When Canadian businesses ship high-value goods, there’s a common and costly misconception: many believe the carrier will fully cover any damage or loss. Unfortunately, that’s far from the truth. The reality? Carrier liability and freight insurance are not the same—and this critical difference can either protect your bottom line or leave you exposed to massive financial risk.
In this guide, we’ll break down the key differences between freight insurance and carrier liability, so you can make informed decisions that safeguard your logistics operations, inventory, and revenue.
1. Carrier Liability Is Extremely Limited
Carrier liability is a basic legal obligation requiring a carrier to reimburse you for loss or damage. But the coverage is minimal—and often shockingly low.
In Canadian rail shipping, for example, liability is typically limited to $2 per pound or a fixed cap per shipment. Let’s break that down:
Example: If your 1,000-pound shipment of electronics is worth $100,000, you could receive as little as $2,000 in compensation.
That means a $98,000 shortfall could come straight out of your pocket. Relying on carrier liability is a major gamble, especially when you’re shipping high-value freight.
Government of Canada: Transportation of Dangerous Goods Act
2. Freight Insurance Covers the Full Value of Your Cargo
Unlike carrier liability, freight insurance offers full coverage based on the declared value of your goods. That means if your shipment is damaged, lost, or stolen, you’re eligible to receive 100% compensation—not a fraction.
Example: If your $75,000 shipment of machinery is lost, you’ll be reimbursed for the full $75,000.
Whether you ship electronics, pharmaceuticals, machinery, or perishables, full-value protection ensures that a logistics disruption doesn’t turn into a financial disaster.
3. With Carrier Liability, You Must Prove Negligence
Here’s a hidden catch most shippers miss: with carrier liability, you’re required to prove the carrier was at fault—which can be incredibly difficult.
Proving negligence often requires:
- Documentation and evidence collection
- Lengthy investigations
- Legal follow-ups
With freight insurance, you get no-fault coverage. If a covered incident occurs, the insurance pays—no need to chase proof or fight through red tape.
4. Freight Insurance Covers a Broader Range of Risks
Carrier liability typically excludes a wide range of risks, such as:
- Theft
- Extreme weather
- Natural disasters
- Route disruptions
- Warehousing damage
By contrast, freight insurance protects against all of the above and more. In today’s complex supply chain, that added layer of protection is essential.
Canadian Climate Data – Government of Canada
Transport Canada: Rail Safety
5. Insurance Claims Are Faster and Simpler
Anyone who’s filed a claim through a freight carrier knows it can be a nightmare—slow, bureaucratic, and frustrating.
When you choose freight insurance from a provider like RailGateway.ca, claims are handled by dedicated experts who understand logistics. The result:
- Faster resolutions
- Clearer communication
- Better customer service
- Less downtime for your business
You get peace of mind knowing that if something goes wrong, you’ll be taken care of—quickly.
Why Relying on Carrier Liability Could Cost You Big
Here’s a quick side-by-side comparison to illustrate the impact:
| Feature | Carrier Liability | Freight Insurance |
| Compensation Amount | Capped (e.g. $2/lb) | Full value of goods |
| Coverage Scope | Limited | Broad, multi-risk |
| Proof of Negligence | Required | Not required (no-fault) |
| Claim Process | Slow & complex | Fast & streamlined |
| Peace of Mind | Low | High |
The Smart Choice for Canadian Shippers
With fuel prices, supply chain disruptions, and cargo theft on the rise, protecting your shipment is more important than ever. Freight insurance isn’t just an optional add-on—it’s a strategic decision that can protect your cash flow, customer relationships, and reputation.
Don’t assume you’re covered. Know your options. Choose freight insurance to secure your shipments and sleep better at night.
Protect Your Freight with Confidence
At RailGateway.ca, we specialize in affordable freight insurance solutions for Canadian businesses of all sizes. Whether you’re shipping across Ontario, Alberta, British Columbia, or coast-to-coast, we’ll help you get the right coverage—fast.
Ready to insure your next shipment?
👉 Get a freight insurance quote now
