Carrier liability is not the same as freight insurance. Most shippers don't discover the difference until they file a claim. Here's what you need to know before your next shipment.
One of the most misunderstood areas in freight logistics is cargo insurance. Many shippers assume that because a carrier holds insurance, their goods are fully protected in the event of damage or loss. In most cases, that assumption is wrong — and the gap between expectation and reality only becomes apparent at the worst possible moment.
Carrier Liability Is Not Full Coverage
Under Canadian and US transportation law, carriers are liable for cargo loss or damage — but only up to a statutory limit, and only when the carrier is at fault. Standard carrier liability in Canada is governed by the applicable provincial Carriage of Goods Act and often limits recovery to a low per-pound or per-shipment figure. For high-value freight, that cap can represent a fraction of actual product value.
What Carrier Liability Typically Excludes
- Acts of God — weather events, floods, extreme cold
- Shipper-caused damage — improper packaging or loading
- Inherent vice — spoilage that would have occurred regardless of transit
- Delays — loss of market value due to late delivery
- Government seizure or customs holds
All-Risk Cargo Insurance
Shippers who want genuine protection purchase all-risk cargo insurance, which covers physical loss or damage to goods from virtually any external cause during transit. Premiums are based on cargo value and commodity type. For temperature-sensitive goods, specialized coverage for spoilage is available. Cannabis shipments typically require endorsement-specific coverage due to the regulated nature of the product.
How to Declare Value
On a standard bill of lading, you can declare a cargo value that overrides the carrier's default liability limit — typically for an additional charge. This is not the same as purchasing insurance, but it does increase the ceiling of what a carrier must pay in the event of a claim. Consult your freight broker and insurance provider about the best approach for your commodity and risk tolerance.
When booking freight through OTR Logistics Solutions, ask our team about cargo insurance options for your shipment. We can advise on declared value and connect you with options appropriate for your commodity.
Frequently Asked Questions
What is the difference between carrier liability and freight insurance?
Carrier liability is a legal obligation under transportation law — limited in amount and requiring proof of fault. Freight insurance is a separate policy purchased by the shipper, providing broader coverage up to declared value regardless of who is at fault.
How do I arrange cargo insurance for a freight shipment?
You can purchase cargo insurance through your freight broker, a third-party cargo insurer, or your business insurance broker. When booking with OTR Logistics Solutions, ask about cargo coverage options for your specific commodity and shipment value.
Does cannabis freight require specialized cargo insurance?
Yes. Standard cargo policies often exclude cannabis due to its regulated status. Specialized cargo endorsements covering licensed cannabis product are available from insurers in the regulated space. Confirm coverage is in place before booking any cannabis shipment.
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