May 08, 2017 | Cargo Insurance, Industry Insights, Shipping

An Inside Look at Declared Value Vs. Cargo Insurance

Share This:

Shippers often mistake declared value coverage with Cargo insurance, but in fact they are quite different. It is important to understand these differences and how claims are paid under each type of policy. Following is a brief overview of how these policies work.

The practice of declaring a value for carriage occurs when a shipper wants the option to pursue a recovery amount that exceeds the carriers stated limits should a loss occur. Declaring a value does not increase the carriers scope of liability, it simply allows the shipper to pursue a higher recovery. Consider a scenario in which a shipper’s goods are valued at $200,000 and the chosen carrier has a stated maximum liability of $100,000. To make up for the shortfall, the shipper can declare a value of $200,000 and pay additional charges for the $100,000 increase in liability.

It’s important to note, however, that the exclusions, limitations, and terms of the bill of lading still apply and, even more importantly, in the event of a claim the shipper needs to provide evidence that the loss was caused by the carrier. Just because the shipper paid for the additional coverage doesn’t necessarily mean that any type of loss or damage that occurs while in the care, custody and control of the carrier will be fully recovered. Legal liability on the part the carrier must be proven. In addition, carriers have several established defenses with regard to cargo damage, including acts outside of their control, acts of God, and insufficient packing, among others. Take this scenario, for instance. On the way to the airport, a trucker was held at gunpoint and the cargo was stolen. The driver took no additional risks and was following his regular route. The cargo claim was denied due to the lack of contributory negligence on the part of carrier.

Now let’s take a look at Cargo insurance, which directly protects the goods on behalf of the shipper against physical loss or damage according to the policy terms. The shipper does not have to prove that the carrier is legal liable for the damage. If there is a covered claim, the shipper will be reimbursed for its full-insured value for a 100% loss or reimbursed proportionally for partial losses. Cargo insurance is clearly the better alternative for shippers, but declared value does have its place for some items such as commodities that cannot be insured for all-risk coverage.

Purchasing Cargo insurance allows shippers to eliminate gaps in coverage and protect their financial interests. Roanoke Trade specializes in providing insurance solutions to transportation and logistics providers, and will be happy to review specific coverage details with you. For information about our insurance products and services, please contact one of our Roanoke Trade professionals at 1-800-ROANOKE (800-762- 6653).

Share This:

Related


Guarding Against Fictitious Pickups and Cargo Theft: Tips and Training

Fictitious pickups are increasing in North America. In the US, the percentage of cargo thefts due to fictitious pickup rose from 1% in 2022 to 17% in 2023. Strategic theft patterns are also rising, where thieves use identity theft and fraud with fictitious pickup and brokering schemes to obtain loads from freight locations. Combatting this […]

Cargo Insurance, Industry Insights

Thank You to Karen Groff

We have important news to share with you. Karen Groff, President of Roanoke Insurance Group, has decided to leave the organization. Although our hearts are heavy with this news, we respect her decision and wish her all the best in her future endeavors. Karen played an integral role in Roanoke’s success over the past 30 […]

Corporate Communiqué, Industry Insights

Get the Highlights: World Shipping Council’s 2023 Report on Container Safety

On the open sea cargo losses happen. Every year, 100s of millions of cargo containers carrying goods valued into the trillions of dollars crisscross the ocean on ships. Transporting these goods safely requires proper packing, stowage, container weight, and securing of containers, but even when all these measures are carried out to perfection, containers get […]

Cargo Insurance

Roanoke is the leading provider of insurance and surety solutions for transportation and logistics providers. In fact, we are recognized as the most reliable source for U.S. customs bonds.

Contact

If you have any questions or need help, feel free to contact with our team.

800-762-6653

US CORPORATE HEADQUARTERS

1501 E. Woodfield Road

Suite 400W

Schaumburg, IL 60173


CANADA CORPORATE HEADQUARTERS

390 Bay Street

Munich Re Centre, 22nd Floor

Toronto, ON M5H 2Y2

Solutions that Go the Distance.

© 2024 Roanoke Insurance Group Inc. A Munich Re company

Better Business Bureau logoCoverholder at Lloyd's logo