Freight Insurance

Limited Liability versus Cargo Insurance

Know your risks. Is your cargo insured?

When shipping with LTL freight carriers, the short answer is no! LTL carriers only provide “Limited Liability” coverage which is different from primary cargo insurance.  It provides a limited protection if your cargo is lost, stolen or damaged and can be declined for many reasons, including “Acts of God.”  The amount of coverage has little to do with the actual value of your freight and can be as low as $0.10 cents a pound.  This is completely different from Truckload carriers who include primary Cargo Insurance.

Below we go into detail about how to protect your cargo while in transit with either Truckload or LTL Carriers.

If an LTL shipment is damaged, lost or stolen, the carrier will reimbursement only to the “limit” of the carrier’s liability, regardless of the actual freight value.  Each carrier has its own rules and Limits of Liability, based on weight, class and commodity.  The carriers’ limits average $1.00 – $5.00 per pound and as low as $0.10 cents a pound when booking under a spot volume quote (5+ skids) or for used goods.  This means a 1,000-pound pallet could have $100 of limited liability coverage.  In the case of damage, the burden is on you to prove carrier negligence.  Even if the freight is obviously damaged, the shipper must prove the freight was packaged well enough to withstand the rigors of transit across bumpy roads, abrupt traffic stops and repeated handling across multiple docks. The carrier may require photographs of your freight before it was loaded to prove its condition at time of loading. Carriers can decline coverage for a variety of reasons, such as act of God (Weather related) or act of shipper (improper packaging, insufficient banding or wrap, over-stacking, too tall, too heavy, cracked pallets, etc).  And even in the best cases, the carrier can still deny responsibility.

Even though, with lost or stolen cargo claims, the carrier cannot claim shipper negligence, the limited coverage amount rarely reimburses for the full value.

How a carrier determines the value of your cargo?

For claims covered only by the carriers Limited Liability, the carrier will want to see proof of your cost of goods, not the sales value.  So if you bought a commodity low and are selling it high, the carrier will only consider the low cost.  But a Shippers Interest Cargo policy is different.

What options do I have?

Assuming your broker will cover the cost or “make up the difference” is not a viable solution.  Getting frustrated and short paying the brokers invoices may have unintended consequences. Most modern day brokers report to Credit Agencies.  Short or unpaid invoices affects your credit rating.  The agencies make this information readily available to the shipping marketplace and other brokers. Shippers with poor credit may be charged higher prices as the marketplace views the non-paying company as high-risk.

Scroll down to learn how to cover the full sales value of your cargo.

Solution – Shippers Interest Cargo Insurance

Shippers can purchase Primary Cargo Insurance to cover the full sales value of their freight on a per shipment basis for both LTL and TL shipments. The shipper is not required to prove carrier negligence and settlements are usually paid within 30 days.  (LTL carriers can take up to a year or longer to settle a claim)

SHIP SLC provides several programs to purchase insurance. Costs are reasonable priced as cents per $100 value and can be purchased even as the truck is loading at the dock. 

Example:  freight valued at $20,000 could be insured for as little as $60.

(This is an estimate and there are exclusions, please ask your Logistics Representative)

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