Freight Insurance

At Wentworth Alexander Insurance Brokers, we recognise that every business is unique. Whether you’re a small local operation or a global logistics provider, we offer tailored solutions to meet your needs. Our policies are built to address the complexities of the freight and logistics sector, adapting seamlessly to the demands of your operations and ensuring you have the support you need every step of the way.

Why Choose Wentworth Alexander Insurance Brokers?

With years of experience in the insurance sector, our dedicated team brings in-depth knowledge and a client-centric approach. We focus on:

• In-depth risk assessments to identify vulnerabilities in your supply chain.
• Bespoke policies that evolve with your business.
• Transparent advice to help you navigate your insurance requirements.
• Dedicated support throughout the claims process to minimise disruption to your operations.

How Do I Make A Claim on My Freight Insurance?

If you need to make a claim on your freight insurance, Wentworth Alexander will handle the entire process. Simply notify us, find your documentation, and let us take care of the rest. Learn more about our claims support here.

What is freight insurance and who actually needs it?

Freight insurance - more precisely called freight liability insurance or freight forwarder's liability insurance - is a specialist commercial policy that protects businesses in the transport and logistics sector against claims arising from loss, damage, or misdelivery of goods they are carrying or handling on behalf of their customers.

This is fundamentally different from cargo insurance. Cargo insurance protects the goods owner (importer, exporter, buyer). Freight insurance protects the logistics operator - those moving or managing goods on behalf of others.

Businesses that need freight insurance include:

• Road hauliers and freight carriers - transporting goods in their own vehicles for hire and reward
• Freight forwarders - arranging and coordinating shipments using third-party carriers on behalf of clients
• Customs clearance agents - handling goods through UK or international customs
• Warehouse and storage operators - holding goods on behalf of customers for a commercial fee
• Courier and parcel operators - delivering goods at an individual consignment level
• Contract logistics and 3PL providers - managing end-to-end supply chain operations for clients

If your business earns revenue from moving, storing, or managing other people's goods, freight insurance responds when something goes wrong and your customer holds you liable.

What is the difference between freight insurance and cargo insurance?

This is the most frequently misunderstood distinction in commercial transport insurance - and getting it wrong means the wrong party arranges cover, leaving one party completely exposed.

A critical practical point: freight liability insurance pays out only up to the operator's legal liability - which is tightly capped by standard trading conditions. This is why cargo owners should always arrange their own cargo insurance rather than relying on a carrier's policy.

 What are BIFA conditions and how do they limit a freight forwarder's liability?

BIFA (British International Freight Association) Standard Trading Conditions are the standard terms and conditions under which almost all UK freight forwarders operate. They define the maximum liability the freight forwarder accepts for loss, damage, or delay to goods in their care.

Key BIFA liability limitations:

• Per kilo liability limit - under BIFA 2017 conditions (the current version), a freight forwarder's liability is limited to SDR 2 per kilogram of gross weight of the goods lost or damaged - approximately £2.20–£2.30 per kg at current exchange rates
• Maximum liability cap - overall liability is also capped at 75,000 SDR (approximately £82,500) per claim
• Claims notification period - customers must notify claims within very short timeframes (typically 14 days for visible damage, 14 days from delivery for concealed damage, and 9 months for non-delivery)
• Consequential loss exclusion - BIFA conditions typically exclude liability for indirect or consequential losses (lost profits, missed contracts, downtime) even if the forwarder is at fault

Why this matters for freight insurance: Freight forwarder's liability insurance is structured around these BIFA liability limits. When arranging cover, the policy must be aligned to the actual conditions under which you trade. If you operate under modified terms offering higher liability, your policy must reflect this. WAIB reviews your trading conditions as part of every freight liability placement.

What are RHA conditions and how do they apply to UK road hauliers?

The Road Haulage Association (RHA) Conditions of Carriage are the standard trading terms for UK domestic road hauliers, equivalent to BIFA conditions in the freight forwarding sector. Any UK haulier operating under RHA conditions has their liability to customers defined and limited by these terms.

Key RHA liability limits under the current RHA 2020 conditions:

• Liability cap - limited to the lesser of: the actual value of the goods, or £1,300 per tonne of the gross weight of the consignment lost or damaged
• Consequential loss - excluded unless specifically agreed in writing in advance
• Claims timeframes - damage must be noted on delivery receipt; claims submitted within 7 days of delivery for visible damage; within 28 days for concealed damage

For context: a 1,000kg pallet of electronics worth £50,000 would generate a maximum RHA liability payout of £1,300 - leaving £48,700 as an uninsured gap for the goods owner. This is precisely why cargo owners cannot rely on their haulier's freight insurance as a substitute for their own cargo cover.

