Cargo Insurance VS Carrier's Limit of Liability

If you are in the logistics or the shipping industry, freight damage and loss are an inevitable part of the business. There are high chances that you might face such scenarios throughout your business activity. Hence, you should be aware of the difference between cargo insurance and the carrier's limit of liability. Understanding these terms, their main areas of difference and claim processes can greatly impact your business model.

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Learn more about Marine Insurance

What is the Carrier Limit of Liability?

To understand this term, let us spilt the word into two. The word carrier means the logistic company is legally entitled to transport the shipment from one place to another. Liability means having a legal responsibility towards something. So, the word carrier limit of liability means the maximum amount a carrier or the company is liable to pay in case of damages, losses, or delay in shipment. 

The value of this coverage is usually much less than the actual value of the cargo. It may also depend on the content of the shipment and the rate at which the carrier charges for that type of commodity. Liability limits typically cover a percentage of the value lost.

What is Cargo Insurance Policy?

When your consignment is in transit, it is prone to various risks. These risks can damage or cause the loss of your cargo. It is thus always important to consider cargo insurance for your freight. Marine cargo insurance policy, also sometimes known as freight insurance, or goods in transit insurance, is one of the most common insurance types used to protect the value of goods (cargo) from physical damage or theft. 

The main aim of cargo insurance is to minimize financial loss if the shipment is damaged or lost. A small amount, in terms of premium, is paid to buy this insurance which also gives the shipper peace of mind.

Cargo Insurance VS Carrier's Limit of Liability

Carrier limit of liability and cargo insurance may seem similar, but in reality, there are a few major differences between them. If you are having a business in shipping, transportation or logistics, these differences may help you choose the right plan and improve your bottom line. The table below briefly showcases cargo insurance VS carrier's limit of liability.

Cargo Insurance Carrier's Limit of Liability
Cargo insurance is a specific type of insurance that is bought by payment of premium Carrier limits of liability is not considered as insurance but is only a supplementary protection
Shippers are not obligated to have a minimum cargo insurance Carriers are legally required to carry a minimum amount of insurance
It ensures that the business is protected from unexpected losses or damages Goods are not fully protected even if the carrier is at fault for damaging the goods

Difference in Claims Process

Let us look at the difference in the claims process in cargo insurance and carrier's limit of liability.

For shipment covered only by carrier’s limit of liability:

  • The claim must be filed within 9 months of delivery
  • Notice of damage must be included in the delivery receipt
  • Proof of value and proof of loss must be provided
  • Acknowledgement should be done by the carrier within 30 days and responded to within 120 days
  • Carrier negligence must be proven

For shipment covered by cargo insurance:

  • Proof of value and proof of loss must be provided
  • Claims payment is done usually within 30 days
  • No need to prove carrier negligence


Rough weather, accidents, or circumstances beyond your control can lead to damaged or lost cargo. Purchasing a policy for marine insurance online can help providing adequate coverage, seamless procedures, and hassle-free claim settlements.

Written By: PolicyBazaar - Updated: 17 November 2023
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Policybazaar for Business - Marine Insurance - Customer Reviews
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Based on 114 reviews
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3.8 April 20, 2023
Great Experience
I recently purchased Marine insurance from Policybazaar for my shipping business and I must say I am thoroughly impressed with their service and coverage. From start to finish, the experience has been smooth and hassle-free.Thankyou.
4.3 April 03, 2023
Provides Comprehensive Protection
When it comes to coverage, Marine insurance that i bought from PolicyBazaar has exceeded my expectations. It provides comprehensive protection for my cargo and vessels during transit, ensuring I can focus on my business operations with peace of mind. Thankyou.
4.3 March 17, 2023
Excellent Services
I highly recommend Marine insurance from PolicyBazaar website to anyone in the shipping or logistics industry. Their user-friendly website, comprehensive coverage, and excellent customer service make them stand out from the competition. With Policybazaar, I feel confident in navigating the high seas, knowing that my business is well-protected. Thank you, Policybazaar.
4.3 February 28, 2023
User Friendly Interface
The website's user-friendly interface made it easy to compare different plans and find the perfect fit for my business needs.Thanks
4.3 February 11, 2023
Prompt Services
I appreciate the transparency and honesty with which Policybazaar handled my claims. They were prompt in processing my claim and their claim settlement process was hassle-free.Thanks PolicyBazaar.
3.8 February 10, 2023
Exceeds Expectations
I recently had the pleasure of purchsing marine insurance from Policy bazaar website and I must say it has been an outstnding experience from start to finish. I am thrilled to share my positive customer review, as this truly exceeded my expectations. Thanks PB.
3.8 January 31, 2023
Easy Navigation
The ease of navigating the Policy bazaar website and finding the right marine insurance policy was impressive. The website's user-friendly interface and intuitive design made it incredibly simple to compare various options, understand the coverage details and make an informed decision. I appreciated the transparency provided throughout the process. Thanks.
3.8 January 21, 2023
Excellent Support
The customer service provided by Policy bazaar was decent. Their team was responsive, knowledgeable and went above and beyond to assist me at every step. Their professionalism and commitment to customer satisfaction were truly commendable.Thankyou.
4.3 January 11, 2023
Sanjeev Rathor
Efficient Process
When it came to claims processing, Policy bazaar demonstrated remarkable eficiency and effectivenes. I had an unfortunate incident during the coverage period and filing a claim was a breeze. The entire process was streamlined and their team guided me throuugh every necssary step, making it hassle-free. The promptness with which my claim was setled reflected their commitment to their customers' well-being and peace of mind. Thankyou.
3.8 January 01, 2023
Comprehensive Coverage
I must mention the comprehensive coverage provided by the marine insurance policy I purchasd through Policy bazaar. It offered me the necesary protection and peace of mind. Thankyou PolicyBazaar.