The Difference Between Cargo Liability and Contingent Cargo Liability
Insurance can often feel like a maze of fine print and technical jargon. One common point of confusion? The difference between cargo liability and contingent cargo liability. While they might sound similar, these two types of coverage serve very different purposes — and knowing the difference could protect your business from costly mistakes.
What Is Cargo Liability?
Cargo liability, often referred to as carrier cargo liability, is the coverage that a motor carrier (trucking company) provides for the freight they transport. This is the primary coverage, and it’s legally required for carriers operating in interstate commerce.
Cargo liability is meant to cover losses or damages to goods while they are in the carrier’s possession. However, it comes with limitations:
- It only applies if the damage or loss is due to the carrier’s negligence.
- It may exclude certain causes (like Acts of God, theft without forced entry, or improper packaging).
- There may be limits on how much is covered, depending on the carrier’s policy and the declared value of the cargo.
Bottom line: Carrier cargo liability only protects the freight if the carrier is found at fault and if the loss falls within policy limits and conditions.
What Is Contingent Cargo Liability?
Contingent cargo liability is insurance typically carried by freight brokers. It’s a secondary policy that activates only under specific conditions — usually for extreme outlier events.
For example, if a carrier involved with a freight claim goes bankrupt during the claim process, the broker’s contingent cargo policy might kick in to protect the shipper.
But there’s a catch:
- Contingent cargo policies are usually contingent on the failure of the carrier’s policy.
- They may also require the broker to show that they performed due diligence in selecting a qualified, insured carrier.
- Not all Commodities are covered under the policies
Key Differences at a Glance
| Cargo Liability | Contingent Cargo Liability | |
|---|---|---|
| Primary Coverage | Yes | No |
| Who Holds Policy | Carrier | Freight Broker |
| When It Applies | Loss/Damage due to Carrier’s Fault | If the carrier’s policy fails |
| Legal Requirement | Yes (For Carriers) | No (Optional but common for brokers) |
| Limitations | Exclude certain losses Policy limits apply | Varies widely by policy Subject to conditions |
Cargo liability and contingent cargo liability aren’t interchangeable — they’re two distinct layers of protection. While carriers are required to carry cargo liability insurance, brokers carry contingent cargo insurance as a backstop. For shippers, knowing how these policies work can help you avoid gaps in coverage and unexpected surprises when things go wrong.
If you’re unsure what kind of protection your freight is under, don’t be afraid to ask. A trustworthy broker will be transparent about what coverage is in place and help you make an informed decision.
Covering your Shipments – Easily.
At Translogistics, Inc. (TLI), protecting your high-value shipments is simple. Through our ViewPoint system, you can instantly secure additional cargo insurance at the time of quoting—no extra steps, no separate forms. Just enter your shipment value, and ViewPoint provides a real-time insurance quote alongside your freight rate.