All carriers have a limit to liability unless a higher value is declared for insurance purposes. See excerpts from various bills of lading for the fine print on carrier liability.
Courier:Unless a greater value is declared in writing on the UPS Pickup Record or the UPS Waybill, the shipper declares the released value of each shipment to be $100.00 which is a reasonable value under the circumstances surrounding the transportation. For each $100.00 or fraction thereof of declared value per shipment in excess of $100 an additional charge as stated on the current rate chart applies. However, the rules relating to liability established by the Convention for the Unification of Certain Rules Relating to International Carriage by Air signed at Warsaw, Poland, on October 12, 1929 and any amendments thereto shall apply to the international carriage of any shipment hereunder insofar as the same is governed thereby. Claims not made within nine months after delivery of the package or, in the case of non-delivery within nine months after a reasonable time for delivery has elapsed shall be deemed waived. The Carrier shall not be liable for any special, incidental or consequential damages.
Excerpt from International Air Service Guide, United Parcel Service Canada Ltd.
Ocean Carrier:(1) Basis of Compensation
For the purpose of determining the extent of the Carrier's liability for loss of or damage to the Goods, the sound value of the Goods shall not exceed the invoice value plus freight and insurance if paid.
(2) Hague Rules Limitation
Whenever the Hague Rules are applicable, otherwise than by national law, in determining the liability of the Carrier, the liability shall in no event exceed Can $500 per package or unit.
(3) Ad Valorem
The Merchant agrees and acknowledges that the Carrier has no knowledge of the value of the Goods, and that higher compensation than that provided above may not be claimed unless, with the consent of the Carrier, the value of the Goods declared by the Shipper prior to the commencement of the Carriage is stated on this Bill of Lading and extra Freight paid, if required. In that case, the amount of the declared value shall be substituted for the limits laid down above. Any partial loss or damage shall be adjusted pro rata on the basis of such value.
(4) Delay
The Carrier does not undertake that the Goods shall arrive at the Port of Discharge or Place of Delivery at any particular time or to meet any particular market or use, and the Carrier shall in no circumstances whatsoever and howsoever arising be liable for direct, indirect or consequential loss or damage caused by delay.
(5) Scope of Application
(a) The terms of this Bill of Lading shall at all times govern all responsibilities of the Carrier, in connection with or arising out of the supply of a Container to the Merchant, not only during the Carriage, but also during the periods prior to and; or subsequent to the Carriage.
(b) The exemptions from liability, defences and limits of liability provided for in this Bill of Lading shall apply in any action against the loss, damage or delay, howsoever occurring and whether the action be founded in contract or in tort and even if the loss, damage or delay arose as a result of unseaworthiness negligence or fundamental breach of contract.
(c) Save as is otherwise provided herein, the Carrier shall in no circumstances whatsoever and howsoever arising be liable for direct or indirect or consequential loss or damage.
(6) Mandatory Inspection by Authorities
If by order of the authorities at any place, a Container has to be opened for the Goods to be inspected, the Carrier will not be liable for any loss or damage incurred as a result of any opening, unpacking, inspection and re-packing from the Merchant.
Excerpt from Bill of Lading Conditions, Canada Maritime Limited
Truck:5. Exceptions from Liability
The carrier shall not be liable for loss, damage or delay to any of the goods described in the Bill of Lading caused by an Act of God, the Queen's or public enemies, riots, strikes, a defect or inherent vice in the goods, the act or default of the consignor, owner or consignee, authority of law, quarantine or differences in weights of grain, seed, or other commodities caused by natural shrinkage.
6. Delay
No carrier is bound to transport the goods by any particular vehicle or in time for any particular market or otherwise than with due dispatch, unless by agreement specifically endorsed on the Bill of Lading and signed by the parties thereto.
9. Valuation
Subject to article 10, the amount of any loss or damage for which the carrier is liable, whether or not the loss or damage results from negligence, shall be computed on the basis of:
(a) the value of the goods at the place and time of shipment including the freight and other charges if paid; or
(b) where a value lower than that referred to in paragraph (a) has been represented in writing by the consignor or has been agreed upon, such lower value shall be the maximum liability.
10. Maximum liability
The amount of any loss or damage computed under paragraph (a) or (b) of article 9 shall not exceed $4.41 per kilogram computed on the total weight of the shipment unless a higher value is declared on the face of the Bill of Lading by the consignor.
11. Consignor's Risk
Where it is agreed that the goods are carried at the risk of the consignor of the goods, such agreement covers only such risks as are necessarily incidental to transportation and the agreement shall not relieve the carrier from liability for any loss or damage or delay which may result from any negligent act or omission of the carrier, his agents or employees and the burden of proving absence from negligence shall be on the carrier.
