Carrier liability insurance – a guarantee for the transport company

Carrier liability insurance: general concepts, types, who and when pays compensation, international conventions, rules, international insurance clubs

According to international rules, freight transportation, regardless of the transport used, must be accompanied by insurance support, which is provided to the organization performing the transportation.

The responsibility of the transport company is defined as follows:

  • She is responsible for the load entrusted to her only in “the limits of reasonable”.
  • She does not face liability in case of force majeure.
  • It is not completely relieved of its responsibility; only financial restrictions are imposed on it.

The ability to protect the company’s rights in case of loss, damage to someone else’s cargo will be provided by the carrier’s liability insurance from one of the companies licensed for this type of services.

Carrier liability insurance: types, general concepts

This insurance product is conventionally classified according to the types of funds that are used in each case for transportation:

  • car,
  • water,
  • air,
  • railway.

Also, the classification is carried out by categories of people who may incur losses as a result of the work of the transport company.

Therefore, policies may cover the following risks:

  • harm to human health, death,
  • damaged luggage
  • loss, incorrect shipment, its damage,
  • different types of damage caused by outsiders (those who are not passengers and those who do not cooperate with the carrier company).

Insurance cover may cover domestic and overseas transportation.

The carrier’s liability insurance policy provides for the payment of compensation only to third parties – people who have suffered losses as a result of the incompetent carriage of cargo or their own baggage, to passengers if they have suffered injuries or have died.

The insured can be any organization that has various vehicles owned or operated under leasing or lease agreements for the purpose of carrying out regular transport of people or goods.

The company must have a license, a certificate officially authorizing the provision of such services.

According to the contract, the insured must pay the insurance policy. Instead, the issuing company undertakes to pay compensation to third parties after the occurrence of insurance claims involving the insured’s vehicles entered into the contract.

Compensation is also paid in cases that are determined by Russian law, as well as laws of other states and regulations of international law.

Coverage and risks

Coverage and risks

The carrier’s liability insurance covers the risk of damage to the insurer to other people or organizations.

These may be the following circumstances:

  1. Wounding, injury, death of one or several passengers who were on the vehicle at the time of the accident or during a different kind of event that has a direct connection with the process of transport operation by the insured.
  2. Loss / partial damage of any type of baggage as a result of statutory events.
  3. Loss, total loss, shortage, damage to the goods transferred for delivery.
  4. Failure to comply with the deadlines set for cargo transportation / delivery of people to their destination, if the reason for the delay is in the list of grounds for compensation.
  5. Violations during extradition: unreasonable delay, lack of documents confirming the right of the addressee to receive the delivered cargo.
  6. Invalid shipping consignment.
  7. The injury, the death of people who are not in the transport of the insured, the loss of another’s property due to improper operation of the insured vehicle.

In all these cases, the insurer undertakes to indemnify all victims of damage that the insured caused to other persons. However, there are exceptions that exempt the insurer from its obligation to pay compensation.

The insurer does not pay compensation under the following conditions:

  • The policyholder intentionally violated the fire safety regulations, the storage conditions for fire hazardous materials, the operation of equipment, and other regulations and standards.
  • Before the start of transportation, the owner knew about the malfunction of the insured vehicle, the lack of proper qualifications of its employees or the illness, and the unavailability of the driver / pilot to carry out the work ahead.
  • The insurer knew about the circumstances that could increase the risk of an insured event, but did not report them to the insurance company.
  • About the circumstances that could increase the insured risk, it was stated, however, the insurer did not fulfill the requirements set by the insurer to eliminate them within a specific time frame.
  • In addition to the direct assignment associated with the transportation activity, the insured machinery was used for other purposes: it was used for personnel training, she participated in races and other competitions, the potential of the vehicle was checked and so on.
  • Technical means were operated in such conditions which are not provided for by their direct purpose.
  • Transport was used in places not specified in the contract, with the exception of force majeure, when the equipment had to be operated in another area.
  • More cargo was transported by transport or more people were accommodated than is required by technical regulations.
  • The equipment was used as intended after the court decided to suspend the company’s activities.
  • Transport was used for illegal activities, smuggling smuggling, etc.
  • Insurance event occurred during a force majeure.
  • Loss caused during the war and active hostilities.
  • The cause of the damage was the explosion of mines, bombs, other military weapons. The exception is that these military weapons were the cargo that was on the insured vehicle.
  • The vehicle was captured, arrested or detained during a strike, a military maneuver.
  • The damage was caused by rebellion, insurrection, etc.
  • Cargo or passengers received damage / injury during an act of sabotage, terrorist act, other actions of a political nature.
  • The loss was caused during the strike / lockout.
  • The cargo has been lost due to confiscation, requisitioning by the authorities that took over the administration of the country, as well as the issuance by them of acts contrary to the previous legislation.
  • The loss was caused by radiation, radioactive substances / waste, nuclear fuel.
  • The listed materials may be cargo or be outside the insured vehicle.
  • The injured person intentionally provoked an insurance incident.

It is important to remember: the compensation will be paid if the people suffered bodily harm (injury, injury, death). Even when the insured is responsible for the incident, victims still receive material compensation.

Rail transportation

According to the 1998 Railway Transport Charter, the carrier must only meet the health and life of passengers and their baggage. Hand luggage does not apply here, the passenger must monitor it on their own.

The Civil Code provides for specific amounts of monetary compensation for the loss of cargo on the railway. A list of circumstances exempting from the obligation to compensate for the loss is given: for example, if the cargo is accompanied by the representative of the sending company or the forwarding agent from the receiving party travels with him, if a minimal shortage in weight complying with the norms of natural expectation and other options is found.

