Who Has The Responsibility To Ensure Cargo Is Insured?

Our company, Diversified Transportation Services, gets calls each week from new clients around the country asking various forms of the same question. The question is typically like this:

"Why did my current carrier or 3PL not pay the full claim that I submitted?"

The answer is surprisingly very simple. Carriers have been for many years working to keep to keep costs, and thus have over time, reduced the Liability per pound based on the class of the LTL item being shipped.

While many shippers still believe in error that ALL LTL CARRIERS FULLY INSURE THE GOODS ON THE TRAILER, they are clearly wrong. Carriers are not doing this to avoid paying a claim, they are doing it because shippers want to keep costs down overall, and having limits on the liability per pound, based on the actual LTL class of the goods, is one way to achieve what everyone wants --low priced, cost-effective logistical options for LTL transportation.

Who has the responsibility to ensure the cargo on an LTL or Truckload carrier is properly insured?

The answer is shipper.

It is the shipper’s legal responsibility to ensure that the goods that they put on an LTL or Truckload carrier are properly insured.

So the question remains - "How does a shipper protect themselves and make sure, that in the event of a claim, that their goods are properly insured?

1. Read your LTL carrier tariff, if you have one, and look at the limits of liability as they are listed.
2. On the BOL that you provide the carrier, look to see if the value of the goods is clearly stated AND if added insurance is requested to cover the goods for the full value. This varies by carrier so you need to consult with the carrier or a 3PL such as Diversified Transportation Services who can provide supplemental insurance when requested. Keep in mind that the added cost per pound for extra insurance varies widely by each carrier. Get that cost in writing up front so you are not surprised.
3. DTS can provide cost-effective added insurance as well for each load very cost-effectively as we do it every day. Just call us so we can discuss your current needs regarding liability that you need for your company.
4. If you using a 3PL or an LTL carrier - ask them what the carrier liability is per pound is on the class your shipping and tell them the following - "I want to have my shipment insured for XXXX amount please." Do this in writing and make sure that any details are in writing. If a carrier or 3PL just tells you, don't worry you're insured, then you may want to dig a little deeper. Remember, in a court of law, the best documentation wins....So, you want to have things in writing when it comes to properly insuring your shipments, and what level of expectation you have for the liability in the event of a claim.

At the end of the day, it is very simple---the shipper has the legal responsibility to ensure their goods are properly insured. At Diversified Transportation Services we work to meet our client's overall needs and have been for over 28 years. If you would like a free consultation on how DTS can drive down your logistics costs as well as help you with your insurance issues if you have, feel free to reach out to us at marketing@dtsone.com or call us at 310-521-1200.

Happy Shipping!