LTL Carrier Liability Limits & RatesWritten by Neal Willis
With shipments of a particularly high value, FAK structured pricing and LTL volume shipments in particular, one instance of damage and/or loss could negate any savings you’ve achieved with lower pricing. Due to limited carrier liability coverage rates, shippers are often left with no recourse to recover full value reimbursement for damaged, lost and/or stolen shipments through a claim settlement with the carrier. This is because there’s often a gap in coverage between the actual value of the commodity and the actual amount your carrier can be held liable for in the event of damage, theft and/or loss of that particular commodity.
Liability coverage limits for LTL carriers can vary from one carrier to another and from one shipper to another. Generally speaking, LTL carrier liability coverage limits can be found in the carrier’s published rules tariff, which is based on and can vary according to several factors, including the specific pricing structure in place, the commodity and class of a shipment, the mode of shipment (regular LTL vs. volume LTL) and the condition of the items (new vs. used).
When electing to ship something via LTL Volume, a shipper sacrifices carrier liability coverage in exchange for a lower freight rate. Volume LTL shipments are commonly covered with a carrier liability rate of only $1/lb. In the event of damage and/or loss of a Volume LTL shipment, a shipper can be left bearing a significant financial burden if the freight isn’t covered with some type of additional cargo insurance.
FAK pricing structures also go hand in hand with lower carrier claims liability coverage. If there’s an FAK pricing structure involved, the amount of applicable carrier liability coverage can vary drastically and can range anywhere from $0.99/lb. all the way to $25/lb. or more, depending upon the applicable FAK class under which a shipment falls. Just like with a Volume LTL shipment, the savings you gain from a pricing standpoint with an FAK can be negated with just one damage and/or loss claim.
Additionally, used goods, if even covered by the carrier, also move under lower liability with carrier coverage rates commonly as low as $0.10/lb. As a shipper, it’s important to know the applicable carrier liability limits you’re covered with through your carriers. Unless you have additional freight cargo insurance covering your shipments or you have negotiated increased claims liability limits higher than the standard carrier liability limits applicable under most major LTL carrier’s published rules tariffs, it’s highly likely that you’re leaving your business exposed to financial loss in the event of damage, theft and/or loss.