By Joseph McDevitt

Category: Logistics

Types of Insurance: Cargo Liability vs Cargo Insurance

Cargo Liability Insurance

How do Cargo Insurance and Cargo Liability Insurance Differ?

Shippers frequently pose this important question: What sets apart these insurance types? Let’s clarify: cargo insurance and cargo liability insurance provide contrasting coverage and serve unique purposes. So, cargo insurance safeguards the shippers investment by ensuring financial protection against loss or damage during transportation, while cargo liability insurance compensates the transportation carrier when they are deemed responsible for lost and damaged freight.

Cargo Insurance

  1. Protects the investment of the policyholder, such as the owner of the goods.
  2. Offers financial security if the insured goods suffer loss or damage during transportation.
  3. Issued directly to the cargo owner by the insurance company.
  4. Provides coverage for cargo damage regardless of the transporting party’s fault.
  5. Varieties include all-risk cargo insurance and named perils cargo insurance.

Cargo Liability Insurance

  1. Cargo liability insurance protects the motor carrier and its obligation to compensate for freight loss.
  2. This insurance provides financial protection if the transportation company is found liable for loss or damage during transit.
  3. Types include motor carrier cargo insurance and ocean cargo liability insurance.
  4. Limited coverage as the transportation company may have defenses against liability for cargo loss.

Common Insurance Questions

What is the liability of cargo?

Cargo legal liability insurance, tailored for carriers like ship, truck, and train operators engaged in transporting goods, is procured through a contract of carriage and specifies the carrier’s accountability for loss or damage to goods during transit.

What is freight liability?

Carriers assume liability for all shipment loss, damage, and delay, provided that the loss wasn’t caused by one of five recognized carrier defenses: an act of God, an act of public enemy, an act of the shipper, an act of public authority, or the inherent nature or vice of the goods themselves.

Who is liable for cargo damage?

The carrier bears the responsibility for damage to the shipment, as they are directly accountable for its transportation.

Who is not covered by cargo insurance?

Issues stemming from areas within the shipper’s control, like damage caused by inadequate packaging, defective products, or hazardous items, might not receive coverage. If the delivery receipt is signed clear at the time of delivery, it implies that the carrier didn’t deliver a damaged shipment; however, if concealed damage is noted within five days, the carrier usually offers only a partial settlement, and after five days, it’s unlikely that any settlement will be provided.

Shipper Support

Shippers, TLI has been assisting with freight routing since 1994. Call us today at 610-280-3210, and let’s move your next load together. This brief article offers context on the types of insurance associated with shipping. If you are looking for a significantly more in-depth guide, follow this link.