In the case of damaged freight, are you covered? Carrier liability basics.
January 27, 2017
If you’ve ever shipped freight, you probably understand that accidents and natural occurrences can impact goods as they are shipped. Try not to worry though. There are measures in place, including carrier liability, to protect your goods through the rigors of over the road transportation.
In this post, we will attempt to clear the air in terms of when shippers and their goods are protected via carrier liability. The following points will be discussed in further detail:
- What is carrier liability?
- What is the difference between liability and freight insurance?
- Maximum liability for LTL and full truckload
- Bill of lading’s role in carrier liability
What is carrier liability?
Carrier liability is the term used in the shipping industry to describe that a carrier is liable for shipment losses, damages and delays, except those that may have been a result of an act of the shipper, an act of public authority, an act of God or the inherent nature of the goods, and not resulting from the carrier’s negligence.
Carrier liability’s history can be traced back to 49 U.S. Code 14706, also known as the Carmack Amendment, which was originally designed for water and rail carriers in 1906, before applying to motor and rail carriers in 1935. Its purpose was to put a set of rules in place around the rights, responsibilities and liabilities of freight shippers and carriers in the event of a loss.
For a carrier to be liable for losses or damages, the shipper must prove that their freight was in good condition when given to the carrier, but was delivered damaged, or not delivered at all, as well as the amount of the damage claimed. Shippers must file their claims within 9 months of the delivery or the date upon which delivery should have been made. If the delivery receipt is not noted as damaged some carriers require immediate notification. The carrier has 30 days to acknowledge a claim has been made and must respond to the shipper within 120 days.
What’s the difference between liability and freight insurance?
The Carmack Amendment does not establish a limit of liability for rail or motor carriers. However, most carriers attempt to limit their liability in tariffs or other contracts with the shippers. Most carriers hold and maintain some amount of cargo insurance designed to cover cargo loss or damage claims caused by the carrier. The coverage amount is determined by the carrier and is often dependent on the type of commodity the carrier generally transports. It’s possible the amount covered is less than the actual value of the goods being shipped.
Cargo loss or damage insurance is available to cover the full value of the goods being shipped. With insurance, the shipper does not need to prove that the carrier is at fault for a loss. Unlike carrier liability, insurance may be redeemable even if a factor outside the carrier’s control caused the damage, although some coverage exclusions may exist. If a shipper purchased insurance and wants to make a claim, they are required to prove a loss has occurred and provide the value of the goods that were damaged or lost.
Maximum liability for LTL and full truckload.
For full truckload shipments, make sure to inquire about the maximum carrier liability. If it does not meet your needs, additional liability coverage can typically be purchased. Liability for LTL shipments vary on a carrier-by-carrier basis, and the maximum liability can be up to $25 per pound for new goods, but can be subject to lower amounts depending on the carrier, packaging, freight class or other conditions. However, additional liability is usually available for purchase on LTL shipments as well. Maximum liability for goods that are used or being resold typically maxes out at $0.50 per pound, with $0.10 per pound being very common. Shippers are also able to purchase insurance prior to shipping their goods if the full value is not covered by the maximum liability total. The freight experts at Freightquote are also available to help you understand the maximum liability on each of your shipments.
Bill of lading’s role in carrier liability.
As explained throughout this post, if the shipper can prove that a carrier received the goods in an undamaged state and delivered them damaged or lost, the carrier will be liable unless one of the five exclusions to carrier liability exist and the carrier was not negligent. The notations made on the bill of lading at the time of the pickup and delivery become very important to make these matters official. A clear and concise bill of lading will serve as the receipt and agreement between the shipper and carrier. The carrier generally requires pictures of the damage as well.
Third party and online freight service providers like Freightquote generally bear no liability for in-transit damages. However, customer service representatives are always ready to assist customers that have claims to make. Next time you book a shipment, make sure you fully understand carrier liability and its role in protecting your goods.
Whether you have been shipping freight for many years or this is your first time, Freightquote’s patented technology allows you to get instant and free freight shipping rates.
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