Carrier Limit of Liability: Filing a Lost Freight Claim

Carrier Limit of Liability: Filing a Lost Freight Claim

by | Sep 16, 2020 | Logistics / Shipping, Marine Cargo Insurance, Supply Chain Security, Trade Topics

Filing a lost freight claim with a carrier while only being covered by carrier limit of liability is consistently a losing battle for shippers. Shippers expecting to be fully reimbursed by their carrier for their lost goods are almost always unpleasantly surprised by the amount they actually receive.

Lost Freight Claims Covered by Carrier Limit of Liability

Carrier liability covers damage or loss that occurred due to carrier negligence. To settle a lost freight claim, the responsibility is typically on the shipper to prove that the damage was the carrier’s fault. For a carrier to be liable for loss or damage, shippers must prove that their cargo was in good condition when given to the carrier, but was delivered damaged, or not delivered, and they must prove the amount of the damage they are claiming.

When filing a lost freight claim, a shipper will usually be asked to provide the packing slip and invoice for their lost shipment. Shippers will also need to provide a breakdown of how they came to the amount they are claiming to have lost, which includes listing what is missing or damaged and any other related costs.

However, carriers will only be held liable for a certain amount per pound of lost or damaged goods, which can be as low as $0.10 per pound. For example, If a carrier is only liable for $0.10 per pound, and the shipper ordered 150 pounds of this type of merchandise, the shipper will only receive $15 for the full weight of their shipment.

There is a difference in carrier limited liability per pound for different types of commodities. There is also a maximum carrier liability per occurrence of goods being lost or damaged. Some common examples are:

  • Household goods: carrier liability per pound is $0.10, and the maximum liability per occurrence is $10,000
  • Uncrated machinery: carrier liability per pound is $0.50, and the maximum liability per occurrence is $50,000
  • Furniture: carrier liability per pound is $2.00, and the maximum liability per occurrence is $50,000
    Computer systems/components: carrier liability per pound is $5.00, and the maximum liability per occurrence is $50,000

As you can see from these examples, carrier limit of liability differs significantly between commodity types but seldom covers the loss suffered by the shipper.

The shipper will also usually be reimbursed for their original freight charges for their lost or damaged goods. For example, the shipper in the example above who is only reimbursed $15 for their lost goods will also be reimbursed $128.54 for their freight charges. This means that their entire claim payment will total $143.54.

Say that the shipper receiving this claim payment of $143.54 actually experienced a loss of $2378.00. This means that with their lost freight claim payment, the shipper is still unable to recover $2,234.46 for their lost or damaged goods.

Lost Freight Claims Covered by Marine Cargo Insurance

It is essential for shippers to understand that they can avoid this type of loss by purchasing marine cargo insurance. Marine cargo insurance covers the loss, damage, or theft of commodities while in transit between the point of origin and final destination. Importers must pay for cargo insurance as part of the freight bill, but the protection it provides goes a long way if damage does occur, even if it is the carrier’s fault. Contact TRG today to get a free Marine Cargo Insurance quote.

Shippers covered by marine cargo insurance claiming lost or damaged goods must only provide proof of value and loss. Insured shippers are not required to prove carrier negligence, which is required when a shipper is only covered by carrier limit of liability. Claims are typically paid in full within 30 days.

Download a complete guide on Marine Cargo Insurance from Trade Risk Guaranty.

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