Cargo insurance vs CMR carrier liability: what's actually covered if your freight is damaged

When freight is lost or damaged in transit, there are two distinct things that might pay out, and they work on completely different logic. The first is CMR carrier liability: the carrier's statutory responsibility for the goods while they are in its charge, set by the CMR Convention and capped by weight. The second is all-risks cargo insurance: a policy on the goods themselves, sold by an insurer, that is written to pay the full commercial value of the cargo.

The confusion is understandable — both seem to answer the question "am I covered?" — but they are not interchangeable. CMR liability is something the carrier owes you by law and always exists on an international road movement. Cargo insurance is something someone has to actively buy. A consignment can be covered by CMR liability and have no cargo insurance at all, which is the default situation unless you or your supplier arranged a policy.

Treat them as a floor and a ceiling. CMR liability is the floor the carrier guarantees; all-risks cargo insurance is the ceiling that protects the goods' real value. The gap between the two is where most painful losses happen.

The CMR Convention (the Convention on the Contract for the International Carriage of Goods by Road) governs almost every international road shipment in Europe. Under it, the carrier is liable for total or partial loss of the goods, and for damage to them, occurring between the time it takes the goods over and the time it delivers them. That liability is largely automatic — broadly, you do not have to prove the carrier was negligent, only that the goods left undamaged and arrived damaged or short.

But the Convention also caps how much the carrier has to pay. Compensation for loss or damage is limited to 8.33 SDR (Special Drawing Rights) per kilogram of gross weight of the goods affected. SDR is an IMF currency unit whose value floats; at recent rates 8.33 SDR works out to roughly 10 to 11 EUR per kilogram. That figure is indicative and moves with the exchange rate, but the structure never changes: the cap is set by weight, not by what the goods are worth.

This is the single most important thing to understand about CMR liability. It does not matter whether the affected pallet held cushions or microchips — the carrier's maximum exposure is the same per kilogram. For dense, low-value goods the cap may comfortably exceed the value; for light, high-value goods it falls far short.

CMR liability is broad, but it is not absolute. The Convention lists excepted causes for which the carrier is not liable, even though the damage happened during carriage. The carrier is relieved if the loss or damage arose from the inherent vice of the goods — their natural tendency to deteriorate, leak, rust, ferment or break without external cause — or from insufficient or defective packing carried out by the sender.

It is also relieved where the loss resulted from the claimant's own act or omission, from instructions the claimant gave, or from circumstances the carrier could not avoid and the consequences of which it could not prevent — the CMR's version of force majeure. There is a further list of special risks (open unsheeted vehicles where agreed, handling by the sender or consignee, certain natural characteristics of goods, livestock and so on) that shift the burden of proof onto the claimant.

The practical lesson is that CMR liability is not a guarantee against every loss. If the goods were poorly packed by the sender, or were always going to fail on their own, the carrier can decline — and in that situation only an all-risks cargo policy responds, because cargo insurance pays regardless of carrier fault.

All-risks cargo insurance — also called goods-in-transit or, on the wider wording, marine cargo insurance — is a policy on the goods, not on the carrier's conduct. It is designed to pay the full insured value of the cargo, which is normally the commercial invoice value (and often invoice value plus a margin for freight and a notional uplift), regardless of whether the carrier was at fault and regardless of the CMR weight cap.

Because it follows the goods rather than the carrier's liability, it responds to many of the situations where CMR liability does not: damage from an excepted cause, losses the carrier successfully defends, and the large slice of value that sits above the 8.33 SDR/kg cap. It is the only mechanism that reliably makes a high-value shipper whole on a total loss.

All-risks does still have exclusions — wilful misconduct of the insured, ordinary wear, inherent vice in some wordings, inadequate packing, and so on — so it is not literally every conceivable event. But for the everyday transit perils that destroy commercial value, it is the protection that pays the real number rather than a weight-based fraction of it.

The clearest way to see why this matters is to put numbers on it. Take a single pallet of electronics weighing 500 kg gross, with a commercial value of 40,000 EUR — light for its worth, which is typical of electronics, instruments and high-value components. The figures below are indicative, used only to show the shape of the gap.

