As a shipper in the freight industry, learning as much as you can about liability claims and insurance is as important as mastering logistics. Knowing what’s covered, what’s not, and how to bridge any gaps is critical to your success. This article will help you navigate the crisscrossing paths of freight insurance.

Carrier’s Liability Overview

There is no sole form of freight insurance a motor carrier can purchase to provide protection against all losses. And even if a carrier holds a certificate of insurance, there’s no guarantee that a legitimate claim will be covered by that insurance.

Per the Carmack Amendment, passed by Congress in 1935, a regulated motor carrier operating in interstate commerce is liable for freight loss, damage, and delay. But here’s the fine print: 1) The carrier must be proven negligent by you, the shipper; and 2) Wide-ranging exclusions apply (including Acts of God, public enemy, shipper negligence, etc.).

Typically, carrier’s liability is limited and does not cover the full value of goods. For example, common limits include:

• Major Parcel Carriers: Maximum payout of $100 customary
• Ocean Carriers: Maximum of $500 per container customary
• Domestic Air Carriers: $0.50 per pound customary
• Less-Than-Truckload (LTL) Shipments: Ranges from $0.10 - $25.00 per pound with customary payout of $0.50 per pound
• Full-Truck-Load (FTL) Shipments: Maximum payout of $100K customary

Don’t be fooled — a common misconception is that declaring excess value to the carrier is the equivalent of insuring your shipment for its full value. In reality, it’s just raising the carrier's limits of liability and the same exclusions apply.

All-Risk Insurance Overview

All-risk insurance is the broadest policy form available and is not subject to the limitations set forth by the Carmack Amendment. In short, it’s your safest, and best, bet. It provides full-value coverage to shippers for losses both in and outside of the carrier's control. Shippers can purchase this in their name on a per load basis, and with full transparency of all the terms and conditions.

Here’s quick comparison of the two:

The decision is ultimately yours, but shippers expose themselves to significant risks when relying on a carrier’s limited liability insurance. You shouldn’t have to fight through red tape or lengthy claims processes to get reimbursed. And you should be entitled to every dollar — not the bare minimum — of your shipment’s retail value in the event of a loss.