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LTL Cargo Insurance

Limited Liability VS Full Value Protection

Don't Gamble with Your Freight: Understanding the Differences Between Limited Liability and Full Value Protection

When it comes to shipping your goods, there is always an element of risk involved. Unfortunately, many shippers are unaware of just how risky it can be, relying solely on the limited liability offered by their carrier. This may seem like a cost-effective option, but it could end up costing you much more in the long run. That's why it's so important to fully understand your coverage options. In this blog post, we'll break down the differences between limited liability and full value protection so you can make an informed decision based on freight class, transit times, and other factors.

How Does Limited Liability Differ from Full Value Protection?
Limited Liability varies from one carrier to the next and is based on packaging, freight class, commodity type, and other specific conditions. Under the Carmack Amendment, carriers have a legal financial responsibility to their customers when goods are damaged or lost, but only in particular circumstances - and only up to a certain amount.

For LTL shipments, limited liability often leaves shippers only receiving between $0.10 and $2 per pound. Additionally, the carrier is financially responsible for loss or damage ONLY when it's proven to be due to carrier negligence. In fact, more than half of carrier liability claims are denied completely. Because of this, damage or loss due to many unforeseen events may not be covered at all, leaving the shipper with a potentially serious financial loss.

On top of many other restrictions, limited liability only covers goods when they are in the care of the carrier. Whereas with full value protection, the goods are covered door-to-door, meaning that they are fully covered until safe delivery, even after leaving the carrier’s custody. It’s not uncommon for LTL shipments to have multiple stops, especially in long hauls, increasing the possibility of freight damage.

What are the Most Common Types of Claims?

Damage: This is when freight is received with visible damage and is one of the most common forms of claims. Examples of this include water damage, contamination, and infestation.  

Loss: This type of claim occurs when goods are lost in transit; meaning that the cargo was picked up but never delivered.

Concealed: When loss or damage is revealed after delivery and reported to the carrier after the driver already leaves, it's considered concealed.

Shortage: When the recipient only receives a portion of the freight expected, a shortage occurs. This often happens when the product falls out or pieces go missing.

Refused: Sometimes a shipment is delivered, and the product is damaged, is the incorrect freight, or the shipment is late. If your consignee refuses the shipment, it’s returned to the carrier’s delivery terminal.

Even though carriers take great measures to prevent damage, it can be alarming how often the above events occur. Even experiencing one such incident can cause a huge financial hit, resulting in the loss of thousands (or even hundreds of thousands) of dollars.  

Why Is Full Value Protection Essential for LTL Shippers?
In LTL shipping, longer transit times, more stops, and increased handling put shipments at increased risk for loss or damage. The route is never straight through, which means delivery rates are often estimates, rather than guarantees.

Another aspect of LTL shipping that may put cargo at greater risk is increased freight handling. shipments are loaded in and out of trailers multiple times before reaching a final destination. Though an overwhelming majority of LTL shipments are delivered in pristine condition, the increased handling means increased exposure to potential product damage.

Being that LTL freight shares trailer space with other companies, there’s no guarantee that the other shippers packed their cargo carefully. This sometimes leads to neighboring cargo being damaged from improperly packaged freight.

Utilizing full value protection is the only way to guarantee that any loss or damage to the product is completely covered during the shipping process.