If that pallet is destroyed in transit, CMR carrier liability caps recovery at roughly 500 kg multiplied by about 10.5 EUR, around 5,250 EUR (using an indicative 8.33 SDR of about 10.5 EUR/kg). That leaves a shortfall of about 34,750 EUR against the 40,000 EUR value — money you simply do not recover from the carrier, even if the carrier is fully and obviously at fault. All-risks cargo insurance, by contrast, is written to pay the full 40,000 EUR, closing the gap entirely.

Now reverse the profile. A 24-tonne load of building aggregate worth, say, 4,000 EUR has an indicative CMR cap of around 24,000 kg multiplied by 10.5 EUR, well into six figures — vastly more than the goods are worth, so CMR liability alone covers it comfortably and a cargo policy adds little. Same Convention, same cap formula; opposite conclusion. The variable that flips the answer is the value-to-weight ratio.

Whether or not you also hold a cargo policy, preserving your CMR claim against the carrier follows a strict, time-sensitive process — and getting the first step wrong can weaken the claim. At delivery, inspect the goods before signing. If damage or shortage is apparent, note it specifically on the CMR consignment note and the proof of delivery (POD) — a precise reservation such as "3 cartons crushed, contents damaged", not a vague "goods received unchecked". A clean signature on the POD makes it much harder to argue the goods arrived damaged.

If the damage is not apparent at delivery — concealed damage you only find on unpacking — you must notify the carrier of it in writing within 7 days of delivery (excluding Sundays and public holidays). Miss that window and the law presumes the goods were delivered in the condition described on the consignment note. In all cases, reserve your rights in writing, photograph the damage and the packaging as found, and keep the invoice, packing list and CMR together as the evidence file.

The substantive claim then has to be brought within the limitation period: one year from delivery for ordinary claims, extended to three years in the case of wilful misconduct (or default treated as equivalent under the applicable law). Submit the documented claim to the carrier — or, if you hold cargo insurance, notify your insurer promptly and let them pursue recovery against the carrier under their subrogation rights.

If you also want the wider commercial detail on consignment notes and the documents that travel with the goods, our EORI, CMR and commodity codes guide covers the paperwork basics.

On your shipments SAVA is the carrier under the CMR Convention, and it carries the statutory CMR liability that goes with that role — the 8.33 SDR per kilogram of gross weight affected described above. That liability is real and automatic; it is the floor the Convention guarantees on every international movement we run.

What SAVA does not do is underwrite or indemnify the goods beyond that CMR limit. We are not your cargo insurer, and we never represent your freight as "fully insured" by us — the CMR cap is a weight-based figure, not the value of your goods. For the value above the cap, the protection has to come from an all-risks cargo policy.

You have two clean routes to that cover. We can arrange additional all-risks cargo insurance for your consignment alongside the freight, or you arrange it directly with your own insurer or broker against the full commercial value. Either way, the Incoterm on the sale decides who carries the risk for each leg and therefore who should be buying the cover — see our Incoterms 2020 guide for where risk passes. Tell us which route you want at quote stage and the written quote will reflect it.

Work out your value-to-weight ratio (consignment value divided by gross kg). If it is materially above the indicative 10 to 11 EUR/kg CMR cap, you are under-covered by CMR alone and should arrange all-risks cargo insurance for the full value. If it is well below, CMR carrier liability may be enough on its own.

Decide who arranges the cover before dispatch — SAVA can arrange additional all-risks cargo insurance, or you place it with your own insurer — and confirm the Incoterm so the risk and the insurance line up. At delivery, inspect before signing, note any apparent damage precisely on the CMR and POD, report concealed damage in writing within 7 days, photograph everything, and keep the claim within the one-year limitation period (three years for wilful misconduct).

All figures here are indicative — the SDR rate moves and policy wordings vary — so treat them as orientation, not a binding quotation. When you request a written quote, tell us the goods' value and whether you want all-risks cover arranged, and we will set it out clearly alongside the freight price.