes 1 and 2 (domestic including Alaska). Increased released 
valuation, also referred to as ``Basic Coverage,'' became effective 
within CONUS and Alaska on 1 April 1987 for intrastate shipments 
(shipments within a single State), and on 1 May 1987 for interstate 
shipments (shipments from one State to another). For Codes 1 and 2 
shipments picked up after these dates, the carrier's released valuation 
(the carrier's maximum liability for loss and damage) increased from 
$.60 per pound per article to $1.25 multiplied by the net weight of the 
shipment ($2.50 for shipments to and from Alaska). For Codes 1 and 2 
shipments picked up prior to these dates, carrier liability remains at 
$.60 per pound per article and is calculated the same as for Code 4 
shipments. There are also two higher levels of coverage available in 
which the owner pays the difference between the basic coverage and the 
higher level requested: High or higher increased released valuation 
(Option 1) and full replacement protection (Option 2). These higher 
carrier released valuation rates only apply to Codes 1 and 2 shipments 
and they do not affect the liability of a non-temporary storage (NTS) 
warehouse which remains at $50.00 per line item.
    (1) Increased Released Valuation (IRV). IRV is the basic valuation 
for service Codes 1 and 2 and is fully paid by the Government. If the 
claimant is due additional recovery money, the words ``claimant due 
carrier recovery'' must be added on the claims file to ensure the 
recovered amount is provided to the claimant if eligible. IRV is not 
reflected on the GBL by an special language. For Codes 1 and 2 shipments 
picked up after the effective dates mentioned above, the carrier's 
released valuation is $1.25 multiplied by the new weight of the shipment 
($2.50 multiplied times the net weight of the shipment for shipments to 
and from Alaska). For example, if the weight of an IRV shipment moved 
from Kansas to New York is 10,000 pounds, the most the carrier could be 
held liable for would be $12,500 (10,000 pounds times $1.25=$12,500). If 
the same shipment was moved from Alaska to New York, the maximum carrier 
liability would instead be $25,000 (10,000 pounds times $2.50=$25,000).
    (2) Higher Increased Released Valuation (Option 1). This type of 
coverage may be purchased by an owner who desires protection for items 
whose value exceeds a maximum allowance or for a shipment whose value 
exceeds the statutory maximum. If the claimant is due additional 
recovery money, the words ``claimant due carrier recovery'' must be 
added in the claims file. Option 1 must be annotated on the original 
GBL. A GBL correction notice is acceptable only if the carrier or his 
agent has notice of the correction before pick-up. Option 1 may be 
listed in block 27 or block 30 either as a lump sum, such as ``Option 1-
-$30,000,'' or as a multiple, such as ``Option 1--$3.00 times the net 
weight.'' The carrier's maximum liability is whatever higher valuation 
the claimant places on the shipment. For example: The owner of a 10,000 
pound shipment requests Option 1 coverage of $30,000.00 and has this 
listed on the GBL. The carrier's maximum liability is $30,000.00. Under 
basic coverage, the carrier's maximum liability for this shipment would 
only be $12,500.00. The claimant must initially file a claim with the 
carrier. The Government will only accept a claim if the carrier denies 
the claim, if delay would

[[Page 426]]