For hauliers, goods in transit (GIT) insurance is the insurance product that responds to these RHA liability claims and is typically arranged alongside freight liability cover. WAIB structures haulier insurance programmes to cover both exposures cleanly.

What does errors and omissions cover do within a freight insurance policy?

Errors and omissions (E&O) cover - sometimes listed as a separate section within a freight forwarder's liability policy - protects the logistics operator against claims arising from mistakes in arranging or administering a shipment, rather than physical loss or damage to goods.

E&O claims in freight and logistics typically include:

• Incorrect customs documentation - misfiling of customs declarations leading to goods being delayed, seized, or subject to incorrect duty charges
• Booking errors - arranging the wrong vessel, aircraft, or collection date, resulting in missed shipment windows and customer loss
• Misrouting - sending goods to the wrong destination or incorrect port
• Failure to arrange insurance - where the forwarder was instructed to arrange cargo insurance on the client's behalf but failed to do so correctly
• Incorrect advice on tariff codes or duty rates - resulting in underpayment of duty, HMRC penalties, and client liability
• Late filing of import/export documentation - causing regulatory penalties for the client

E&O cover is particularly important for freight forwarders and customs agents whose core service involves administrative and advisory work rather than physically handling goods. A single customs misfiling on a high-value commercial shipment can generate a six-figure liability claim against the forwarder.

 Does freight insurance cover international shipments including sea and air freight?

Yes - a comprehensive freight forwarder's liability or freight carrier policy is designed to respond to claims arising across all transport modes, provided the appropriate extensions are included.

By transport mode:

• International road freight (Europe) - liability governed by the CMR Convention (Convention on the Contract for the International Carriage of Goods by Road). Freight insurance responds to claims up to CMR liability limits and, where the policy is arranged on a wider basis, beyond CMR limits.
• Sea freight - liability governed by Hague-Visby Rules or Bills of Lading Act. Freight forwarder liability policies cover claims arising from errors in booking, documentation, and custodial liability while goods are under the forwarder's control.
• Air freight - governed by the Montreal Convention. Air freight freight forwarder liability responds to claims within Montreal liability limits for carriers and documentation errors for forwarders.
• Multimodal shipments - where a single shipment crosses multiple modes (road + sea + road), the policy must include multimodal coverage to ensure no leg is uninsured.

Key policy check: Ensure your freight liability policy includes worldwide territory if you operate internationally. Some policies limit geographic coverage to specific regions (UK only, or Europe only) and would not respond to claims arising from intercontinental shipments.

What is consequential loss and is it covered under freight insurance?

Consequential loss refers to indirect financial losses that flow from the original loss or damage event - such as loss of business profits, missed contracts, production downtime, or penalty charges - rather than the direct cost of the lost or damaged goods themselves.

In the freight and logistics sector, consequential loss claims are typically excluded from standard freight forwarder's liability and goods in transit policies. Both BIFA and RHA standard trading conditions explicitly limit or exclude liability for consequential loss, and this is reflected in the policy terms designed around those conditions.

However, consequential loss exposure is very real in practice:

• A manufacturing client whose production line stops because a component shipment was delayed or misfiled at customs
• A retailer missing a product launch window because their goods arrived at the wrong UK port
• A construction contractor facing delay penalties because specialist materials were damaged in transit

Some insurers offer consequential loss extensions as optional additions to freight liability policies, typically with sub-limits. Where your contracts with customers include penalty clauses, liquidated damages, or high-value time-critical shipments, discuss a consequential loss extension with your WAIB broker.

What happens if a freight forwarder fails to arrange insurance as instructed?

This is one of the most significant E&O exposures for freight forwarders and customs agents, and one where claims regularly reach six figures. If a client instructs their freight forwarder to arrange cargo insurance on their behalf, and the forwarder fails to do so - or arranges inadequate cover - the forwarder can be held personally liable for the full uninsured loss.

How this typically arises:

• Client provides standing instructions to insure all shipments above a certain value
• Forwarder fails to declare a specific shipment, or arranges cover under the wrong ICC clause
• Goods are lost or damaged; the cargo insurer declines the claim due to the undeclared or improperly arranged policy
• Client's loss - the full commercial value of the goods - becomes a claim against the freight forwarder's E&O cover

Key protections for freight forwarders:

• Ensure your freight forwarder's liability policy includes a failure to arrange insurance extension with sufficient sub-limits
• Implement internal processes to confirm insurance arrangements on every shipment where a client has given standing instructions
• Ensure your BIFA/RHA conditions clearly define the scope of any insurance-arranging obligation and the limits of that obligation
• Maintain records of all insurance instructions given by clients and the corresponding insurance confirmations issued

Without an E&O extension covering failure to insure, a freight forwarder's liability policy may exclude this scenario entirely - leaving the forwarder personally exposed. WAIB reviews these scenarios as a standard part of freight liability policy placement.