Cargo Insurance That Covers What Carrier Liability Won’t

Carrier Liability Is Not Insurance

For most interstate truck shipments in the U.S., carrier liability is governed by federal law known as the Carmack Amendment (49 U.S.C. 14706). It makes the carrier liable for actual loss or injury to the property, but with important limits:

• Carriers can limit their liabilityThrough their tariffs, bills of lading and contracts, many carriers cap what they’ll pay. LTL carriers commonly cap it per pound, and the limit is often lower for used goods. That can be far below what the freight is worth.
• You have to make the caseIn general, the claimant must show the freight was in good condition when tendered, arrived damaged or short, and the amount of the loss.
• Some causes are excludedCarriers are generally not liable for loss caused by an act of God, a public enemy, the act or default of the shipper (including inadequate packaging), public authority, or the inherent nature of the goods.
• There are deadlinesCarriers can’t require a written claim in less than nine months, or give you less than two years to sue after they deny a claim in writing. Check the carrier’s actual terms.

A freight broker or logistics provider arranges transportation but is not the carrier, so the carrier’s liability terms are what apply to the move.

Liability Limits by Mode

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What Third-Party Cargo Insurance Does

Cargo insurance is a policy that covers the insured value of your goods instead of relying on carrier liability. All-risk coverage generally pays for physical loss or damage from an external cause during transit, whether or not the carrier is found liable. Like any insurance, it comes with its own terms and conditions. For ocean shipments, cargo policies typically also respond to general average, a maritime rule that can require cargo owners to share the cost of saving a vessel.

Cargo insurance doesn’t replace good packing. Damage from poor packaging or from the nature of the goods is a common reason claims are disputed, with carriers and insurers alike.

Declared Value vs. Cargo Insurance

Some carriers let you declare a higher value for an added charge. That raises the carrier’s liability limit, but your recovery still depends on the carrier being liable and on its claims process. Cargo insurance is a separate contract with an insurer.

When Cargo Insurance Makes Sense

• ✓High-value freight, where carrier limits would cover only a fraction of the loss
• ✓Used machinery and equipment, which often carry low carrier limits
• ✓Fragile, sensitive or hard-to-replace items
• ✓International shipments with more handoffs and lower liability limits
• ✓Customer or contract requirements to insure goods in transit

How to Add Coverage

Coverage has to be in place before the freight is picked up; it can’t be bought after a loss. When you request a quote, tell us you’d like cargo insurance and include:

• ✓What the freight is, and whether it’s new or used
• ✓Its value, as shown on your commercial invoice
• ✓How it’s packaged
• ✓Origin, destination and mode

Prefer to talk it through? Call 800-674-3554 and ask for a conversation about coverage options for your shipment. We’ll help you decide whether added coverage makes sense.

If something does go wrong, document it at delivery. Note damage on the delivery receipt, take photos and keep the packaging. Our freight claims guide explains the process, and the freight packaging guide can help prevent damage in the first place.