Carrier Liability vs. Freight Insurance: Key Differences

Sometimes, freight can become damaged, lost, or stolen while en route to the next destination. If you ship valuable items, you need to protect your business financially using either carrier liability or freight insurance.

Here is a comparison of carrier liability vs. freight insurance to help you choose the best protection for your business.

What Is Carrier Liability?

Before we compare freight insurance and carrier liability, you need to know a bit more about each. Carrier liability is the amount of responsibility the carrier retains for damages, stolen packages, and lost items. The carrier will cover the financial loss up to a certain point. For example, carrier liability will not cover natural disasters or shipper mistakes.

What Is Freight Insurance?

Freight insurance covers any losses or damages that may occur during the shipping process. Unlike carrier liability, this insurance has an additional cost; however, it is an excellent choice to protect businesses that ship valuable items. Also, freight insurance will cover natural disasters while carrier liability will not.

Differences Between Liability and Insurance

While some companies use the terms carrier liability and freight insurance interchangeably, they are not the same thing. Here are a few key differences between carrier liability and freight insurance that you need to remember.

• Freight insurance requires an additional fee, while carrier liability does not.
• With carrier liability, you need to prove that the loss was the carrier’s fault. With freight insurance, you can skip this step since you only need to prove that a loss occurred.
• Carrier liability does not cover natural disasters or acts of war, but freight insurance will.
• Freight insurance covers the entire cost of the cargo, while carrier liability may only cover a certain dollar amount per pound of cargo.

Best Option for Your Business

Now that you have learned about carrier liability vs. freight insurance, how do you choose the best option for your business? It depends on the risks you take and the costs of your products. For high-risk shipping methods and expensive products, freight insurance is generally the best choice. For low-risk shipping methods and inexpensive products, carrier insurance may be the better option. It all depends on the freight transportation services you choose and the value of your freight. If you want dependable and efficient freight transportation services to make shipping easier, reach out to Diversified Transportation Services.