Declared Value Coverage

Declared value coverage is a form of carrier liability protection where the shipper declares the value of a shipment at the time of booking, and the carrier accepts liability for that declared amount in the event of loss or damage during transit. It is not insurance in the traditional sense. Declared value coverage extends the carrier’s maximum liability beyond the default limits set by tariff or contract, in exchange for an additional charge paid by the shipper. The distinction between declared value coverage and standalone cargo insurance is important because the two products offer different levels of protection, different claims processes, and different scopes of coverage.

Default Carrier Liability Limits

Every carrier, whether an ocean line, an airline, or a trucking company, has a default maximum liability for cargo loss or damage. These limits are set by international conventions, federal regulations, and the carrier’s own tariff. For ocean freight under the Carriage of Goods by Sea Act (COGSA), the default carrier liability is $500 per package or customary freight unit. For a container holding 1,000 individual units of a consumer product, “per package” can mean per container (one package, $500 total) or per shipping carton, depending on how the bill of lading describes the cargo. This ambiguity has been litigated extensively.

For domestic trucking, the Carmack Amendment provides for full actual value liability, but carriers routinely limit their liability through released value rates in their tariffs. An LTL carrier might cap liability at $25 per pound or $100,000 per shipment, whichever is lower. For air freight, the Montreal Convention limits carrier liability to approximately 22 Special Drawing Rights (SDR) per kilogram, roughly $30 per kilogram.

These default limits are often far below the actual value of the goods being shipped. A container of electronics worth $200,000 protected by only $500 under COGSA represents a catastrophic gap between actual loss and recoverable amount.

How Declared Value Coverage Works

To close that gap, the shipper declares the full value of the goods on the bill of lading or shipping document and pays the carrier an additional charge, typically calculated as a percentage of the declared value. Rates vary by carrier and mode but generally fall between 1% and 3% of the declared value. For a shipment valued at $50,000, declared value coverage might cost $500 to $1,500.

Once the value is declared and the additional charge is paid, the carrier’s liability for that shipment increases to the declared amount. If the shipment is lost or damaged in transit, the shipper can file a claim for up to the declared value. The carrier must pay the claim if the loss resulted from causes within the carrier’s responsibility (mishandling, theft, accident, etc.).

Declared Value vs. Cargo Insurance

Declared value coverage only protects against carrier-caused loss or damage. If the carrier can demonstrate that the loss was caused by an act of God, inherent vice of the goods, shipper negligence, or another excluded peril, the carrier may deny the claim even if value was declared. The shipper must prove that the carrier was at fault.

Standalone marine cargo insurance (an all-risk policy underwritten by an insurance company) covers a broader range of perils, including many that declared value coverage does not. An all-risk policy typically covers loss or damage from any external cause except specifically excluded perils (war, nuclear events, willful shipper misconduct). The claims process with an insurance company is also distinct from a carrier liability claim, often faster, and less adversarial.

Many experienced importers carry both declared value coverage and standalone cargo insurance. The declared value filing establishes the carrier’s liability limit, while the insurance policy provides broader coverage and a more reliable claims process. For high-value shipments, the cost of both protections is minor relative to the financial exposure of an uninsured loss.

Practical Considerations for Sellers

Sellers shipping inventory to Amazon FBA through LTL carriers should review the carrier’s liability terms before assuming full coverage. The default LTL liability limit may cover only a fraction of the shipment value. Declaring the full value and paying the additional charge provides greater protection for shipments worth several thousand dollars or more. For ocean imports, working with a freight forwarder to obtain a marine cargo insurance policy is the standard recommendation, as COGSA’s $500 per package limit offers virtually no meaningful protection for a container of consumer goods.