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Carrier liability vs All risk cargo insurance

Carrier Liability vs All Risk Cargo Insurance. Is Your Shipment Covered?

The moving of shipments and cargo is one of the biggest commercial jobs in the world. It needs lots of experience, planning and a good third-party logistics (3PL) company to handle this huge operation. But as we all know, nothing can remain perfect forever! Sometimes, even the most skilled brokers or carriers experience issues that result in loss or harm to the goods. Therefore, it is always suggested to obtain insurance which protects both you and your client’s possessions from any kind of mishap.

If you belong to a cargo shipping or logistics business, dealing with freight loss and damage is a frequent aspect of your job. It is highly likely that these situations will happen frequently in your business activities. So, it becomes important for you to know the contrast between carrier liability and cargo insurance. Keep reading…

Understanding Carrier Liability and Cargo Insurance: A Comprehensive Guide!

In the field of logistics and freight forwarding, it is very crucial to know the difference between the two responsibilities – carrier’s legal liability and cargo liability insurance. After all, every service that carries expensive items needs to make sure they are safe. But how does someone stay informed with so many terms thrown around like – “cargo insurance,” “liability insurance,” and “carrier liability”? Let us break it down for you!

What Is the Difference Between Carrier Liability and Insurance?

Many confuse carrier liability with cargo insurance (“shippers’ interest”). While there are some similarities in specific freight coverage, it is crucial to understand their key differences. Unfortunately, misplaced or damaged goods are the most common issue during freight shipping.

This is why it is essential to understand how to obtain the best coverage for every cargo. Let’s study the definition of both terms and their coverage limits.

Carrier Liability

Usually, the carrier’s quote for your shipment includes carrier liability. The coverage value is often much less than the cargo value. However, it depends on the type of goods being transported and the carrier’s charge for that item. Let’s see what is covered by the liability carrier:

  • Coverage: Carrier liability often covers only specific causes of loss or damage outlined by the carrier’s terms and conditions, which can be pretty restrictive.
  • Compensation: Compensation, as outlined in carrier liability, is usually limited to a pre-set sum and could potentially be much less than the real worth of the cargo.
  • Exclusions: There are many risks that carrier liability does not cover, like acts of God, normal wearout or poorly packed items.

Cargo Insurance

Cargo insurance is an optional coverage you choose to purchase based on the cargo’s actual value. The fees of cargo insurance are added extra to liability carriers. The benefit is that the entire worth of your goods will be covered under this policy. Let’s see what all risk cargo insurance coverage is:

  • Coverage: All risk insurance policies normally include coverage for various risks such as theft, loss, and damage due to rough handling or from weather and transportation issues.
  • Compensation: If there is a claim, all risk cargo insurance has the goal to compensate the shipper for total insured value of goods. This is different from carrier liability which only gives limited compensation.
  • Exclusions: Even if there are some exceptions, coverage of all-risk policies is typically broader and less limited compared to carrier liability insurance.

Carrier Liability vs. All Risk Cargo Insurance Examples

With just carrier liability, the maximum sum the carrier will pay is limited to the figures below. Regardless of the mode of transportation, the entire value of the goods is protected by all-risk cargo insurance.

Details of the Shipment: one box = 45kg (100lbs), value = $10,000

Carrier liability vs all risk cargo insurance
Carrier liability vs all risk cargo insurance

It is possible that the products will not be fully covered at their commercial worth, even if the carrier is at fault for shipping damage. You can rest assured that with all risk cargo insurance that guarantees your company is shielded from unforeseen losses or damages.


At the end of the day, choosing between carrier liability vs. all-risk cargo insurance relies on your individual shipping requirements, the cargo’s worth, and how much risk you are willing to accept. Accidents on the road, unfavorable weather situations like storms or heavy rains, natural calamities such as earthquakes can lead to loss or damage of goods which might be out of your influence.

Before you ship your next cargo, it’s important to evaluate the possible risks and select insurance coverage that provides optimum protection for your goods against these risks. Please keep in mind that the correct insurance is not only for your shipment but also affects your bottom line.


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