THAT YOUR SHIPPING COMPANY CARRIES
Before you allow a carrier to ship your freight, it is very important for you to know the liability limits or insurance, they carry to cover your freight. Don’t assume that they will reimburse you 100% for damaged or lost shipments – even if it is their fault.
Since deregulation, carriers can limit their liability based on rates they charge, and they are not required to inform you of these limitations.
For instance, most air cargo carriers limit their liability to $.50 a pound. That means a 1,000 lb / 450 kgs shipment valued at $6,000 would only be reimbursed at $500 if lost or damaged. Although this is an extreme case, it is not uncommon.
Many of the major “common” type carriers have decreased the maximum liability from $25.00 dollars to $10.00 a pound. And many have slipped in a “per piece, per pound” clause to further limit their financial responsibility for lost or damaged shipments.
Here’s how the “per piece, per pound” works against you:
Let’s suppose you shipped 10 boxes of parts that totalled 1,000 lbs / 450 kgs that had a total net worth of over $10,000. Let’s also suppose that one of those boxes was worth more because it contained an expensive part or piece of equipment that was needed to assemble the products in the other boxes. During shipping, that one box containing the expensive parts or equipment gets lost or damaged.
As long as there was no other liability limit applied, you could claim up to $10,000 for that one box because the total shipment was covered (1,000 lbs x $10).
Under the “per piece, per pound” liability rule, the maximum you could claim for the same 100 lb box would be $1,000 ($10 x 100 lb box).
That is a $9,000 difference in the coverage of your shipment.
Most of the time, freight-forwarders ask the value of the shipment so they can check the liability limits of the carrier and inform the client of what is and isn’t covered. By knowing in advance what the risk is, shippers can protect themselves by purchasing additional insurance or by simply finding a different carrier with better coverage.