Cargo Insurance VS Carrier's Limit of Liability

What is the Carrier Limit of Liability?

To understand this term, let us spilt the word into two. The word carrier means the logistic company is legally entitled to transport the shipment from one place to another. Liability means having a legal responsibility towards something. So, the word carrier limit of liability means the maximum amount a carrier or the company is liable to pay in case of damages, losses, or delay in shipment. 

The value of this coverage is usually much less than the actual value of the cargo. It may also depend on the content of the shipment and the rate at which the carrier charges for that type of commodity. Liability limits typically cover a percentage of the value lost.

What is Cargo Insurance Policy?

When your consignment is in transit, it is prone to various risks. These risks can damage or cause the loss of your cargo. It is thus always important to consider cargo insurance for your freight. Marine cargo insurance policy, also sometimes known as freight insurance, or goods in transit insurance, is one of the most common insurance types used to protect the value of goods (cargo) from physical damage or theft. 

The main aim of cargo insurance is to minimize financial loss if the shipment is damaged or lost. A small amount, in terms of premium, is paid to buy this insurance which also gives the shipper peace of mind.

Cargo Insurance VS Carrier's Limit of Liability

Carrier limit of liability and cargo insurance may seem similar, but in reality, there are a few major differences between them. If you are having a business in shipping, transportation or logistics, these differences may help you choose the right plan and improve your bottom line. The table below briefly showcases cargo insurance VS carrier's limit of liability.

Difference in Claims Process

Let us look at the difference in the claims process in cargo insurance and carrier's limit of liability.

For shipment covered only by carrier’s limit of liability:

• The claim must be filed within 9 months of delivery
• Notice of damage must be included in the delivery receipt
• Proof of value and proof of loss must be provided
• Acknowledgement should be done by the carrier within 30 days and responded to within 120 days
• Carrier negligence must be proven

For shipment covered by cargo insurance:

• Proof of value and proof of loss must be provided
• Claims payment is done usually within 30 days
• No need to prove carrier negligence

Conclusion

Rough weather, accidents, or circumstances beyond your control can lead to damaged or lost cargo. Purchasing a policy for marine insurance online can help providing adequate coverage, seamless procedures, and hassle-free claim settlements.