Carrier liability vs cargo insurance
A carrier's liability is a legal obligation with a cap and a list of excuses. Cargo insurance is a policy that pays you on agreed terms. Shippers often assume the first replaces the second. It doesn't.
Five differences that matter
| Carrier liability | Cargo insurance | |
|---|---|---|
| How much | Capped by convention or contract: per kg (e.g. 8.33 SDR/kg under CMR, 26 SDR/kg under Montreal) or per package (e.g. 666.67 SDR under Hague-Visby, US$500 under COGSA). | Usually the insured value, often invoice value + freight + 10%. |
| Do you have to prove fault? | You must prove loss while in the carrier's care; the carrier can then rely on defences. | No. On an "all risks" basis you show a loss from an insured peril, subject to exclusions. |
| Defences and exclusions | Wide. Ocean carriers under Hague/Hague-Visby are not liable for, among other things, errors in navigation or management of the ship, fire (unless the carrier's actual fault), perils of the sea and inherent vice. | Narrower; typical exclusions are wilful misconduct of the insured, insufficient packing, inherent vice, delay and some war/strike risks unless added back. |
| General average | Not covered. If the ship declares general average you may have to contribute to release your cargo even if it is undamaged. | Typically covered, with the insurer posting the guarantee. |
| Deadlines | Short: notice within days (3 days ocean, 7 days CMR, 14 days air) and suit within 1 to 2 years. | Set by the policy; prompt notice still required. |
A worked example
A 5,000 kg ocean shipment of 10 pallets worth US$80,000 is lost overboard under a bill of lading governed by the Hague-Visby Rules. The carrier's limit is the higher of 2 SDR × 5,000 kg = 10,000 SDR and 666.67 SDR × 10 packages = 6,666.70 SDR. At about US$1.36 per SDR, that is roughly US$13,600, if the carrier is liable at all. The uninsured gap is about US$66,400. See it in the calculator.
When does the carrier pay more than the limit?
- Declared value. Most regimes let you declare a higher value on the bill of lading, air waybill or consignment note, usually for extra freight.
- Serious misconduct. Hague-Visby, Hamburg, CMR and CIM limits can be broken for intentional or reckless conduct. The Montreal cargo limit cannot.
- US domestic trucking. The Carmack Amendment starts from full actual loss, but released rates in the bill of lading or tariff often limit it.
Practical checklist
- Check which document governs (bill of lading, sea waybill, AWB, CMR note, CIM note, BOL) and which regime it incorporates.
- Compare the limit to your cargo value with the calculator.
- Decide: declare value, insure, or accept the gap.
- Diary the notice and time-bar deadlines the day the goods arrive.
Limit changes, in your inbox
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Prototype: this form is not connected yet and stores nothing.General information only, not legal or insurance advice. Limits depend on the contract, the documents issued, declared values, national law and the facts of each case. Check the primary sources and consult a qualified professional before relying on any figure.