Extract from the Bill of Lading, Hendrie And Company Limited
Airline:Notice concerning Carrier's Limitation of Liability
If the carriage involves an ultimate destination or stop in a country other than the country of departure, the Warsaw Convention may be applicable and the convention governs and in most cases limits the liability of the carrier in respect of loss, damage or delay to cargo to 250 French gold Francs per kilogramme, unless a higher value is declared in advance by the shipper and a supplementary charge paid if required.
The liability limit of 250 French gold Francs per kilogramme is approximately USD 20.00 per kilogramme on the basis of USD 42.22 per ounce of gold.
4. Except as otherwise provided in Carrier's tariffs or conditions of carriage, in carriage to which the Warsaw Convention does not apply Carrier's liability shall not exceed USD 20.00 or the equivalent per kilogramme of goods lost, damaged or delayed, unless a higher value is declared by the shipper and a supplementary charge paid.
6. In cases of loss, damage or delay of part of the consignment, the weight to be taken into account in determining Carrier's limit of liability shall be only the weight of the package or packages concerned.
Extract from Air Waybill, KLM Royal Dutch Airlines
Insurance Terms
Insurance terms, like INCO terms, have strict legal meanings. The legal meaning does not always match the usual English understanding of the phrase.
All Risk: The "All Risks" clause reads as follows: "This insurance is against all risks of loss or damage to the subject matter insured but shall in no case be deemed to extend to cover loss, damage or expense proximately caused by delay or inherent vice or nature of the subject matter insured...." This clause has become the most widely used as it provides very broad coverage. Covers goods against all risks including pilferage and damage however caused but excludes damage or spoilage due to inherent risk. Inherent risk is a risk based on the nature of the goods and should have been guarded against by the supplier in his choice and method of packing.
Example:
A machine worth USD 250,000 is shipped by ocean container from Canada to Germany in January. Upon arrival in Germany, damage is discovered and a claim is filed against an All Risk Insurance Policy. The damage was caused by a free-moving arm on the machine which beat itself against the machine during transit.
Will the ALL RISK insurance cover this damage?
Free From Particular Average (FPA): A "Particular Average" loss is a partial loss of the subject matter insured caused by a peril insured against and this clause means the Insurer will not pay partial losses unless the vessel be stranded, sunk or burnt.
Example:
The truck taking the container of grape juice to the dock overturns. The barrels of grape juice burst and the cargo is a total loss. The cargo was covered by FPA insurance.
Will the claim be paid?
During a fire at sea, 20% of your cargo is damaged. The cargo was covered by FPA insurance.
Will the claim be paid?
While unloading the container from the ship, the crane operator lets the container smash against the dock. Fifty percent of the cargo is damaged. Would the claim be paid under FPA policy?
Would the above claims be paid under an ALL RISK policy?
With Averaging (WA): The "W.A." coverage differs from "F.P.A." mainly in the fact that it contemplates paying for losses due to heavy weather regardless of stranding, sinking or burning. The most commonly used "With Average" clause reads as follows: "Warranted free from Average under the percentage specified in the policy unless ... the vessel or craft be stranded, sunk or burnt..." In other respects the "W.A." clause is similar to the "F.P.A." clause. The purpose of the percentage of value provision is to eliminate petty claims, which collectively might affect the cost of the insurance.
Example:
The W.A. clause specifies a percentage of 20%. Would the claim be paid under the following scenarios?
a. During a storm at sea, a piece of equipment breaks loose and causes damage to various containers. One container suffers a 10% loss and another suffers a 25% loss.
Which claims will be paid?
b. As the result of a fire on board ship, several containers are damaged. One container suffers a 10% loss and another suffers a 25% loss.
Which claims will be paid?
c. As the result of a crane operator's error, several containers are damaged on the dock. One container suffers a 10% loss and another suffers a 25% loss.
Which claims will be paid?
d. If any of the above claims are denied, would they be paid under an ALL RISK policy?
War Risk: This is an optional coverage which covers loss or damage in the event of war or civil disruption, including strikes. War risk should be added on to the above coverages.
Contingency Insurance: Covers supplier in the event that the consignee neglected to provide insurance or had insufficient insurance or the supplier was unable to collect from consignee's insurance due to currency restrictions etc. Such contingency insurance is less expensive than regular marine insurance.
Best Coverage: Select the coverage which best suits your needs.
Harte & Lyne Limited can arrange insurance coverage on goods purchased or sold abroad and can include in the amount covered a provision for lost profits. For Further information mail to consult@harte-lyne.ca or call 1-800-263-6832