Your valuable machinery shipment is damaged in transit. The carrier’s liability? A fraction of what you paid.
This massive protection gap isn’t rare—it’s the industry standard. Most LTL carriers limit their liability based on weight, not value, regardless of what your shipment actually costs to replace. With damage occurring regularly across the industry, you’re essentially gambling on every valuable shipment you send.
The financial impact is real: Damage claims can cost thousands, but without proper coverage, you’ll absorb most of that loss yourself.
Smart shippers bridge this gap with freight insurance that covers actual replacement costs—not arbitrary weight calculations. For a small percentage of your shipment’s value, you can eliminate the guesswork and turn shipping risks into predictable business expenses.
Here’s exactly what you need to know to protect your shipments and your bottom line.
What you’ll learn
Difference between carrier liability and full value freight insurance coverage
Types of LTL freight insurance available for different shipping scenarios
When insurance investment makes financial sense for your shipments
How to file successful claims and recover losses quickly
TL;DR:
Key takeaways
Carriers typically cover only $0.50-$1.00 per pound in basic liability
Full value freight insurance costs 1-7% of shipment value, but covers replacement cost
Claims must be filed within specific timeframes to ensure coverage
What is LTL freight insurance?
LTL freight insurance provides financial protection for your shipments beyond the minimal coverage automatically included by carriers. This additional protection bridges the gap between what carriers are legally required to cover and your shipment’s actual value.
PRO TIP: Most carriers limit their liability to a fraction of your shipment’s worth. Without additional coverage, you’re essentially self-insuring the difference between their minimal payout and replacement cost.
When shipping less-than-truckload (LTL), you’re sharing truck space with other customers’ cargo. This increases handling touchpoints and potential damage risks compared to full truckload shipping. Standard carrier liability rarely matches today’s product values, leaving significant coverage gaps.
The “insurance gap” represents the difference between automatic carrier coverage (often $0.50-$1.00 per pound) and your shipment’s actual replacement value. For a $5,000 electronics shipment weighing 100 pounds, carrier liability might cover only $100, leaving you responsible for the remaining $4,900.
Freight insurance exists because modern cargo values far exceed the liability limits established decades ago. Today’s shipments routinely contain electronics, machinery, and specialty items worth hundreds of times more per pound than carrier coverage provides.
Types of LTL freight coverage
Understanding your coverage options helps you choose appropriate protection for different shipping scenarios. Three main types of coverage are available for freight shipments.
Carrier liability protection
Carrier liability is the automatic but limited coverage included with every shipment. Motor carriers can limit liability to as low as $0.50 per pound². This coverage calculates payouts based on weight, not value—a critical distinction that often surprises shippers.
NOTE: Carrier liability operates on a per-pound basis regardless of your item’s actual value. A $10,000 piece of equipment weighing 50 pounds might only receive $50 in carrier liability coverage.
For example, if your 200-pound machinery shipment suffers damage, carrier liability at $1.00 per pound provides maximum compensation of $200, regardless of the equipment’s $15,000 replacement cost.
Shipper’s interest insurance
Shipper’s interest insurance provides full value protection based on your declared shipment value rather than weight. This cargo insurance covers replacement cost, making it suitable for high-value, lightweight items where carrier liability falls drastically short.
Unlike weight-based carrier coverage, shipper’s interest insurance considers your product’s actual worth. The shipper declares the shipment value and pays premiums based on that amount, ensuring adequate protection regardless of the cargo’s weight-to-value ratio.
Third-party insurance options
Independent insurance providers offer customizable freight coverage through policies separate from carrier relationships. These third-party options provide flexibility in coverage terms, claim procedures, and policy limits that carrier-provided insurance coverage may not match.
Third-party insurers can often provide broader coverage terms and may offer better rates for frequent shippers. When comparing carrier options, consider factors like claim resolution speed, coverage exclusions, and premium costs across different providers.
Carrier liability vs. full value insurance: key differences
Understanding the fundamental differences between basic carrier liability and comprehensive freight insurance helps you make informed protection decisions for your shipments.
Motor carriers can publish liability limits in their tariffs as low as $1.00 per pound¹, creating substantial coverage gaps for valuable cargo. This weight-based calculation system originated when most freight consisted of bulk commodities with relatively low per-pound values.
| Coverage type | Coverage basis | Typical cost | Example payout |
|---|---|---|---|
| Carrier liability | $0.50-$1.00 per pound | Included with shipment | $100 for 100-lb shipment |
| Full value insurance | Declared shipment value | 1-3% of shipment value | $10,000 for $10,000 shipment |
EXAMPLE: A $20,000 computer server weighing 100 pounds receives only $100 in basic carrier liability coverage, leaving you responsible for $19,900 in potential losses.
