Often people believe (incorrectly) that liability coverage and freight insurance are so similar that they could be twins. In reality, they’re more like family members, related but very different.
While we want to help you avoid any and all hiccups in the shipping process, sometimes accidents happen. So being prepared and protected is important for you and your business. Recognizing the key differences between carrier liability and freight insurance, and which coverage you need for your unique shipment will save you an aspirin and some cash in the event of freight damages.
What Is Carrier Liability?
When freight arrives at its final destination in less than tip-top shape, eyes typically turn to the carrier. But what exactly is carrier liability? Carrier liability refers to what the carrier is responsible for covering when damages, delays or losses occur. However, a lot of times the damages discovered fall outside of the carrier’s purview. If damage is the fault of shipper/packager’s error, or an “act of God” – which is defined as an extraordinary weather event like a hurricane and/or tornado (this does not include ordinary bad weather, like snow and rain), the carrier is not liable.
Even though all shipments come with the carrier’s provided limited liability policy, it’s important to understand that carrier liability covers a certain dollar amount per pound, and generally won’t cover the full value of the damaged commodity in question.
The carrier ultimately determines how much coverage the shipper will receive in the event of damages, and the amount of coverage offered correlates with the freight class or commodity-type. So, what do you do if your shipment is valuable—monetarily or sentimentally? Adding additional 3rd party freight insurance can help.
How Does Freight Insurance Help?
Freight insurance provides additional coverage above and beyond the carrier’s default protection policy or limited liability coverage. These independent,third-party freight insurance policies can offer protection for the full value of your shipment and remove the need of proving liability if any damage or loss of shipment occurs. Since carrier policies don’t adjust to your cargo’s value, purchasing an insurance policy for your freight is invaluable and gives you added peace of mind.
Freight insurance claims are handled between the shipper, the consignee (the recipient of the goods being shipped) and the insurance company. It’s there to cover all your bases and provide protection, so that freight can be the least of your worries.
There are other important things to know about freight insurance, such as different coverage options and how packaging plays a crucial role in making sure you’re not at fault for damages. Overall, independent freight insurance offers better coverage than the standard carrier liability policy.
My Freight Is Damaged. Now What?
Now that we’ve explained the key difference between carrier liability and freight insurance, let’s say your freight was damaged during transit. What now? To help you have a better chance of a successful outcome when you file a freight claim, below are some best practices.
After the shipment is delivered and freight is inspected:
- Thoroughly inspect the integrity of the external packaging.
- If external packaging, shrink wrap etc. is not intact, record any damages on the Bill of Lading (BOL) or Point of Delivery Receipt (POD).
- Take photographs of any external packaging damage and product damage.
- Contact the freight carrier immediately to report damages (not your third-party logistics service provider).
- Don’t throw anything away. If the carrier inspects the product, they will use this to determine if the damage to the product is consistent with damage to containers.
- Cover your bases by looking at our packaging tips.
Get Peace of Mind with a 3PL
Really want to maximize shipment coverage and protection? Partner with a 3PL like FreightCenter today and get all your shipping needs taken care of!