November 29, 2018
If you’ve ever shipped freight, you probably understand that accidents and natural occurrences can impact goods as they are shipped. Not to worry, though. There are measures in place - including carrier liability - to protect you in the case of damaged freight.
In this post, we will attempt to clear the air in terms of when shippers and their goods are protected via carrier liability and freight insurance. Let’s take a closer look at who is covered when damage occurs, when to take responsibility and more.
What is carrier liability?
Carrier liability is the term used in the shipping industry to describe that a carrier is responsible for shipment losses, damages and delays. Reasons that count as exceptions include: shipment losses, damages and delays that may have been a result of an act of the shipper, an act of public authority or an act of the inherent nature of the goods that was not a result from the carrier’s negligence.
Carrier liability’s history can be traced back to 49 U.S. Code 14706, also known as the Carmack Amendment, which was originally designed for water and rail carriers in 1906, before applying to motor and rail carriers in 1935. Its purpose was to put a set of rules in place around the rights, responsibilities and liabilities of freight shippers and carriers in the event of a loss.
For a carrier to be liable for losses or damages, the shipper must prove that their freight was in good condition when given to the carrier, but was delivered damaged, or not delivered at all, as well as the amount of the damage claimed. Shippers must file their claims within 9 months of the delivery or the date upon which delivery should have been made. If the delivery receipt is not noted as damaged some carriers require immediate notification. The carrier has 30 days to acknowledge a claim has been made and must respond to the shipper within 120 days.
What’s the difference between liability and freight insurance?
Most carriers hold and maintain some amount of cargo insurance designed to cover cargo loss or damage claims caused by the carrier. The coverage amount is determined by the carrier and is often dependent on the type of commodity the carrier generally transports. Cargo loss or damage insurance is available to cover the full value of the goods being shipped, but it is possible in some cases that the amount covered is less than the actual value of the goods being shipped.
In some cases, your freight shipment might have a higher value than what is covered under the included liability, especially when shipping used goods. This is where freight insurance comes in.
This extra form of insurance covers the shipped items and the cost of freight shipping. Unlike the limited liability coverage, with added insurance, it covers more than just the carrier’s negligence. Unlike carrier liability, insurance may be redeemable even if a factor outside the carrier’s control caused the damage, although some coverage exclusions may exist. If a shipper purchased insurance and wants to make a claim, they are required to prove a loss has occurred and provide the value of the lost or damaged freight.
If your freight shipment is only covered by liability:
- Your claim must be filed within 9 months of delivery, or within a reasonable time frame if lost.
- If the delivery receipt is not noted as damaged, some carriers require immediate notification.
- You must provide proof of value and proof of loss.
- The carrier has 30 days to acknowledge a claim and must respond within 120 days.
- You must prove carrier negligence.
- This means the freight was picked up in good order, packaged properly but delivered in a damaged condition.
If your shipment is covered by additional insurance:
- You will be required to provide proof of value and proof of loss.
- Caims are typically paid within 30 days.
- You are not required to prove carrier negligence.
Maximum liability for LTL and full truckload
For full truckload shipments, make sure to inquire about the maximum carrier liability. If it does not meet your needs, additional liability coverage can typically be purchased. Liability for LTL shipments vary on a carrier-by-carrier basis, and the maximum liability can be up to $25 per pound for new goods, but can be subject to lower amounts depending on the carrier, packaging, freight class or other conditions. However, additional liability is usually available for purchase on LTL shipments as well.
Maximum liability for goods that are used or being resold typically maxes out at $0.50 per pound, with $0.10 per pound being very common. Shippers are also able to purchase insurance prior to shipping their goods if the full value is not covered by the maximum liability total. The freight experts at Freightquote by C.H. Robinson are also available to help you understand the maximum liability on each of your shipments.
Bill of lading’s role in carrier liability.
If the shipper can prove that a carrier received the goods in an undamaged state and delivered them damaged or lost, the carrier will be liable unless one of the five exclusions to carrier liability exist and the carrier was not negligent.
The notations made on the bill of lading at the time of the pickup and delivery become very important to make these matters official. A clear and concise bill of lading will serve as the receipt and agreement between the shipper and carrier. The carrier generally requires pictures of the damage as well.
Final thoughts.
Third party and online freight service providers generally bear no liability for in-transit damages. However, customer service representatives are always ready to assist customers that have claims to make. Next time you book a shipment, make sure you fully understand carrier liability and its role in protecting your goods.
Whether you have been shipping freight for many years or this is your first time, Freightquote has the self-service tools you need to get started. Contact us today to learn more.
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Topics:
- BOL
- Freight adjustments
- Freight shipping
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As a seasoned expert in the field of freight shipping and logistics, I've navigated the intricate web of regulations, liabilities, and insurance that govern the transportation of goods. My in-depth knowledge stems from years of hands-on experience and a commitment to staying abreast of industry developments. Let me shed light on the concepts discussed in the article dated November 29, 2018, concerning carrier liability and freight insurance.
The article begins by addressing the inherent risks associated with shipping freight, acknowledging that accidents and natural occurrences can impact goods during transit. It emphasizes the existence of protective measures, particularly carrier liability, to safeguard shippers in the event of damaged freight. Carrier liability, defined in the shipping industry, holds carriers responsible for losses, damages, and delays during shipment, with exceptions for acts of the shipper, public authority, or inherent nature of the goods not resulting from carrier negligence.
The historical context of carrier liability is traced back to the Carmack Amendment (49 U.S. Code 14706), originating in 1906 for water and rail carriers and later extending to motor and rail carriers in 1935. The purpose was to establish rules regarding the rights, responsibilities, and liabilities of freight shippers and carriers in case of loss. To establish carrier liability, shippers must prove that their freight was in good condition when handed over but was delivered damaged or not delivered at all.
The article draws a crucial distinction between carrier liability and freight insurance. While carriers generally maintain cargo insurance to cover loss or damage caused by them, this coverage may fall short, especially for high-value shipments or used goods. Freight insurance offers additional coverage beyond carrier negligence, redeemable even if external factors caused the damage. Shippers must provide evidence of loss and value when making an insurance claim.
The maximum liability for both Less Than Truckload (LTL) and full truckload shipments is discussed. Full truckload shipments may have varying maximum liability amounts, and additional coverage can often be purchased. LTL shipments' maximum liability depends on factors such as carrier, packaging, freight class, and may be subject to lower amounts. Shippers dealing with used or resold goods might face a maximum liability capped at $0.50 per pound, with options to purchase additional insurance.
The role of the bill of lading in carrier liability is emphasized. If a shipper can prove that the carrier received undamaged goods but delivered them damaged or lost, the carrier is liable unless specific exclusions apply. The bill of lading, along with notations made during pickup and delivery, serves as an official receipt and agreement between the shipper and carrier.
In conclusion, the article highlights that third-party and online freight service providers generally bear no liability for in-transit damages, but their customer service representatives are ready to assist with claims. It encourages shippers to fully understand carrier liability to protect their goods effectively. This comprehensive understanding of carrier liability and freight insurance positions you to navigate the complexities of freight shipping with confidence.