contingent cargo liability brokers

Common Issues Concerning Goods in Transportation

When an issue arises during the transportation of goods, shippers may hold freight brokers (those who negotiate transportation contracts on behalf of shippers) liable should cargo be lost or damaged in transit. In order to guard against this, contingent cargo liability brokers sell coverage to freight brokers specific to their needs to insure them against claims made by the shippers for any damage occurring to their cargo.


Cargo insurance coverage, available through contingent cargo liability brokers, covers the loss of cargo on any type of common carrier, including truck, rail or ship. It even covers many of the losses associated with rail or ocean shipping, such as instances where the ship sinks with the cargo aboard or in the event of a train wreck.


Loss or damage of goods in transit


One type of loss specific to ocean shipping, where contingent cargo insurance is essential, is called “general average.” When the crew jettisons cargo to save the ship, the insurance company charges the loss of all or part of any one shipper’s cargo back to all the shippers. Contingent cargo insurance then will pay this claim.


Freight brokers or freight forwarders aren’t legally required to carry contingent cargo insurance, but this makes carriers reluctant to work with anyone who does not carry this coverage. This results in freight brokers and freight forwarders more or less being forced to carry this insurance. Furthermore, in the event that a shipper’s cargo suffers damages and the carrier refuses to honor the claim, the shipper will then look to the freight forwarder to make good on the claims. The forwarder must protect their reputation, which would likely suffer if he or she fails to pay restitution.


It’s vital to this industry that shippers ensure that their freight forwarder carries contingent cargo insurance before entering into an agreement for the carriage of cargo as ocean freight. With the resurgence of pirates and the ever-present threat of terrorists, ocean freight traffic often travels on ships registered in countries where safety is a concern. Contingent cargo insurance for freight forwarders allows for greater peace of mind to both shippers and their customers.