If there is damage to your cargo during transit, carriers have extremely limited liability. The common figure is $0.50 per pound or $0.50 per kilogram. This is also dependent on how the damage occurred.
- Shipping by Ocean
- While Cargocentric arranges for the transportation of your goods, by law, it is the carrier who bears responsibility for loss or damage to your freight. The carrier’s liability for freight moving over the ocean is governed by the Carriage of Goods by Sea Act (COGSA). Under the terms of COGSA, the most you could recover from shipping lines in the event they are proven negligent is $500 for each customary freight unit (CFU). Measurement of the CFU is widely defined, and it can vary from one container to one pallet. COGSA is centered on the liability of the carrier. At the heart of the concept of carrier liability is the idea that the carrier is not responsible for paying claims if they did not cause or contribute to the loss. In the event that Cargocentric acts as an NVOCC and assumes carrier liability, recovery in the event of a claim is still limited by COGSA in the bill of lading terms and conditions. In an effort to better define carrier liability, Hague-Visby rules were created to define 17 circumstances under which the carrier cannot be held liable. If a loss is caused by any one of the following defenses; the ocean carrier will not pay for any part of the loss.
- Any neglect default of error of the carrier in navigation or of management of the ship
- Perils or dangers of the sea (storms etc.)
- Act of God
- Act of War or public enemies
- Defects not discoverable by due diligence
- Arrest, restraint or seizure
- Quarantine restrictions
- Acts or omissions of the shipper or owner
- Strikes, lockouts or labor shortage
- Riots or civil commotions
- Inherent defect, quality or vice of the goods
- Attempting to save life or property at sea
- Insufficient packing
Shipping by Air
- Air carriers limit their liability in a similar fashion as ocean carriers. Under the Warsaw convention/Montreal Protocol 4, carriers will pay 17 SDRs (about $20) per kilogram only if it can be proven they were negligent. Once again, the burden of proof is on the shipper, and it is often difficult to prove that the carrier was at fault.
How Can You Protect Yourself?
- “All Risk” Shipper’s Interest Coverage provides the owner of the cargo with coverage for direct physical loss or damage to the cargo without the need to prove liability. If a loss occurs; you will be paid directly and any recovery possible from the carrier will be handled by our subrogation specialists.
Advantages of Insuring Your Cargo through the Cargocentric Policy
- Covered Losses are paid without the need to prove carrier negligence. After your loss is paid, we work with the carriers to ensure your historical losses are minimized.
- Cargocentric can offer broad coverage at competitive rates
- Claim payments based on insured value, not weight of pieces missing/damaged or Carrier’s limited liability
- Cargocentric will report and handle claims on your behalf
* This summary provided for informational purposes. It does not grant or extend coverage. All coverage is governed by the terms and conditions set forth in the policy (text available upon request). Cargocentric is not the insurance company and purchases insurance for its customers from surety companies. Cargocentric liability is dictated by its Terms and Conditions of Service.
** For procedures to file a claim, click here.