The transport of goods is fraught with far-reaching liability risks for freight forwarders, carriers, and warehouse keepers. Discover Brokerage for more information

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The daily transportation of goods is a task fraught with long-term liability risks for freight forwarders, carriers, and warehouse keepers, prompting them to seek carrier liability insurance to minimize the extent of exposure to unforeseen material risks at any time possible.

Based on the liability provisions established by law and those contained 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 client, as a result of delayed delivery, since the provider is also liable for such damages depending on the established basis of liability, regardless of their fault. 

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

What is cargo carrier liability insurance?

The freight forwarder's liability insurance (FFL) covers the carrier's liability and mistakes made as a result of omissions, violations of regulations, and third-party liability claims (the injured party), as the carrier's liability insurance helps freight forwarders to minimize financial losses and the risks involved if something goes wrong during the trip.

Sudden factors that cannot be controlled or foreseen can inflict damage on the responsible owners of transport and freight forwarders throughout the trip, so the company must be ready to face them.

From this point of view, the carrier's liability insurance policy can include taking legal responsibility for the goods while they are in the care and custody of the carrier, and provides coverage for all of the following:

Material losses or damage that fall on the goods.

Legal liability resulting from material losses or damage to goods transported and/or stored while in the care and custody of the freight forwarder.

The legal liability of the cargo carrier resulting from any negligent act and omission of fault on the part of the participant in the provision or non-provision of professional services to the participant as stated in the transport document.

The legal liability of the shipper to any third party.

Fees for fines and penalties resulting from a violation of a regulation or a legal provision resulting in fines, duty, or penalties that 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 the carrier's cargo liability insurance coverage?

Carrier liability insurance coverage is divided into two parts:

Carrier liability insurance

When the carrier assumes responsibility for the shipment, he acknowledges the receipt of the goods in good condition and thus assumes full responsibility for it, then, as soon as the shipment is damaged or the flight has a problem in general, the carrier will have to take responsibility for it.

Cargo liability insurance

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

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

For Road Transport: 1T / 3m3.

For air transport: 1T / 6m3.

For shipment: 1T / 1m3.

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

What is liability insurance?

This type of insurance is aimed at companies and institutions, where they bear responsibility for any damage or risks to the insured persons or businesses within the limits of work, and in cases of transport insurance, this responsibility is on the transported goods in terms of all operations related to loading and unloading and the damage that the goods may suffer during this.

What is the meaning of an insurance official?

The insurance officer is the person who is responsible for identifying risks, selecting the least expensive solutions to compensate for any losses, ensuring the safety of goods during loading and unloading, and supervising all persons involved in the process of ensuring transportability.

What is the principle of good faith as a carrier liability insurance mechanism?

The principle of good faith is essential in the insurance of transfers, where in principle there is an agreement that the fault did not occur intentionally and the insurance contracts must have a high degree of honesty, honesty and good faith between the insured and the insured, therefore no individual of the insurance parties may hide information from the other party.

Limits of Carrier Liability Insurance

To determine the limits of liability insurance the carrier must follow the rules that ensure the limits for both sides. 

The accident occurred during the Transportation period and this is what makes the insurance company bear the losses. 

That an event occurs that leads to the loss or damage of goods, whether related to loading and unloading operations or not

Damage to the goods during transportation must be proved by comparing its condition at the time of delivery for shipment with its condition after damage.

Carrier's liability for delay where the carrier bears the damage caused as a result of the delay in the arrival of the goods