The difference between cargo insurance and logistics liability insurance?

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Difference 1: Different Insured Parties

Cargo insurance is typically purchased by the owner of the goods; logistics liability insurance is purchased by the carrier.

Difference 2: Different Insurance Methods

Cargo insurance is usually bought by the owner of the goods, but often it is handled by the logistics carrier. Cargo insurance involves issuing a policy or declaration for each shipment. Logistics liability insurance, on the other hand, is an annual policy that does not require declarations for each shipment detail throughout the year.

Difference 3: Different Compensation Responsibilities

With cargo insurance, the insured party can claim compensation from the insurance company for any cargo damage. When the owner’s insurance company seeks reimbursement from the carrier, or when the shipper claims compensation from the carrier, the carrier can use logistics liability insurance to claim compensation from their insurance company.

Difference 4: Different Premium Calculation Methods

Cargo insurance premiums are calculated based on the value of the goods, whereas logistics liability insurance premiums are based on the estimated annual freight of the transportation company.

Difference 5: Different Coverage Scopes

Cargo insurance mainly covers losses caused by natural disasters and accidents. Its coverage is relatively narrow and the liability is not always clearly defined, making it difficult to determine responsibility for cargo damage during transit. Logistics liability insurance covers all aspects of logistics, including transportation, transshipment, and storage, providing broader coverage. Therefore, logistics companies typically choose to purchase logistics liability insurance, while private owners of goods often opt for cargo insurance.

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