Carriers Liability Insurance Vs Freight Insurance

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Undoubtedly, freight damages are a reality of shipping. However, we should stay focused on “when” rather than “if” they will happen. The first thought that haunts our mind is- when a loss occurs, how I’ll be compensated? In this article, we’ll understand the difference between carriers’ liability insurance and freight insurance.

Carrier Liability

It’s imperative to know that every freight shipment has some kind of liability coverage determined by the carrier. The coverage amount is based on the type of commodity or freight class of the goods. Therefore the coverage is upto a certain amount based on per pound of freight. 

In some scenarios, liability coverage may be less than the actual value of the freight. For instance, the used goods liability value per pound will be comparatively less than the new goods’ liability value per pound. Before shipping, make sure to know the losses associated and how much the insurance covers.

It’s a responsibility of a shipper to file a claim in case of damages or lost freight. The damages can be due to natural disasters or acts of God, or mistakes of shippers. For instance, weather-related disasters, the packages were not covered properly, etc. 

Insurance agents, after inspecting & accepting then they will pay for the cost of repair (if applicable) or manufacturing cost. Depending on the state or country, it may or may not include retail selling price. They can also pay a partial claim with a reliable explanation of why they are not paying the full claim amount.  

Freight Insurance

Generally, third-party insurers offer freight insurance plans. This insurance is also known as cargo insurance or goods in transit insurance. Here one doesn’t require to prove that the carrier was at fault for the loss. Hence, requires an additional charge. The amount based on the value of the shipped goods. 

The insurance is good to secure your potential customers (including new customers) and the business from damages while in transit. As declared, freight has a higher value than carrier liability insurance.  


Businesses dealing with heavy motor vehicles for transportation are more prone to risks & challenges. Third-party damages or cargo deterioration can lead enterprises to severe financial losses. Whatever the mode of transportation- terrestrial, aerial, & water; protection is a significant measure. Sustain businesses for long with the correct insurance type. In other words, insurance is a lifesaver from financial & legal considerations.

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