cause hardship, or if the carrier fails to satisfactorily settle the 
claim within 30 days. The claim is adjudicated in the normal fashion, 
applying depreciation and maximum allowances. Demand is then made on the 
carrier for the full value of the item lost or damaged. When recovery is 
effected, the Government keeps an amount equal to that paid to the 
claimant and disperses the remaining recovery to the claimant.
    (3) Full Replacement Protection (Option 2). This type of coverage 
may be purchased by an owner who desires protection for items whose 
value exceeds a maximum allowance, for a shipment whose value exceeds 
the statutory maximum, or because the claimant does not wish to have the 
replacement cost of destroyed or missing items depreciated to their fair 
market value. The minimum coverage available under Full Replacement 
Protection is $21,000.00 or $3.50 times the net weight of the shipment, 
whichever is greater. A member who chooses this coverage must initially 
file a claim with the carrier, allowing the carrier the right to repair 
or replace items. The Government will only accept a claim if the carrier 
denies the claim, if delay would cause hardship, or if the carrier fails 
to satisfactorily settle the claim within 30 days. If a claim is 
submitted to the Government, the claim is adjudicated normally, applying 
depreciation and maximum allowances. The claimant should be informed 
that any additional amount will be forwarded after recovery action is 
effected against the carrier. Option 2 must be annotated on the original 
GBL. A GBL correction notice is acceptable only if the carrier or his 
agent receives notice of the correction before pick-up. Option 2 may be 
listed in block 27 or block 30 either as a lump sum, such as ``Full 
Replacement Protection--$50,000.00,'' or as a multiple, such as ``Full 
Replacement Protection--$3.50 times the net weight.'' The carrier's 
maximum liability is the higher valuation the claimant places on the 
shipment. For example: The owner of a 10,000 pound shipment requests 
full replacement protection of $3.50 times the net weight of the 
shipment and has this listed on the GBL. The carrier's maximum liability 
is $35,000.00 (10,000 pounds times $3.50=$35,000.00). Under basic 
coverage, the carrier's maximum liability for this shipment would only 
be $12,500.00.
    (4) Calculating liability on IRV, Option 1, and Option 2 shipments. 
(i) Under IRV and Option 1, the carrier's maximum liability for loss or 
damage to a single item is limited to the repair cost or depreciated 
replacement cost of the item. Under Option 2, the carrier's maximum 
liability for a single item is the repair cost or the undepreciated 
replacement cost of the item. The carrier's maximum liability for the 
entire claim is limited to the released valuation, which is either the 
lump sum declared by the owner or the net weight of the shipment times 
the applicable multiplier. The net weight of the shipment is normally 
listed in block 4 of DD Form 1840 (block 3 of DD Form 1840 dated 
September 84). If the net weight is missing, it should be obtained from 
the transportation office.
    (ii) In completing the carrier liability section of DD Form 1844, 
ignore the Joint Military-Industry Table of Weights. Assert the amount 
adjudicated on each item for which the carrier is liable in the carrier 
liability column. Where the Government payment was limited by 
application of a maximum allowance (or by depreciation on full 
replacement cost claims), assert the full, substantiated value. Total 
the amounts for which the carrier is liable in the carrier liability 
column. If this total exceeds the maximum carrier liability for the 
entire claim, the maximum carrier liability should be entered on DD Form 
1843 as the amount demanded. Do not, however, change the total of the 
amounts for which the carrier is liable on the DD Form 1844.
    (iii) If the amount the claimant receives from the Government is 
limited by application of a maximum allowance (or by depreciation on 
full replacement protection claims) leaving the claimant with an 
uncompensated loss, the claimant may be due reimbursement from recovery 
money after recovery is effected on the claim. Claimants with 
uncompensated losses who have basic coverage are only entitled to 
reimbursement from recovery money if the amount recovered exceeds the 
amount paid by the Government (unless the loss was in excess of the

[[Page 427]]

statutory maximum). Claimants with uncompensated losses who purchased 
Option 1 or Option 2 are entitled to reimbursement up to the value of 
their additional coverage. Such files should be marked: ``claimant due 
carrier recovery.'' The claimant should be informed that recovery from 
the carrier is dependent on the amount and quality of the substantiation 
the claimant provided, and that the actual recovery may be less than 
anticipated. The claimant should further be informed that considerable 
time will elapse before recovery is effected and reimbursement made. 
Such claims should be processed for recovery action as expeditiously as 
possible.
    (b) Codes 4 and 6 (International and Hawaii). On Codes 4 and 6, 
international GBL shipments, carrier liability is computed at $.60 per 
pound multiplied by the weight of the article or carton as prescribed by 
the Joint Military-Industry Table of Weights. In cases where the entire 
shipment is lost or damaged, liability will be computed on the net 
weight of the shipment times $.60 per pound. The net weight of the 
shipment may be obtained from the origin transportation office.
    (c) Codes 5 and T (International and Hawaii). (1) A Code 5 shipment 
is the movement of household goods in Military Traffic Management 
Command (MTMC) approved door-to-door shipping containers (wooden boxes) 
and where a carrier provides line-haul service from origin residence to 
a military ocean terminal. The Government, through the Military Sealift 
Command (MSC), provides ocean transportation to the designated port of 
discharge, and the carrier provides line-haul service to the destination 
residence.
    (2) A Code T shipment is the movement of household goods where the 
carrier provides containerization at origin and transportation to the 
designated Military Airlift Command (MAC) terminal. MAC provides 
terminal services at both origin and destination, and air transportation 
to a designated MAC terminal. The carrier provides transportation to the 
destination residence.
    (3) On Code 5 and T shipments, it is often difficult to decide 
whether the Government or the carrier was in actual custody of the 
shipment at the time of loss or damage. In order to reduce liability 
disputes in such situations, a 50-percent compromise agreement between 
industry and the military has been reached.
    (4) When the 50-percent compromise is appropriate or applicable, the 
DD Form 1844 is prepared in the normal fashion utilizing weights 
indicated in the Military-Industry Table of Weights multiplied by $.60 
per pound. Two different sums should be listed for carrier liability at 
the bottom of the DD Form 1844, the amount of liability due under the 
50-percent compromise and the full amount that will be offset if carrier 
fails to pay, e.g., ``$100.00 Code T, $200.00 Full Liability.'' This 
same computation should be reflected in the ``amount of claim'' box on 
DD Form 1843 (Demand on Carrier/Contractor). If a carrier refuses to 
make a satisfactory settlement or fails to make a timely response to the 
demand, the carrier's full liability will be collected.
    (d) Codes 7, 8, and J (Unaccompanied Baggage Shipments). Gross 
Weight Rules. Government payment to the carrier for transportation of 
unaccompanied baggage (Codes 7, 8, and J) is based upon gross weight of 
the shipment. Unless the inventory is prepared as a ``Proper Household 
Goods Descriptive Inventory,'' computation of carrier liability for loss 
or damage incurred in a Code 7, 8, or J shipment will also be based upon 
gross weight. Gross weight is defined as the total weight of all 
articles, including necessary packing materials and packing containers. 
The shipping container is the external crate (tri-wall or other 
Government approved container) into which individual articles and/or 
packing cartons are placed. For the majority of claims, liability will 
be asserted on gross weight of the container.
    (2) Baggage shipments prepared using a ``Proper Household Goods 
Descriptive Inventory.'' The Joint Military/Industry Table of Weights 
will apply to Code 7, 8, or J unaccompanied baggage shipments if the 
inventory has been prepared as a ``Proper Household Goods Descriptive 
Inventory,'' in accordance with Paragraph 54 of the Tender of Service 
for Personal Property Household Goods and Unaccompanied Baggage (DOD 
4500.34-R, appendix A). A

