Different Extensions in the Freight Forwarder Liability Insurance Policy

The movement of cargo from one place to another is an integral part of the supply chain process. This movement of cargo requires expertise that can ascertain the smooth transit of goods. The entities or companies providing such services are called freight forwarders. Since the movement of cargo is subjected to various risks, Freight Forwarder Liability Insurance Policy is usually bought by these companies to cover their risks.

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What is Freight Forwarder Liability Insurance Policy?

As mentioned above Freight forwarders are companies or entities that handle and coordinate the shipment of goods through various modes of transport including air, sea and road. Having said this, a freight forwarder’s duty isn’t easy. They are responsible for the cargo or the freight throughout the journey. In case of any unprecedented event, they become financially responsible.

The freight forwarder liability insurance policy is specifically focused to protect the freight forwarders against losses or damages to the freight till it reaches the destination. This marine insurance policy provides financial cover to the forwarders from third parties claims or lost shipments.

Coverage under Freight Forwarders Liability Insurance Policy

Freight forwarder liability insurance policy may not be too common, and there are many variations in the offerings from different insurers. Some of the common coverage under this insurance type include.

Carrier’s Liability

When the carrier takes charge of the goods which are in good condition, it becomes liability of the carrier to safely transport the goods to the destination. If the goods are damaged, the extent of liability of damages of the goods has to be determined. In many marine insurance cases, if the carrier is found liable, the actual value of the goods is not taken into consideration. The refund depends on the weight of the damaged goods rather than the actual value of the goods.

Errors and Omission

Transporting cargo is a tedious process. It involves enormous paperwork, documentation, agreements etc. This forms a part of the duty of the freight forwarder. Any error caused in documentation or related process can result in fines, compensation and lawsuits.

A claim can occur when error or negligence is caused on part of the freight forwarder that may lead to financial loss to clients.

Third-party Liability

Accidents can occur at any point in time. Such accidents can occur when two or more vessels or vehicles collide or damage other property. The outcome can be costly and borne by the freight forwarder if the mistake is caused due to him.The freight forwarder liability insurance typically pays for legal, medical and compensation costs that arise due to the third-party claim.

General Average

The freight forwarder industry is subject to several regulations and laws. Apart from international regulations that must be followed, countries may have specific laws in place for the transit of goods.

If there is a breach of law or regulation, it may lead to hefty fines and lawsuits. A general average is a cost that is declared to help recover from the situation. All the parties involved (including the freight forwarder) have to share the losses.

Assured Transport Equipment and Employee Tools

Freight forwarder liability insurance policy may also cover physical loss of or damage to the assured's transport equipment. The insurance may also cover for loss of or damage to employee tools in the vehicle operated by the assured.


A freight forwarder’s liability is always on edge. Sudden uncontrollable factors can occur throughout the journey, and the company must be prepared to face them. A freight forwarder liability insurance policy is thus a crucial part of marine insurance that can help businesses recover from losses quickly and grow exponentially.

Written By: PolicyBazaar - Updated: 25 April 2023
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