Consider real-world scenarios: shipping $15,000 worth of medical equipment weighing 75 pounds provides only $75 in carrier coverage at $1.00 per pound. Meanwhile, parties often agree to liability limitations such as $100,000 per truckload³, but this maximum rarely applies to individual LTL shipments sharing truck space.
Full value freight insurance closes this protection gap by covering actual replacement costs rather than arbitrary weight calculations. A cargo shipment worth $15,000 receives $15,000 in potential coverage, matching your financial exposure to appropriate protection levels.
The cost-benefit analysis becomes clear when comparing premium costs to potential losses. Paying 2-3% of shipment value for full coverage often makes financial sense when carrier liability covers less than 1% of your actual exposure.
Common types of freight claims
Understanding typical claim scenarios helps you recognize when freight insurance provides the greatest value and protection for your shipments.
Visible damage
Visible damage represents the most straightforward type of freight claim, occurring when shipment damage is apparent upon delivery. Shippers reported an average LTL damage rate of 1.24%, meaning 1 in every 80 shipments resulted in damage⁴.
Documentation proves critical for visible damage claims:
Photograph all damage before signing the delivery receipts
Note specific damage on bills of lading
Retain all packaging materials for carrier inspection
Concealed damage
Concealed damage occurs when external packaging appears intact, but contents suffer harm during transit. This scenario particularly benefits from freight insurance since proving carrier responsibility becomes more challenging without obvious external evidence.
Standard carrier liability often disputes concealed damage claims, arguing that packaging integrity suggests proper handling. Comprehensive insurance coverage eliminates these disputes by focusing on actual loss rather than fault determination.
Loss and theft
Complete shipment loss or theft scenarios demonstrate freight insurance value most clearly. When your entire shipment disappears, carrier liability based on weight provides inadequate compensation for valuable cargo.
The average cost for LTL damage and loss claims is around $1,796 per shipment⁵, highlighting the financial impact these incidents create for unprepared shippers. Full value protection ensures you can replace lost inventory without absorbing substantial unexpected costs.
Shortage and refusal claims
Partial shipment losses and customer refusal situations create complex claim scenarios where comprehensive coverage proves valuable. When customers refuse damaged goods or only portions of shipments arrive, freight insurance streamlines resolution processes.
For businesses shipping specialized handling for large items, shortage claims become particularly important since partial loads may render entire orders unusable for customers.
When you need LTL freight insurance
Determining appropriate insurance coverage depends on your shipment characteristics, value thresholds, and risk tolerance levels.
High-value shipments represent the clearest case for additional freight insurance protection. Electronics, precision machinery, and luxury goods routinely exceed carrier liability by substantial margins, making full value coverage a sound investment.
For ecommerce businesses shipping products with high per-pound values, the gap between carrier coverage and replacement costs often justifies insurance premiums. Consider LTL shipping scenarios where product values significantly exceed weight-based liability calculations.
Fragile or delicate goods face elevated damage risks during LTL transport due to multiple handling points and mixed-load conditions:
Glass and ceramics
Precision instruments
Electronic equipment
Medical devices
NOTE: Used goods receive limited carrier coverage since depreciated values reduce claim settlements. When shipping pre-owned equipment or refurbished products, freight insurance provides more predictable protection levels.
The shipper’s financial ability to absorb unexpected losses should factor into coverage decisions. If losing a single shipment would create significant financial hardship, investing in full value protection makes sense regardless of statistical damage rates.
How to file an LTL freight insurance claim
Proper claim procedures maximize your chances of successful recovery and minimize resolution delays when freight damage or loss occurs.
Immediate steps at delivery
Document everything thoroughly before accepting delivery, as your actions at this critical moment significantly impact claim outcomes. Refuse damaged shipments when practical, or note all visible damage on delivery receipts before signing.
Take comprehensive photographs of packaging, contents, and damage from multiple angles. Retain all shipping materials, including boxes, padding, and labels, as carriers often require physical inspection of these items during claim investigations.
PRO TIP: Never sign delivery receipts as “clear” or “good condition” when any doubt exists about shipment integrity. Notations like “subject to inspection” preserve your claim rights while allowing delivery completion.
Cargo insurance claim procedures typically require immediate notification to both carriers and insurance providers. Contact both parties within 24 hours to begin claim processes and preserve all rights under your coverage terms.