[[Page 428]]

properly prepared inventory should reflect the size of each individual 
carton, give a general description of carton contents, and note 
preexisting damage. The complete inventory, not just a portion, must 
have been prepared as a proper household goods inventory. If an 
inventory is only partially prepared as a proper household goods 
descriptive inventory, gross weight will be used.
    (e) Local moves and NTS. There are basically two types of NTS 
shipments: A direct delivery from NTS by the same company that stored 
the property and a delivery from NTS which was picked up at the 
warehouse by a GBL carrier. Direct deliveries of household goods from 
NTS are often erroneously construed as local moves. It is sometimes 
difficult to tell the difference between the two since a shipment 
delivered from NTS by the warehouseman is usually also a short distance 
(local) move. The type of contract involved determines whether or not 
the shipment is considered a local move, a direct delivery from NTS, or 
a carrier delivery picked up from NTS. These distinctions are important 
since different liability is involved.
    (1) Local move. A local move is a shipment performed under a local 
contract that authorizes property to be moved from one residence to 
another within a specified area (usually a move from off base to on 
base, or the reverse). The contract for a local move is the purchase 
order prepared by the transportation office which lists the services 
required of the carrier in accordance with the provisions of the Federal 
Acquisition Regulation (FAR). The purchase order usually includes 
packing and picking up the goods at origin residence or from storage, 
transporting the goods within a designated distance, and delivering and 
unpacking the goods at destination. All these services are performed 
under the authority of one purchase order and will usually be 
accomplished the same day or within a few days of pickup. Timely notice 
must exist in order to pursue carrier recovery and liability is usually 
based on a released valuation of $.60 per pound per article. The Joint 
Military/Industry Table of Weights is used to calculate liability. There 
is no insurance coverage required on local contractors; if the local 
contractor is no longer in business or bankrupt, the file may be closed.
    (2) Direct delivery from NTS. In circumstances where one contractor 
is responsible for pick-up, NTS, and delivery of the shipment, liability 
for loss or damage is assessed against that carrier. Nontemporary 
storage of household goods requires completion of DD Form 1164 (Service 
Order for Personal Property) in accordance with the provisions of the 
Basic Ordering Agreement (BOA). The ``handling-in'' portion of the 
shipment is accomplished by issuance of the Initial Service Order, DD 
Form 1164. The goods are usually stored for a period of 6 months to 4 
years. The ``handling-out'' and post-storage services are accomplished 
by a supplemental service order. These are usually long term storage, 
short distance moves processed under the authority of at least two 
documents: the initial service order and the supplemental service order. 
The BOA states that the contractor shall be liable ``in an amount not 
exceeding fifty dollars ($50.00) per article or package listed on the 
warehouse receipt or inventory form'' (i.e., $50.00 per inventory line 
item).
    (3) Carrier delivery picked up from NTS. The NTS portion of the 
shipment requires completion of an Initial Service Order, DD Form 1164, 
to accomplish the ``handling-in'' of the goods into the warehouse for 
storage, as prescribed by the provisions of the BOA. When storage is 
terminated, the ``handling-out'' and post-storage services are 
accomplished by issuance of a GBL in accordance with the tender of 
service. The GBL may be issued to a different company or in some cases 
to the same company that stored the goods. These are long-term storage, 
long-distance moves processed under the authority of two documents: the 
initial service order and the GBL. Liability is assessed entirely 
against the delivering carrier at whatever rate is appropriate for the 
code of service involved, unless the carrier prepares an exception sheet 
(rider) noting damage or loss at the time the goods are picked up from 
the warehouse. The exception sheet must be signed by a warehouse 
representative.

