The daily transportation of goods is a task full of long-term liability risks for freight forwarders, carriers and warehouse keepers, prompting them to seek Freight Forwarder Liability Insurance to reduce exposure to unforeseen physical risks at any possible time.

Based on the liability provisions set out in the law and those in the contracts of the transport agreement, companies may be liable for damaged or lost goods.

The same applies to financial damages incurred by the customer, as a result of delayed delivery, where the service provider is also responsible for these damages depending on the established basis of liability, regardless of their fault.

If the customer files a claim in relation to the damage to the goods being transported, the service provider (freight forwarder, carrier, warehouse keeper) must clarify whether he must compensate for the loss. This is often difficult without knowledge of the law in the case of transportation using various modes of transport.

What is Freight Forwarder Liability Insurance for shipments?

Freight Forwarder Liability Insurance (FFL) covers carrier's liability and errors made as a result of omissions, regulatory violations and third party liability claims (Affected Party), as Freight Forwarder Liability Insurance helps freight forwarders reduce financial losses and risks involved if something goes wrong during the journey.

Uncontrollable or unpredictable sudden factors can cause damage to responsible transporters and freight forwarders throughout the journey, so a company must be prepared to face them.

From this standpoint, the carrier's liability insurance policy can include legal liability for the goods while in the care and custody of the carrier, and provide coverage for each of the following:

• Material loss or damage to the goods.

• Legal liability resulting from material loss or damage to goods transported and/or stored while in the care and custody of the cargo carrier.

• The legal liability of the carrier of the shipment resulting from any act of negligence and omission of the Participant's fault in providing or not providing professional services to the Participant as stated in the transport document.

• The legal liability of the shipper towards any third party.

• Fees for fines and penalties resulting in a breach of a regulation or legal provision resulting in fines, duty or penalties for which the participant is legally responsible for paying to an authority in connection with the delivery of goods belonging to a third party.

How much is Freight Forwarder Liability Insurance coverage for shipments?

Freight Forwarder Liability Insurance is divided into two parts:

1. Freight Forwarder Liability Insurance

When the carrier assumes responsibility for shipping, it acknowledges that the goods have been received in good condition and therefore takes full responsibility for them, after that, once the shipment is damaged or the journey generally has a problem, the carrier will have to take responsibility for it.

2. Cargo Liability Insurance

However, even if the carrier claims to be responsible for the goods entrusted to it, it is very important to consider the extent of that liability because in practice, the carrier's liability in the event of a disaster is regulated by agreements between companies.

Transportation costs and freight rates depend on the weight and volume of goods transported, hence carrier's limited liability insurance depends on the international transport pricing method as well (weight/volume ratio):

• For road transport: 1T/3m3.

• For air transportation: 1T/6m3.

• Chargeable: 1T/1m3.

In other words; if the carrier is found responsible, the refund will be made based on the weight of the damaged goods and not on the actual value of the goods.