Cargo claims are one of the least enjoyable parts of freight brokerage, but handling them correctly is essential. A poorly documented or late-filed claim is a loss you absorb. A properly filed claim against a carrier with adequate cargo insurance typically gets paid, though often at a negotiated settlement rather than full invoice value.
What the Carmack Amendment Governs
The Carmack Amendment (49 U.S.C. § 14706) is the federal law governing carrier liability for damaged, lost, or delayed freight in interstate commerce. The key provisions:
- Carriers are liable for the actual loss or damage to freight in their possession
- Shippers and brokers must file a written claim within 9 months of delivery for damage/loss claims (or 9 months from the date delivery should have occurred for non-delivery)
- Legal action must be initiated within 2 years of the carrier's written declination of the claim
- Carriers can limit liability through released value provisions in the bill of lading
The 9-month window is non-negotiable. Courts have consistently held that missing this deadline extinguishes the claim regardless of the merits.
Step 1: Document at Delivery
The most valuable evidence in any cargo claim is notation on the delivery receipt (Proof of Delivery or POD) at the time of delivery. This is the shipper's or receiver's signature on the driver's paperwork.
Visible damage: If damage is apparent when the driver opens the trailer or before the freight is moved from the vehicle, the receiver should note the damage on the delivery receipt before signing. Specific is better than vague: "3 cases crushed, product appears wet" is more useful than "freight damage."
Concealed damage: Not all damage is visible at delivery. If the product is in sealed packaging and damage is discovered when the packaging is opened later, this is "concealed damage" and is still claimable, but the burden of proof is higher because you can't prove the damage happened in transit versus at another point in the supply chain.
Taking photos at delivery of any visible damage, the trailer interior, the freight positioning, and the delivery receipt notation is standard practice for receivers processing high-value shipments.
If the receiver signs the delivery receipt clean (no notation) and damage is discovered later, you can still file a claim for concealed damage, but the carrier will dispute it more aggressively.
Step 2: Notify the Carrier Promptly
Contact the carrier as soon as damage is discovered — both to establish the timeline and to request that they preserve records (photos, driver logs, inspection reports).
For concealed damage, prompt notification matters more: the longer the gap between delivery and claim notification, the stronger the carrier's argument that damage occurred after delivery.
Step 3: Compile Your Documentation
A complete cargo claim file includes:
- Original Bill of Lading — the contract of carriage that establishes the freight description and quantity at pickup
- Delivery Receipt / POD — with damage notation if visible at delivery
- Commercial invoice — establishing the value of the damaged goods
- Packing list — confirming quantities
- Photos — delivery condition, damaged product, packaging
- Inspection report — if a formal inspection was conducted by a third party
- Repair or replacement invoices — if goods were repaired or replaced
- Salvage value documentation — if damaged goods had any salvage value (offsets the claim)
- Written claim letter — formal notice of the claim with all the above attached
Step 4: Write and Submit the Formal Claim
The formal claim letter should state:
- The load details (Pro number, BOL number, pickup/delivery dates)
- Description of the damage or loss
- The amount you are claiming
- Reference to attached documentation
Send it to the carrier's claims department via certified mail or email with delivery confirmation. Get a claim number and track the status.
Many carriers have online claim portals; using these is fine as long as you get confirmation of receipt and a claim number.
Step 5: Negotiate the Settlement
Most cargo claims are settled for less than the full claimed amount. Common reductions:
- Depreciation — carriers often argue the goods weren't worth full invoice value
- Salvage credit — if any portion of the damaged goods was usable or resalable, the carrier offsets the claim by that amount
- Carrier's liability limits — if the carrier's released value rate was lower than actual value (and you didn't purchase additional coverage), the payout is capped
- Contributory negligence — if the freight was improperly packaged, the carrier may argue shared liability
The question of whether to accept a settlement offer involves weighing the settlement amount against the cost and time of pursuing the full claim through litigation.
The Broker's Role in Cargo Claims
Here's where it gets nuanced for brokers: your customer relationship is with the shipper, but the contract of carriage is between the carrier and the shipper (or the consignee). Brokers are not directly a party to cargo claims under the Carmack Amendment.
In practice, many shippers expect their broker to help manage cargo claims — assembling documentation, following up with carriers, and escalating disputes. Whether you have a contractual obligation to do this depends on your broker-shipper agreement.
Some brokers include contractual language that explicitly limits their liability for cargo claims and directs the shipper to file claims directly with the carrier. This is legally sound but may not be what shippers expect, and handling claims well is a relationship-building opportunity.
Freight broker cargo liability insurance is separate from carrier cargo insurance. Some brokers carry contingent cargo coverage that steps in when a carrier's cargo insurance fails to pay. This is worth understanding if you're moving high-value freight regularly.
Frequently Asked Questions
What if the carrier refuses or doesn't respond to the claim?
After submitting a claim, the carrier has 30 days to acknowledge receipt and 120 days to resolve it (pay, deny, or make a counteroffer) under federal regulations. If they miss these timeframes, document the non-response and consult an attorney. The 2-year litigation window from denial still applies.
Can I file a cargo claim on behalf of my shipper customer?
Yes, as their agent with appropriate authorization. The shipper typically needs to assign the claim to you or provide written authorization for you to act on their behalf. Some brokers have their customers assign cargo claims to them contractually in the broker-shipper agreement.
What does "released value" mean on a bill of lading?
Released value is the maximum carrier liability per pound, set at the time of booking. If you book freight at the default released value ($0.50/lb for many carriers) rather than purchasing excess value coverage, a 500 lb shipment of electronics worth $5,000 would only yield a claim of $250. For high-value freight, always ensure your carrier's cargo insurance or a separate policy covers actual value.
How long does a typical cargo claim take to settle?
Simple, documented damage claims with cooperative carriers can settle in 30–60 days. Disputed claims can take 6–18 months. Claims that go to litigation can take 2–3 years. Most brokers push for negotiated settlements rather than litigation because the legal costs often exceed the disputed amount.
Does cargo insurance cover the full claim amount?
It depends on the policy limits and the circumstances. Most carrier cargo policies have per-load limits (often $100,000–$250,000) and exclude certain commodities or circumstances. Reading the actual policy and understanding the exclusions is important for brokers who handle high-value freight.