[[Page 429]]

If a valid exception sheet exists, liability for items noted on the 
exception sheet is assessed against the NTS warehouse at $50.00 per 
inventory line item. An exception sheet should be prepared by the GBL 
carrier who picks up the goods from NTS even if that carrier is the same 
company that stored the goods. This is necessary in order to relieve the 
carrier from liability as a carrier. If either the carrier alone, or 
both the carrier and the NTS facility, fail to pay their proper 
liability, the file is forwarded to the Naval Material Transportation 
Office, (NAVMTO), Norfolk, Virginia for offset action.
    (f) Direct Procurement Method (DPM). (1) A DPM move is a method in 
which the Government manages the shipment from origin to destination. 
Contracts are issued to commercial firms for packing, containerization, 
local drayage, and storage services, or Government facilities and 
employees provide these services. Separate arrangements are made with 
carriers and separate documents are issued for each segment throughout. 
DPM contractors are also known as packing and crating (P&C) contractors, 
as local drayage contractors, or just as local contractors.
    (2) GBL's for DPM shipments are usually only issued to motor freight 
carriers.
    (i) Block 3 on the GBL entitled ``service code'' will contain the 
letters A, B, H, or V, followed by a second letter A, H, K, N, P, R, W, 
X, or Y. These two letter codes identify the GBL as a DPM contract.
    (ii) Block 18, ``consignee,'' and Block 19, ``from,'' on the GBL 
contain the name and address of another carrier or transportation office 
rather than the name and address of the claimant.
    (iii) Block 27, ``description of shipment,'' on most GBL's contains 
the statement, ``household goods released at a value of 10 cents per 
pound per article.'' This refers to the motor freight carrier's 
liability only. The origin and destination contractors' liability is 
still $.60 per pound times the weight of the article or carton, as 
indicated in the Joint Military/Industry Table of Weights.
    (iv) If liability lies against the motor freight carrier, the term 
``article'' is defined as the weight of each packed item, such as the 
weight of a broken dish within a carton rather than the net weight of a 
carton, as used against the origin and destination contractors. 
Liability is computed against the motor freight carrier at a rate of 
$.10 per pound times the weight of the article.
    (3) Since 1 January 1981 the destination contractor has been held 
liable for loss and damage unless it can prove that it is not at fault, 
i.e., took exceptions prior to receipt of goods. The motor freight 
carrier is liable for any damage or loss noted against it during its 
portion of the move. If the motor freight carrier has noted specific 
damage when it received the shipment, liability is charged against the 
origin contractor at $.60 per pound times the weight of the article or 
carton. Damage noted against the origin contractor or motor freight 
carrier should be indicated on a valid shipping document and generally 
involves distinct damage to or missing containers. These documents must 
be signed by all parties involved in the transfer of the goods.
    (4) The destination contractor must receive timely notice of loss or 
damage via DD Form 1840/1840R and a demand packet. If exceptions were 
taken against the origin contractor or motor freight carrier on a 
transfer document, they should receive only demand packets.
    (5) In determining destination or origin contractor's liability, the 
term ``article'' has been defined as each shipping carton or container 
and the contents thereof, less any exterior crate or shipping carton. 
The net weight of each article (carton or box) packed within the 
exterior crate or carton may be used to determine the contractor's 
liability for a damaged or missing item originating out of that carton.
    (6) Claims offices should obtain a copy of the DPM contract from the 
local contracting office or transportation office in order to identify 
which company has the DPM contract and verify the limits of the 
liability clause. Contracts are awarded on a calendar-year basis.
    (g) Mobile homes. Mobile home claims represent such a small 
percentage of claims received that claims personnel