Documentation requirements
Successful claims depend on thorough documentation supporting your loss and damage assertions. Essential documents include:
Original bills of lading
Commercial invoices
Photographs of damage
Inspection reports
NOTE: The LTL industry claims ratio decreased from 0.588% to 0.345% from 2020-2025⁶, suggesting improved handling procedures, but proper documentation remains critical when claims do occur.
Maintain detailed shipping records including product descriptions, values, packaging methods, and routing information. This documentation supports both carrier liability and freight insurance claims by establishing shipment conditions and value.
Reporting timeframes
Most freight insurance policies require claim notification within 24-48 hours of discovery, with formal claim filing deadlines typically ranging from 9 months to 2 years depending on coverage terms.
WARNING: Carrier notification deadlines often differ from insurance requirements, so contact both parties immediately upon discovering damage or loss. Missing notification deadlines can void coverage regardless of claim validity.
Claims processing timeline
Expect 30-60 days for typical freight insurance claim resolution, though complex cases involving multiple parties or disputed liability may require additional time. Simple visible damage claims often resolve faster than concealed damage or total loss situations.
Appeals processes provide recourse when initial claim decisions prove unsatisfactory. Review denial reasons carefully and provide additional documentation addressing specific carrier or insurer concerns to improve appeal success rates.
Cost considerations and choosing a provider
Understanding freight insurance pricing helps you budget appropriately and select cost-effective coverage for your shipping needs.
Freight insurance typically costs 1% of commercial invoice value, with rates ranging from $0.25-$0.75 per $100 of declared shipment value. Premium calculations consider factors like commodity type, packaging methods, shipping routes, and historical loss experience.
PRO TIP: ROI analysis becomes straightforward when comparing premium costs to potential losses. A $10,000 shipment with $100 in annual premium costs provides excellent value when carrier liability covers only $100-$500 of potential exposure.
| Shipment value | Insurance cost (2%) | Carrier liability (100 lbs) | Protection gap |
|---|---|---|---|
| $5,000 | $100 | $100 | $4,900 |
| $10,000 | $200 | $100 | $9,900 |
| $20,000 | $400 | $100 | $19,900 |
Average cargo insurance ranges from $800-$1,500 annually per truck for $100,000 limit, but LTL shippers typically purchase coverage per shipment rather than annual policies. Calculate costs based on your shipping frequency and average shipment values.
READ MORE: When selecting coverage providers, evaluate logistics providers offering insurance services alongside traditional insurance companies to find the best combination of rates, service, and expertise for your shipping profile.
Provider selection criteria should include:
Financial strength ratings
Claim resolution reputation
Coverage territory
Customer service quality
Strong insurance coverage becomes worthless if providers lack financial stability or dispute legitimate claims.
Citations
- Parcel Industry. “Motor Carrier Liability, Cargo Liability Insurance, and Cargo Insurance: An Analysis.” Parcel Industry, 2024. parcelindustry.com/article-6325-Motor-Carrier-Liability-Cargo-Liability-Insurance-and-Cargo-Insurance-An-Analysis.html.
- The Roanoke Group. “What is the Better Recovery Option – Carrier’s Legal Liability or Cargo Insurance?” The Roanoke Group, 2023. www.roanokegroup.com/blog/what-is-the-better-recovery-option-carriers-legal-liability-or-cargo-insurance/.
- Benesch Law. “Cargo Liability – Global Comparative Analysis of Legal Regimes.” Benesch Law, 2024. www.beneschlaw.com/resources/cargo-liability-global-comparative-analysis-of-legal-regimes.html.
- Flock Freight. “2025 Shipper Research Study.” Flock Freight, 2025. www.flockfreight.com/the-need-for-speed-research-study-25.
- Flock Freight. “2025 Shipper Research Study.” Flock Freight, 2025. www.flockfreight.com/the-need-for-speed-research-study-25.
- Synchrogistics. “Synchro LTL Freight Claim Index.” Synchrogistics, 2025. synchrogistics.com/synchro-ltl-claims-index/.
- Cota Systems. “#1 Ultimate Freight Insurance Guide: Become Immediately Less Risky.” Cota Systems, 2024. www.cotasystems.com/blog/freight-insurance-guide.
- Trucking Insurance Services. “How Much Does Cargo Insurance Cost?” Trucking Insurance Services, 2024. www.truckinginsuranceservices.com/blog/how-much-does-cargo-insurance-cost/.
