Carrier Liability vs Cargo Insurance

In freight, misunderstandings around liability can become expensive, fast. One of the most common is the assumption that carrier liability and cargo insurance are interchangeable. They aren’t. And when a shipment is damaged or lost, this confusion can leave shippers financially exposed and forwarders facing difficult conversations with their customers.

This article breaks down what carrier liability really covers, what it doesn’t, and why cargo insurance remains the only reliable way to protect the full value of a shipment.

What Is Carrier Liability?

Carrier liability refers to the legal responsibility a carrier has for loss or damage to goods in their care. It’s not insurance. It’s a legal framework, based on conventions like CMR (road), Hague-Visby (sea), or the Montreal Convention (air), that determines how much the carrier might owe if something goes wrong.

In most cases, this liability is:

• Strictly limited by weight or container
• Dependent on proving fault
• Excluded for many common causes of loss (like weather, handling by third parties, or “act of God” events)

This means that even if a forwarder or carrier accepts responsibility for a shipment, the actual compensation might be a fraction of the shipment’s value.

A Real-World Example

Let’s say a container worth £80,000 is damaged in port. Under most sea freight conventions, the carrier’s liability is capped at around £2 per kilogram. If the cargo weighs 700kg, the maximum payout is just £1,400 regardless of how much was lost or who was at fault.

That’s not protection. That’s a partial refund at best. And for many shippers, it’s the moment they realise they weren’t insured, just “covered” by a legal clause they didn’t understand.

What Cargo Insurance Actually Covers

Cargo insurance is a financial product. It’s designed to cover the full value of the goods, regardless of who caused the loss or whether legal liability can be proven. Most policies cover risks like:

• Theft, loss, or damage in transit
• Fire, water damage, or accidents
• General Average contributions
• Delay-related spoilage (for perishable goods, with specific terms)

A properly written all-risk policy offers peace of mind that liability frameworks never can. It pays out based on the value of the goods, not on how much they weigh or which clause of the Montreal Convention applies.

Why the Confusion Persists

Many shippers assume their goods are insured simply because they’re being transported by a professional provider. Many forwarders assume their customers will request insurance if they need it. Neither side has a clear view of where the liability actually falls.

This misunderstanding leads to gaps, not just in coverage, but in accountability.

Cargo insurance is not included by default in most freight services. And unless the customer has explicitly opted in to cover, they’re likely moving their goods uninsured.

The Forwarder’s Role: Clarifying the Landscape

For forwarders, it’s not about becoming an insurance expert. It’s about helping customers make informed decisions and avoiding reputational fallout when things go wrong.

When you offer cargo insurance as part of the booking flow - embedded, instant, and clearly priced - you give the customer the option to protect their shipment fully. That clarity removes confusion, improves service, and builds trust. It also reduces disputes when claims happen, because expectations were set clearly at the point of transaction.

Risk Profiles Are Changing, Liability Isn’t

Today’s supply chains move faster, rely on more subcontractors, and cross more jurisdictions than ever before. But the liability frameworks that govern international transport haven’t kept pace. They’re still based on outdated models, slow-moving claims processes, and capped compensation formulas.

Insurance, on the other hand, has evolved. Modern platforms like Breeze enable per-shipment cover in seconds, full policy visibility, and fast claims processing, all without disrupting the booking flow.

Liability is what you fall back on. Insurance is what you plan for.

Final Word: Know the Difference and Communicate It

Carrier liability has a place in global logistics, but it shouldn’t be mistaken for meaningful protection. Cargo insurance exists to fill the gap, not just financially, but operationally and reputationally too.

The most successful forwarders we work with don’t just offer insurance, they explain it. They make the difference clear, and they embed the option directly into the process.

That’s not just a better service. It’s a smarter business model, for them and for the clients who trust them with high-value goods on the move.