[[Page 430]]

are often unfamiliar with the requirements and documentation necessary 
to process such claims. For an explanation of the adjudication of such 
claims and the forms used to effect shipment, see Sec. 751.12(g) above.
    (1) Carrier liability--(i) For damage to the mobile home. Carrier 
liability for damage to a mobile home is generally the full cost of 
repairs for damage incurred during transit. A mobile home carrier is 
excused from liability when the carrier can introduce substantial proof 
that a latent structural defect (one not detectable during the carrier's 
preliminary inspection) caused the loss or damage.
    (ii) For damage to contents. The carrier's liability for loss or 
damage to household or personal effects inside the mobile home (such as 
clothing and furniture. or furnishings which were not part of the mobile 
home at the time it was manufactured) is limited to $250.00 unless a 
greater value is declared in writing on the GBL. Under the Mobile Home 
One-Time-Only (MOTO) rate system, effective for shipments after 1 
November 1987 the owner no longer prepares his own inventory. Under the 
MOTO system, the carrier in coordination with the owner is required to 
prepare a legible descriptive inventory on DD Form 1412, Inventory of 
Articles Shipped in House Trailer.
    (iii) Agents of the mobile home carrier. If the shipment is 
transferred to another mobile home carrier for transport, the first 
carrier will continue to be shown on the GBL and is responsible for the 
mobile home from pickup to delivery. The carrier is also responsible for 
damage caused by third parties it engages to perform services such as 
auxiliary towing and wrecking.
    (iv) Water damage. Water damage to a double-wide or expando-type 
mobile home is usually due to the carrier's failure to provide 
sufficient protection against an unexpected rainstorm. Carriers will 
often assert that this damage is due to an ``act of God'' and attempt to 
avoid liability. It is, however, the carrier's responsibility to ensure 
safe transit of the mobile home from origin to destination. Not only 
should carriers be aware of the risk of flash floods and storms in 
certain locales during certain seasons, but a carrier is supposed to 
provide protective covering over areas of the mobile home exposed to the 
elements. Carrier recovery should be pursued for water damage to these 
types of mobile homes.
    (v) Waivers signed by the claimant. The carrier may attempt to 
escape liability by having the owner execute a waiver of liability. Such 
waivers are not binding upon the United States.
    (vi) Extensions of storage in transit (SIT). The extension of SIT 
past 180 days is only applicable to household goods and holdbaggage 
shipments. It is not applicable to the shipment of mobile homes. If a 
mobile home remains in SIT past 180 days, storage is at the owner's 
expense.
    (2) Notice. Item 306 of the carrier's rate solicitation states that: 
``Upon delivery by the carrier, all loss of or damage to the mobile home 
shall be noted on the delivery document, the inventory form, the DD Form 
1800, and/or the DD Form 1840. Late(r) discovered loss or damage, 
including personal property within the mobile home, will be noted on DD 
Form 1840R not later than 75 days following delivery and shall be 
accepted by the carrier as overcoming the presumption of correctness of 
delivery receipt.'' Notification to the carrier may be made on any of 
the documents. Claims personnel will dispatch the DD Form 1840R in 
accordance with Sec. 751.14.
    (3) Preparation of demands. The carrier is liable for the full 
amount of substantiated damage to the mobile home itself (less estimate 
fees), plus up to $250.00 for loss or damage to contents (unless the 
claimant purchased increased released valuation on the contents). 
Prepare a demand for this amount. In addition to the DD Form 1843 and DD 
Form 1844, the demand packet should include the following documents:
    (i) DD Form 1800, Mobile Home Inspection Record;
    (ii) DD Form 1863, Assessorial Services, Mobile Home;
    (iii) DD Form 1840/1840R, Joint Statement of Loss or Damage at 
Delivery/Notice of Loss;
    (iv) DD Form 1412, Inventory of Items Shipped in House Trailer;
    (v) DD Form 1841, Government Inspection Report;

[[Page 431]]

    (vi) Driver's statement, from the driver of the towing vehicle;
    (vii) Claimant's statement concerning previous moves;
    (viii) Estimates of repair, preferably two, from firms in the 
business of repairing mobile homes; and
    (ix) Engineer's statement, or statement by other qualified 
professionals.
    (4) References. Chapter 3 and Appendix E of DOD 4500.34-R, pertain 
to mobile home shipment and contain much valuable information. Another 
source is NAVSUP 490, Chapter 10 ``Mobile Homes of Military Personnel.''