Before you allow a carrier to ship your LTL freight, it is very important for you to know the liability limits, or insurance, they carry to cover your freight. Don’t assume that they will reimburse you 100 percent for damaged or lost shipments — even if it is their fault.
Since deregulation, LTL carriers can limit their liability based on rates they charge, and they are not required to inform you of these limitations.
For instance, most air cargo carriers limit their liability to 50 cents a pound. That means a 1,000-pound shipment valued at $6,000 would only be reimbursed at $500 if lost or damaged. Although this is an extreme case, it is not uncommon.
Many of the major LTL trucking companies have decreased the maximum liability from $25 a pound to $10 a pound. And just recently, many have slipped in a “per piece, per pound” clause to further limit their financial responsibility for lost or damaged shipments.
Here’s how the “per piece, per pound” works against you:
- Let’s suppose you shipped 10 boxes of parts that totaled 1,000 pounds with a total net worth of more than $10,000. Let’s also suppose that one of those boxes was worth more because it contained an expensive part or piece of equipment that was needed to assemble the products in the other boxes. During shipping, that one box containing the expensive part or equipment gets lost or damaged.
- As long as there was no other liability limit applied, you could claim up to $10,000 for that one box because the total shipment was covered (1,000 pounds x $10).
- Under the “per piece, per pound” liability rule, the maximum you could claim for the same 100-pound box would be $1,000 (100 pounds x $10). That is a $9,000 difference on the coverage of your shipment.
Check your LTL carrier’s liability before you ship, or when you get an LTL quote to avoid surprises.
