Carrier Liability Insurance: Understanding Your Obligations

Introduction

If you move other people’s goods for a living—whether you’re a one-van courier, a regional haulage firm, or a specialist logistics operator—your biggest risk often isn’t your vehicle. It’s the cargo.

A single damaged pallet, a missing high-value parcel, or a temperature excursion on a controlled load can trigger claims, disputes, and reputational damage. And because many customers assume “the carrier is responsible,” you can end up on the hook even when the loss wasn’t your fault.

Carrier Liability Insurance (sometimes called Goods in Transit Liability or Haulier’s Liability, depending on the policy wording) is designed to protect carriers against their legal liability for loss of or damage to goods they carry under a contract of carriage.

This guide explains what carrier liability insurance is, the obligations it supports, how liability is determined, what’s typically covered (and not covered), and how to set the right limits for your operation.

What is Carrier Liability Insurance?

Carrier Liability Insurance is a commercial insurance policy that covers a carrier’s legal liability for loss or damage to goods while they are in the carrier’s care, custody, or control during transit.

It’s important to separate carrier liability from:

• Motor insurance (covers the vehicle and third-party injury/property damage)

• Own goods in transit (covers your own stock/tools, not customers’ goods)

• Marine cargo insurance (often bought by the cargo owner, not the carrier)

• Professional indemnity (covers advice/services, not physical goods)

Carrier liability insurance is about your responsibility as the carrier—and the claims that arise when goods are damaged, stolen, lost, or delivered late (where late delivery is covered, which is less common).

Why it matters: the real-world claim scenarios

Carrier liability claims aren’t limited to dramatic vehicle accidents. Many claims come from everyday operational issues, such as:

• Theft from an unattended vehicle

• Forced entry to a locked van overnight

• Misdelivery (delivered to the wrong address or left in an unsafe place)

• Water damage from poor load protection

• Load shift due to inadequate strapping

• Damage during loading/unloading

• Refrigeration failure or temperature deviation

• Fire in a storage area while goods are temporarily held

• Missing items due to poor scanning or handover procedures

Even if you believe you did “everything right,” customers may still pursue you first—especially if your contract makes you responsible.

Understanding your obligations as a carrier

Your obligations come from a mix of:

• The contract of carriage (your terms, the customer’s terms, or a standard form)

• Common law duties of care

• Any relevant international conventions (for example, CMR for international road carriage)

• Industry rules and trading conditions (such as RHA conditions)

The key point: liability is not always automatic, but it is often assumed. Your insurance needs to match the liability you accept.

1) Contractual obligations: what you agree to matters

Many carriers unintentionally accept higher liability than they realise. Common contract pitfalls include:

• Agreeing to “full value” liability for goods

• Accepting liability for consequential loss (lost profits, penalties)

• Accepting liability for delay

• Agreeing to strict security requirements without documenting compliance

• Accepting liability for goods left unattended or stored overnight

If your customer’s purchase order or transport agreement overrides your standard terms, your liability exposure can increase significantly.

2) Duty of care: reasonable precautions

Even where liability is limited by contract, you still typically have a duty to take reasonable care. Claims often hinge on whether you:

• Used suitable vehicles and equipment

• Secured the load appropriately

• Followed agreed routes and security protocols

• Kept goods in safe custody when not moving

• Maintained refrigeration/temperature control systems

• Used trained drivers and appropriate procedures

Insurers will also look at “reasonable precautions” conditions in the policy. If you fail to follow them, cover can be reduced or declined.

3) International carriage: CMR and cross-border obligations

If you carry goods internationally by road, liability may be governed by the CMR Convention. In simple terms, CMR can:

• Set a framework for liability

• Limit compensation based on weight (often calculated per kilogram)

• Define time limits for claims nCMR is a specialist area and policy wording matters. If you do any cross-border work—even occasionally—your broker should ensure your carrier liability policy includes appropriate CMR cover.

Carrier liability vs goods in transit: what’s the difference?

These terms are often used interchangeably, but there’s a practical difference:

• Carrier liability insurance: responds when you are legally liable under contract or law.

• Goods in transit (all risks) cargo insurance: can cover the goods regardless of legal liability (often purchased by the cargo owner).

Why it matters: if you are not legally liable, a carrier liability policy may not pay. That can create disputes with customers who expect you to reimburse them anyway.

If your customers expect you to “make them whole” regardless of fault, you may need:

• Broader policy wording, and/or

• Clear contractual terms limiting liability, and/or

• Customers to insure their own goods.

What does Carrier Liability Insurance typically cover?

Coverage varies by insurer and wording, but many policies can include:

• Loss or damage to goods while in transit

• Theft (subject to security conditions)

• Damage during loading/unloading (sometimes included, sometimes optional)

• Temporary storage in the ordinary course of transit (limited time/conditions)

• Legal costs and defence expenses (where covered)

Common extensions (optional)

Depending on your business model, you may need extensions such as:

• CMR liability for international road carriage

• Subcontractor cover (liability arising from work done by subcontracted hauliers)

• Temperature-controlled goods (refrigeration breakdown/temperature deviation)

• High-value goods (electronics, pharmaceuticals, luxury items)

• Hazardous goods (subject to compliance and underwriting)

What is usually excluded?

