Damaged Freight: Are you covered?
November 29, 2018
If you’ve ever shipped freight, you probably understand that accidents and natural occurrences can impact goods as they are shipped. Not to worry, though. There are measures in place - including carrier liability - to protect you in the case of damaged freight.
In this post, we will attempt to clear the air in terms of when shippers and their goods are protected via carrier liability and freight insurance. Let’s take a closer look at who is covered when damage occurs, when to take responsibility and more.
What is carrier liability?
Carrier liability is the term used in the shipping industry to describe that a carrier is responsible for shipment losses, damages and delays. Reasons that count as exceptions include: shipment losses, damages and delays that may have been a result of an act of the shipper, an act of public authority or an act of the inherent nature of the goods that was not a result 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?
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. Cargo loss or damage insurance is available to cover the full value of the goods being shipped, but it is possible in some cases that the amount covered is less than the actual value of the goods being shipped.
In some cases, your freight shipment might have a higher value than what is covered under the included liability, especially when shipping used goods. This is where freight insurance comes in.
This extra form of insurance covers the shipped items and the cost of freight shipping. Unlike the limited liability coverage, with added insurance, it covers more than just the carrier’s negligence. 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 lost or damaged freight.
If your freight shipment is only covered by liability:
- Your claim must be filed within 9 months of delivery, or within a reasonable time frame if lost.
- If the delivery receipt is not noted as damaged, some carriers require immediate notification.
- You must provide proof of value and proof of loss.
- The carrier has 30 days to acknowledge a claim and must respond within 120 days.
- You must prove carrier negligence.
- This means the freight was picked up in good order, packaged properly but delivered in a damaged condition.
If your shipment is covered by additional insurance:
- You will be required to provide proof of value and proof of loss.
- Caims are typically paid within 30 days.
- You are not required to prove carrier negligence.
Maximum liability for LTL and full truckload
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 by C.H. Robinson are also available to help you understand the maximum liability on each of your shipments.
Bill of lading’s role in carrier liability.
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 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 has the self-service tools you need to get started. Contact us today to learn more.
Do you have a shipment to book?
Image Credit: https://www.istockphoto.com/portfolio/JohnnyH5
Get Your Shipping Quote