The carrier is not insuring your freight. It is limiting what it owes you.
It is easy to assume that handing goods to a carrier transfers the risk. It does not. Standard carriage conditions work out what a carrier owes from what the goods were worth, then cap that amount by the weight of the shipment. You are paid the lower of the two, and because the ceiling is worked out on total weight, it bites hardest exactly where the goods are worth the most.
Build the cargo file The short answerValue first, then capped by weight, unless you declared a value on the bill of lading
Insurance. It is a limit on someone else’s liability to you
The ceiling is published by the Province, free, and you can work out yours today
If a carrier loses my shipment, do they pay what it was worth?
Usually not. If you have assumed the payout starts with what the load weighs, it is the other way round, and the difference is not small. The payout starts from what the goods were worth at the place and time you shipped them. The weight of the whole shipment then sets a ceiling on that figure. You are paid the lower of the two.
Because the ceiling is worked out on total weight and not on value, it bites hardest exactly where the goods are worth the most. A light pallet of costly goods can sit well above its ceiling, and the gap between the ceiling and the real loss can run to most of the load. A heavy pallet of low value goods may sit under its ceiling, and there the number to look at is the value of the goods. That is worth checking rather than assuming, because the value used may not be the value you have in mind.
There are three ways that number moves, and only one of them moves it up. It moves up if a higher value is declared on the face of the bill of lading, and a carrier can charge you for carrying that extra risk. It moves down if a lower value was put in writing, if it was agreed between the parties, or if it comes from the classification or tariff your rate is based on. That last one is the one shippers rarely see, because it can sit inside a rate you accepted without anyone ever raising the word value with you.
British Columbia sets these conditions out in its own regulation, and anyone can read it for free. The Motor Vehicle Act Regulations, B.C. Reg. 26/58, Division 37, Part 12, cover bills of lading and cargo insurance. The conditions for general freight are in Schedule 3, under the name Specified Conditions of Carriage. Household goods have their own set in Schedule 4, and the two do not say the same thing. When a carrier accepts your freight it must issue a bill of lading at that moment. That bill of lading must be signed by the shipper or the shipper’s agent and by the carrier or its agent, and it must contain the Schedule 3 conditions or refer to them. The same Schedule sets a deadline that decides whether the carrier is liable at all. Article 12a says the carrier is not liable for loss, damage or delay unless written notice reaches the originating carrier, or the delivering carrier, inside the time the Article sets, and that notice has to give the origin, the destination, the shipment date and the amount you are claiming. Article 12b then sets its own deadline for the final statement of the claim, which has to be filed with a copy of the paid freight bill. Read both Articles the day something goes wrong, because a claim that misses the notice is not a smaller claim. It is no claim. Source: Motor Vehicle Act Regulations, Division 37, Part 12, at BC Laws (opens in a new tab). We are brokers, not lawyers, and this is general information. The regulation as published is what governs, and these rules are provincial, so do not assume a load moving elsewhere is handled the same way. What we take from it is operational: the paperwork at pickup is not a formality, and it is worth getting right every time.
You recover against a ceiling set by weight, while the loss is the value of goods you had already been paid for or already promised to a customer. The freight was paid once. Replacing the goods is paid again.
Carrier liability is not cargo insurance.
Carrier liability
What the trucking company owes you if it is at fault, capped by the conditions of carriage. You have to prove fault, you argue with their insurer, and the cap applies regardless of what the goods were worth.
Cargo insurance
Your own policy on your own goods. It responds to the loss rather than to the argument about fault, it is written to the value of the shipment, and the recovery against the carrier becomes your insurer’s problem rather than yours.
Four habits that change the outcome.
Declare the value, and expect to pay for it
Declaring a higher value asks the carrier to accept more risk, and they will normally charge for it. That charge is the honest price of the cover. Not declaring is not free. It just moves the cost to you and you find out later. And if you are moving documents or anything of unusual value, say so on the bill of lading. Under Article 13 a carrier does not have to accept goods of extraordinary value without a special agreement, and if their nature is not disclosed on the bill of lading the ceiling still applies.
Get the bill of lading right at pickup
Signed by the shipper, when the goods are loaded, with the value and the goods described properly. It is the document that says what was agreed and when. Sorting it out at the delivery end is too late to be worth much.
Tell the carrier in writing, early
The conditions of carriage set a short deadline for giving the carrier written notice that goods were lost, damaged or delayed, and a second, longer one for filing the full claim with a copy of the paid freight bill. Miss the first and the carrier is not liable at all, however good the claim was. Your bill of lading has to carry a statement of that notice rule. The deadlines are in Articles 12a and 12b of Schedule 3, so read them before you need them.
Insure the goods, not the argument
Cargo cover responds to the loss. Chasing a carrier means proving fault, waiting on their insurer and living with the cap. One of those pays you this month.
What shippers ask us about this.
The carrier says they are fully insured. Is that enough?
Their insurance covers their liability, which is the capped amount, not the value of your goods. Two different questions. A carrier can be properly insured and still owe you a fraction of what you lost.
We ship through a freight forwarder. Are we covered by them?
Usually not. A forwarder arranging transport is not the same as a forwarder insuring your goods, and their own liability terms limit what they owe as well. If cover was not specifically arranged for your shipment, assume it does not exist and check.
Does our commercial property policy cover goods in transit?
Generally not. Property policies cover goods at described locations. Transit is its own exposure and needs its own cover, which is a gap worth checking on manufacturing and wholesale accounts.
What about goods sitting in a third-party warehouse?
Different again. A warehouse holds goods as bailee, with its own limited terms, and storage sits outside the moving legs. A stock throughput approach can put the whole journey, from supplier through transit and storage to delivery, on one policy rather than three that do not quite meet.
We only ship a few times a year. Is it worth it?
That depends on what one shipment is worth to the business rather than on how many there are. A single container that does not arrive can be a bad year. Tell us what moves and how often and we will tell you honestly whether it is worth arranging.
Two that decide what a stopped shipment costs you: how long business interruption keeps paying and replacement cost or actual cash value.
Not the question you had? Build the cargo file and set out your own situation in plain words. A licensed broker reads it and replies in writing.
Send us the bill of lading and the Incoterm line.
We will tell you where the risk actually sits on your journey, which legs are covered and which are not, and what it would take to put the whole trip on one policy. Next business day.