Exclusions are where most surprises happen. Typical exclusions can include:

• Consequential loss (loss of profit, penalties, loss of market)

• Delay (unless specifically covered)

• Unattended vehicle theft (or theft without forced entry)

• Inadequate packaging by the shipper

• Wear and tear, inherent vice, gradual deterioration

• Mechanical or electrical breakdown (unless it results in insured damage and is covered)

• Dishonesty by employees (may require separate fidelity cover)

• Unexplained shortage (missing items with no evidence of theft/accident)

• Failure to follow security conditions (alarms, immobilisers, locked compounds)

• Certain commodities (cash, jewellery, tobacco, alcohol, mobile phones) unless declared

The takeaway: you don’t just need “a policy”—you need the right wording for the way you actually operate.

Key underwriting questions insurers will ask

To price and structure carrier liability cover, insurers typically want to know:

• What type of goods you carry (general haulage vs specialist)

• Maximum value any one vehicle carries

• Annual turnover from carriage activities

• Vehicle types and security features

• Overnight parking arrangements (locked yard, CCTV, alarms)

• Driver experience and vetting

• Claims history

• Use of subcontractors and how you control them

• Domestic only or international (CMR)

• Any temperature-controlled loads

If you can answer these clearly, you’ll usually get better terms and fewer coverage gaps.

How to choose the right limit of indemnity

One of the most common mistakes is choosing a limit that’s too low.

A sensible approach is to base your limit on:

• The maximum value of goods you carry on any one vehicle at any one time

• The maximum value at any one location if you store goods temporarily

• Any contractual liability you’ve accepted (for example, full invoice value)

Example

If you regularly carry:

• 10 pallets at £5,000 each (total £50,000), and

• Occasionally carry a single high-value item worth £80,000,

then a £25,000 limit may be cheap—but it’s not adequate.

Also consider aggregation: if multiple consignments are affected by one event (fire, theft), the claim can exceed what you think of as “one job.”

Your paperwork: how to reduce disputes and protect your position

Insurance is the backstop. Your day-to-day documentation is what prevents small issues becoming expensive claims.

Use clear terms and conditions

Make sure you:

• Issue your terms before you accept the job

• State liability limits clearly

• Specify excluded goods and required declarations

• Define what counts as “delivery” (signature, photo, GPS proof)

Keep robust proof of collection and delivery

Good evidence reduces friction:

• Signed PODs (proof of delivery)

• Photos at collection and delivery

• Seal numbers and checks

• Scanning logs

• Temperature logs (for controlled goods)

• Incident reports completed immediately

Have a claims process

A simple internal process helps:

• Record the incident the same day

• Preserve evidence (CCTV, dashcam, photos)

• Notify the insurer promptly

• Don’t admit liability until facts are confirmed

Subcontractors: where liability gets messy

If you subcontract work, you can still be liable to your customer. Key questions include:

• Does your policy cover subcontracted carriage?

• Do you require subcontractors to hold equivalent carrier liability cover?

• Do you verify certificates and policy limits?

• Do your contracts allow you to recover losses from subcontractors?

A common best practice is to:

• Maintain a subcontractor approval process

• Keep copies of insurance documents on file

• Use written subcontract agreements with back-to-back terms

Compliance and risk management (what insurers like to see)

Better risk management can reduce claims and improve premiums. Insurers typically like:

• Documented driver training (load security, theft prevention)

• Vehicle security: immobilisers, alarms, trackers

• Secure overnight parking (locked yard, CCTV, lighting)

• Route planning and “no stop” rules for high-value loads

• Two-person crews for certain goods

• Temperature monitoring and maintenance schedules

• Strong handover controls (scanning, seal checks)

If you can demonstrate these controls, you’re more likely to secure broader cover.

FAQs: Carrier Liability Insurance

Is carrier liability insurance a legal requirement in the UK?

Not usually in the same way as motor insurance is legally required. However, it is often a contractual requirement from customers and can be essential to trade, win work, and protect your business.

Does carrier liability insurance cover theft from an unattended vehicle?

Sometimes, but it often comes with strict conditions (forced entry, locked vehicle, time limits, approved parking). Always check the security conditions and exclusions.

Does it cover damage during loading and unloading?

Many policies can include it, but not all do automatically. If your drivers load/unload or you use tail lifts and pallet trucks, it’s worth confirming.

What’s the difference between carrier liability and goods in transit insurance?

Carrier liability responds when you are legally liable. Goods in transit cargo insurance can cover goods regardless of liability (depending on wording) and is often arranged by the cargo owner.

Do I need CMR cover?

If you carry goods internationally by road, CMR liability is highly relevant. Even occasional cross-border work can create exposure, so it’s best to disclose it.

Are high-value goods covered?

They can be, but insurers often require disclosure, higher security standards, and specific limits. Some commodities may be excluded unless agreed.

What happens if my customer’s contract says I’m liable for full value?

Your liability exposure increases. You should ensure your policy limit and wording match what you’ve agreed, or renegotiate terms to cap liability.

Does carrier liability cover consequential loss?

Usually not. Consequential loss (like lost profits or contractual penalties) is commonly excluded unless specifically negotiated.

How quickly should I notify a claim?

As soon as possible. Most policies require prompt notification, and delays can complicate investigations and recovery.

Conclusion: match your insurance to your real-world liability

Carrier Liability Insurance is about more than ticking a box. It’s a practical safeguard against the most common and costly risks in transport: loss, theft, and damage to customers’ goods.

The smart approach is to align three things:

• Your contracts (what you agree to)

• Your operations (how you actually carry and store goods)

• Your insurance (limits, wording, and extensions)

If you’d like, share what you carry, your max load value, and whether you use subcontractors or do international work—and I’ll suggest the most sensible cover structure and key wording points to ask your insurer or broker about.