Is my LTL shipment protected? Here is what to know about carrier liability and freight insurance

March 29, 2024

While freight shipping typically goes smoothly, it’s important to confirm your shipment is appropriately insured to protect against potential damage or loss. Knowing the difference between carrier liability and freight insurance, and what to do if the unexpected occurs, can help you avoid a negative impact on your small business’ bottom line.

Carrier liability and shipper’s interest insurance both help protect against financial loss in the event of loss or damage to a shipment. Understanding the benefits of each will directly impact the outcome of the claim you make. Say you’re a business shipping flat screen TVs. If you receive a shipment with visible freight damage to the boxes, your carrier liability will most likely cover the loss. However, if the boxes look good upon delivery, but when you open them later you discover the TV screens are cracked—then what? Concealed damage (also known as hidden freight damage) not reported at the time of delivery is not necessarily covered under carrier liability protection. Some carriers may cover a portion of the damage, some none at all. Shipper’s interest insurance will cover concealed freight damage for items properly packaged at pickup. Having the proper coverage on your shipment and knowing when and how to file a freight insurance claim will ensure your business isn’t left holding the bag if damage occurs.

What kind of freight coverage is best?

Carrier liability and shipper’s interest insurance both help protect your shipment, each with their own unique benefits and limitations. Familiarizing yourself with the ins and outs of both will help you make the right choice for your shipment.

Carrier liability

Let’s start with carrier liability. This type of LTL freight coverage refers to a carrier’s legal obligation to refund a customer for loss or damage to their goods during transportation. While this coverage certainly offers small business shippers a level of assurance, carrier liability has some notable exclusions. Concealed damage, weather, acts of God, or freight damage that results from improper packaging or loading are not covered.

Carrier liability also has limits to what can be refunded in the event of loss or freight damage. This is typically limited to a per pound amount, which could be less than the declared value of the product. It’s also important to know that in order to receive payment of a carrier liability claim, the onus is on shippers to prove that damage or loss was incurred as a result of carrier negligence.

Shipper’s interest freight insurance

An optional add-on during booking, shipper's interest insurance can help to reduce any potential gaps in coverage for your LTL shipments and simplify the claims process for you. Shipper’s interest insurance covers nearly every type of freight damage, incurred for almost any reason. It doesn’t require a shipper to prove that the carrier was at fault, only that the damage or loss occurred during transit. Shipper’s interest insurance also tends to cover the entire value of the shipment, giving small business shippers a more comprehensive way to protect against freight damage that occurs in transit.

When to choose shipper’s interest insurance

There are several instances where adding shipper’s interest insurance is a no-brainer. When you are shipping high value or fragile freight, or if your freight falls into a high-theft category like electronics and cell phones, we recommend adding this additional insurance.

It’s also important to add shipper’s interest freight insurance to shipments of used goods. Carrier liability will reimburse used goods 10 to 50 cents per pound, compared to new goods at $15-25 per pound. Shipper’s interest insurance covers the same value of your shipment whether the items are new or used.

What to do when your freight is damaged

If you suspect that a shipment has been damaged, the first thing you should do is determine the extent of the freight damage that occurred. As soon as the truck arrives, you should carefully inspect the freight and document any damages you find. The more documentation you have the better, so it is strongly recommended that you take pictures of the damage immediately.

Note the word “DAMAGED” on the bill of lading (BOL) to ensure the condition is known at the time of accepting the freight. Though it may seem counterintuitive, make sure you do not add details here about the exact nature of the damage. Noting the specifics of visible freight damage on the BOL could mean you are not covered for any additional freight damage that might be discovered later. For example, if you write “one pallet damaged” on the receipt and it turns out that two pallets are damaged, the second pallet will be considered concealed damage, which could make it more difficult to get it covered by your carrier liability. Simply writing "DAMAGED" is the best way to ensure that you are covered.

It is also very important that you do not refuse the shipment or discard any damaged product or packaging as this may result in a denied claim or reduced payout.

Making a freight claim

Carriers will want to be notified of any claim as soon as possible—reporting concealed freight damage within 3-5 business days to ensure coverage is preferred. However, if the proof of delivery is noted, you have up to nine months from the date of delivery to file a claim.

How long it will take for your claim to be resolved depends on whether or not it falls under carrier liability or shipper’s interest insurance. If your claim is covered by shipper’s interest insurance, it is typically resolved within 45 days. If your claim falls under carrier liability, it can take more time, as carriers have 30 days to acknowledge the claim, and then an additional 120 days to resolve the claim.

Freightquote has you covered

Lost or damaged freight can have serious repercussions for small businesses with smaller logistical budgets than larger companies. Partnering with Freightquote by C.H. Robinson can help, as we work with over 76,000 vetted carriers who will help to make sure your freight is delivered intact and on time. Shipper’s interest insurance coverage can be easily added during booking, streamlining the process, and ensuring you’re getting the right coverage. Our powerful, easy to use online tool lets you fully manage every aspect of your shipment, from pick up to delivery. In the event loss or damage does occur, our knowledgeable team can help you through the claims process.

Book your next shipment and see just how simple it can be.