Air freight

The Air Code of Russia of 1997 provides for the determination of the amount of responsibility of the air carrier according to the requirements of the Civil Code of the Russian Federation, if the insurance policy does not cost another amount.

Also, the airline carrier is responsible for the safety of cargo shipments, baggage, things that are in the passenger. Anyone can pass the baggage, specifying its price in advance – then the amount of compensation will correspond to the stated value.

If the passenger did not do this, then the compensation will be equal to the cost of baggage, but the maximum price for 1 kg will be no more than 2 minimum wages.

Compensation for hand baggage also depends on the value, but if it is not possible to establish its value, compensation is paid, not exceeding 10 minimum wage.

The airline company may be relieved of its liability to pay damages if it presents evidence that it did everything necessary to prevent the insured event, or that no action could have prevented its occurrence.

Also, the policyholder must prove that the property was lost or insured, not during air travel, but at another time.

According to the Code, the air carrier has the right to increase the limit of its liability; this requires concluding an agreement with the consignor, his consignee or passengers of a particular flight.

Compulsory carrier liability insurance provides for the establishment of the size for each passenger in 1000 or more of the minimum wage. This amount is paid if a person is killed or injured.

As for compensation for lost property, the minimum amount depends on the limit of liability of the air carrier.


The charter of motor transport of RSFSRR from 1969 does not give instructions about the life or injury of passengers. Responsibility of the carrier comes only in accordance with the Civil Code.

The question of the liability of the carrier for cargo shipments, passenger luggage, their carry-on baggage is regulated in the same way as during railway transportation.

If the transport company did not insure its liability, then it will be liable for damages caused by it within the framework of the law or another legal act.

Car owners and companies using vehicles or carrying out other activities that pose a danger to others should compensate for the damage they have caused.

An exception may be the option when the incident occurred due to force majeure or the victim intentionally allowed the occurrence of such a situation.

The organization or individual who owns the vehicle on any legal basis is obliged to compensate for the loss: to have the right to own, rent, use under a lease agreement, by proxy, etc.

If the damage is caused simultaneously by several vehicles, the amount of compensation is divided into all owners equally. The owner will not be liable if he presents evidence that he lost his vehicle as a result of the unlawful actions of the intruders.


When insuring ships and marine goods, the liabilities for the payment of compensation are distributed as follows:

  • 75% of the loss in the event of a collision of vessels is covered by the insurer who issued the hull insurance policy (for damage to the vessel itself),
  • 25% for the damaged ship, as well as compensation for lost cargo and damage to people are paid by mutual insurance clubs.

Regarding the regulation of the carrier’s liability, the following regulations adopted in the USSR still apply: the Maritime Code and the Charter of Water Transport. The first document mentions the carrier’s responsibility to the passengers, the second one does not contain a word about the damage it has caused.

Insurance coverage and denial of payment

Insurance coverage and denial of payment

International shipments are governed by the Hague, Visby and Hamburg rules established in different years of the last century.

These conventions give definitions to basic concepts, formulate conditions for the implementation of maritime transport from one country to another.

If the cargo is transported by several types of transport, the responsibility of the carrier is determined by the one during which the insured event occurred. In other situations, additional conditions of international conventions are applied to determine liability.

According to international conventions, insurance coverage covers the following risks:

  • material or physical damage caused to people, it can be crew members, passengers, port workers;
  • losses incurred as a result of the death of the ship, not caused by a collision (included in the hull insurance policy);
  • ship damage during towing;
  • ship participation in general average (except for risks covered by the hull insurance policy);
  • unforeseen expenses in connection with the rescue of people (for example, in case of a forced deviation of the ship from the course);
  • additional expenses due to the quarantine introduced in the country;
  • legal expenses;
  • fine imposed on a ship in port.

International conventions also include a number of exceptions, in the presence of which compensation is not paid:

  • intentional action aimed at obtaining compensation;
  • transportation of prohibited goods;
  • losses incurred while the crew was on the ship;
  • damage resulting from the operation of vehicles;
  • a claim from the owner of the consignment;
  • the military situation in the country, other risks that can only be covered by a special insurance contract.

Covering the responsibility of owners of watercraft most often assume the so-called mutual insurance clubs (they are denoted by the abbreviation P & I – translated as “protection and reimbursement”).

Here we insure the liability of ship owners, charterers and other persons operating large vessels for shipping activities. The list of risks covered by them also includes pollution of the atmosphere and the environment.

Now there are about 70 such pools. They are mainly concentrated in the USA, Scandinavian countries, Great Britain. All of them are members of an international group. If they need to pay a large amount of compensation, they receive assistance.

P & I clubs offer coverage for the following types of risks:

  • damage or loss of a consignment
  • injury, injury to man,
  • damage to the vessel by a floating or stationary object, incl. due to a collision,
  • moving the ship after the insured event
  • the presence of claims from the crew of the ship,
  • failure to pay compensation when the insured event is a general average
  • the imposition of a fine
  • unplanned expenses: quarantine, trial, towing and others.

In order to receive compensation, the owner of the vessel must submit his emergency certificate together with documents confirming the fact of damage and its size (by an examination certificate and others).

Transportation is an activity that is always associated with a variety of risks, and the owner of the company will have to be responsible for them. To protect its responsibility, all carriers should use the services of an insurance company and enlist the support of its in case of unforeseen circumstances.

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