Cargo Protection
Freight Insurance & Cargo Coverage
Understand your coverage options, know what your carrier is liable for, and protect your freight before it leaves the dock.
The Basics
Carrier Liability vs. Cargo Insurance
Many shippers assume their freight is “fully insured” by the carrier. It is not. There is an important difference between carrier liability and cargo insurance, and understanding it can save you thousands of dollars when something goes wrong.
Carrier liability is the legal obligation a carrier has under the Carmack Amendment to compensate you for freight that is lost, damaged, or delayed while in their possession. However, carrier liability has limits, exclusions, and can take months to settle.
Cargo insurance is a separate insurance policy — purchased by the shipper, broker, or carrier — that provides broader, faster coverage. Unlike carrier liability, cargo insurance can cover perils like acts of God, temperature failure, and contamination.
Federal Law
The Carmack Amendment
The Carmack Amendment (49 U.S.C. Section 14706) is the federal statute that governs carrier liability for damage, loss, or delay of interstate freight shipments. Under Carmack, a carrier is presumed liable for damage unless they can prove one of five defenses:
- Act of God (natural disaster, severe weather)
- Act of a public enemy
- Act or default of the shipper
- Public authority (government seizure)
- Inherent vice or nature of the goods (perishability, shrinkage)
Carmack provides a legal framework, but it does not mean your freight is fully covered. Shippers still need to understand released value rates, declared value, and when to purchase additional insurance.
Coverage Options
Types of Freight Coverage
Released Value
The minimum coverage included with every shipment at no extra cost. For LTL, this is typically $0.50 per pound. A 500-pound pallet would only be covered for $250 regardless of actual value.
Full Value Protection
Covers the full declared value of your freight. The carrier is responsible for repair, replacement, or reimbursement at current market value. Requires declared value on the BOL.
Contingent Cargo Insurance
A secondary policy that kicks in when the carrier's primary insurance denies or underpays a claim. Often carried by freight brokers and 3PLs as an additional layer of protection.
Shipper's Interest Insurance
An all-risk policy purchased by the shipper to cover freight regardless of who is at fault. Covers perils that carrier liability does not, including acts of God and shipper negligence.
Decision Guide
When to Buy Additional Coverage
Consider additional freight coverage when:
- Your shipment value exceeds the carrier's released value rate (most LTL shipments over $5,000)
- You are shipping fragile, high-value, or temperature-sensitive goods
- The freight is irreplaceable (custom-manufactured parts, one-of-a-kind equipment)
- You are shipping to or from high-theft corridors or during peak season
- The cost of a claim loss would materially impact your business
Typical costs: Additional coverage runs $0.50 to $2.00 per $100 of declared value. A $25,000 shipment would cost roughly $125 to $500 for full-value protection — a small price compared to an uninsured loss.
Before You Ship
How to Verify Carrier Insurance & Add Coverage
Before any freight moves, verify the carrier's insurance through FMCSA's SAFER system. Confirm active operating authority, cargo insurance minimums, and public liability coverage.
When you book through Direct Fleet Dispatch, we handle this verification for every carrier. If you need additional coverage beyond the carrier's liability, we can help you:
- Declare the full value of your shipment on the BOL
- Request a full-value rate from the carrier (higher cost, higher coverage)
- Obtain a shipper's interest policy from a freight insurance provider
- Add contingent cargo coverage for an extra layer of protection
FAQ
Freight Insurance Questions
Is my freight automatically insured?
All carriers are required to carry cargo insurance, but the default coverage (released value) is minimal — typically $0.50 per pound for LTL. This means a 1,000-pound shipment worth $50,000 would only be covered for $500. For high-value freight, additional coverage is strongly recommended.
How much does additional freight insurance cost?
Additional cargo coverage typically costs between $0.50 and $2.00 per $100 of declared value, depending on the commodity, lane, and coverage type. A $50,000 shipment might cost $250-$1,000 for full-value coverage. We can help you get quotes from insurance providers.
What is the Carmack Amendment?
The Carmack Amendment is federal law (49 U.S.C. Section 14706) that governs carrier liability for interstate freight. It makes carriers liable for loss, damage, or delay unless they can prove an exception (act of God, public enemy, shipper fault, inherent vice, or public authority). It also sets the framework for filing freight claims.
How do I verify a carrier's insurance before shipping?
You can verify a carrier's insurance through FMCSA's SAFER system (safer.fmcsa.dot.gov). Look for active authority status, minimum cargo insurance ($100,000 for general freight), and public liability insurance ($750,000-$5,000,000 depending on vehicle type). We verify all of this before assigning any carrier to your freight.
Should I purchase shipper's interest insurance?
If you regularly ship high-value goods (electronics, medical equipment, finished products), shipper's interest insurance provides the broadest protection. Unlike carrier liability, it covers all risks including shipper-packed errors and acts of God. It also pays faster than filing a claim through the carrier.
Ship With Confidence
Every carrier we assign is FMCSA-verified with confirmed insurance. Need help understanding your coverage options? We are here to help.