Freight claims cost the North American trucking industry over $800 million annually, according to the Transportation Claims and Prevention Council. For freight brokers, claims represent a triple threat: they damage shipper relationships, create disputes with carriers over liability, and consume hours of staff time to manage and resolve. Most claims are preventable. The ones that are not preventable are recoverable - if your documentation is correct.
This guide covers the federal law that governs carrier liability, the common documentation failures that kill claim recoveries, and a systematic 5-stage prevention framework that any brokerage can implement without additional headcount.
The Carmack Amendment (49 USC 14706) is the federal statute that establishes carrier liability for loss or damage to freight in interstate commerce. Enacted in 1906 and significantly amended since, it creates a presumption of carrier liability when a shipper proves delivery of freight in good condition and receipt by the consignee in damaged or short condition. Once the shipper establishes this prima facie case, the burden shifts to the carrier to prove a valid defense or limitation.
The five common law defenses available to carriers under the Carmack Amendment are: (1) an act of God, (2) an act of the public enemy, (3) an act of the shipper, (4) an act of public authority, and (5) the inherent vice or nature of the goods. In practice, carriers most commonly invoke acts of the shipper (improper packaging) and inherent vice (goods that were already damaged before loading) as defenses. Both of these defenses are defeated by thorough documentation at origin showing the freight was in good condition when loaded.
The Carmack Amendment permits carriers to contractually limit their liability below the actual value of the goods - but only under specific conditions. Under 49 USC 14706(c)(1)(A), a carrier can limit liability if it: (1) maintains a tariff that includes the limitation, (2) gives the shipper a reasonable opportunity to choose between two or more levels of liability, (3) obtains the shipper's agreement to the limitation, and (4) issues a receipt or bill of lading reflecting the agreement.
The practical effect is dramatic. Many LTL carriers publish tariff liability limits of $0.10 per pound per package, $25 per package, or $5.00 per pound - whichever is lower. On a pallet of electronics weighing 500 lbs with an actual value of $15,000, the carrier's liability could be capped at $50 (500 lbs x $0.10/lb) if the shipper accepted the limited liability rate without declaring value. This is not a theoretical scenario - it happens every day in LTL freight.
The "released rate" trap: When a shipper accepts the carrier's standard rate without declaring the value of the goods, they are accepting the "released rate" - which carries the carrier's tariff liability limit. The shipper has implicitly agreed to limited liability in exchange for a lower freight rate. Many shippers do not realize they have made this trade-off until they file a claim and receive a check for $50 on a $15,000 loss.
Shippers have two mechanisms for obtaining higher-than-tariff recovery in a freight claim: declared value and excess liability coverage (also called cargo insurance or inland marine insurance).
Declared value is a notation on the bill of lading that sets the maximum carrier liability at the declared amount. The shipper pays an excess valuation charge - typically a few dollars per $100 of declared value above the carrier's base liability limit. The carrier's liability is capped at the declared value, which means the shipper can recover up to that amount if the goods are lost or damaged. Declaring value does not guarantee full recovery - the carrier can still assert defenses and the claim process still applies. But it removes the tariff liability cap as a barrier.
Cargo insurance or excess liability coverage is a separate insurance policy purchased from an insurer (not the carrier). It pays the shipper regardless of whether the carrier is liable - the insurer then exercises subrogation rights against the carrier. Cargo insurance is the stronger protection for high-value shipments because it does not depend on proving carrier fault and does not require navigating the claim filing deadlines and carrier defenses that burden Carmack Amendment claims.
As a freight broker, you should understand the difference between these two tools because shippers will ask you to arrange carrier liability coverage, and you need to know when declared value is sufficient versus when a shipper needs actual cargo insurance. Freight broker errors and omissions (E&O) insurance does not cover shipper cargo losses - that is the shipper's responsibility to arrange.
The most preventable freight claims originate from inadequate packaging. LTL freight is handled 5 to 7 times between origin and destination as it moves through terminal networks - each handling event is an opportunity for damage. The shipper's packaging must be designed for this environment, not for direct delivery or parcel shipment standards.
Packaging standards for LTL freight should include: pallets in good condition without broken boards or protruding nails; stretch wrap applied tightly in multiple layers with pallet overhang kept to under 2 inches; corner boards and edge protectors for boxed goods; stacking boxes in a column or brick pattern, not pyramids that collapse under weight; and a top cap to prevent compression damage from freight stacked on top.
When shippers use inadequate packaging and freight is damaged, carriers will successfully invoke the "act of the shipper" defense and deny the claim - or settle for pennies. The packaging photographs taken at origin (see Stage 3) are your evidence that packaging was adequate when the carrier accepted the freight.
For truckload shipments, loading practices directly affect freight integrity during transport. Improperly stacked loads shift during transit and create damage that the shipper then claims against the carrier. Key loading practices that reduce claims include: securing heavy freight on the floor with lighter items stacked above, filling void spaces with air bags or blocking and bracing, distributing weight evenly across the axles, and using load bars to prevent shifting when the trailer is not full.
For LTL, loading is the carrier's responsibility at the terminal. But how the shipper presents the freight for pickup determines how the carrier can handle it. A pallet that is already unstable or overweight will be handled differently - and more roughly - than a well-unitized, properly stacked pallet.
Documentation is the stage where most claims are won or lost. The critical documents at origin are: a properly completed bill of lading with accurate commodity description, weight, and piece count; a shipper's count notation if the driver did not verify the count at loading (which triggers "said to contain" language - discussed below); and photographic evidence of the freight condition before loading and after it is secured in the trailer.
For high-value freight, the documentation package should include: timestamped photographs of each pallet showing the condition of packaging; photographs of the loaded trailer before the doors are closed; and written notation on the BOL if there is any pre-existing damage to the trailer (dings, rust, holes in the floor) that could later be attributed to the shipper's freight.
Not all carriers have the same claims frequency and claims payment performance. Claims frequency data is available from the FMCSA's Safety Measurement System (SMS) and through carrier performance data from organizations like the National Motor Freight Traffic Association (NMFTA). Carriers with high complaint rates or poor claims settlement histories should be avoided for high-value or damage-prone freight.
For fragile or high-value commodities, consider whether the routing can be optimized to reduce the number of terminal handlings. A direct service lane between origin and destination has significantly fewer damage opportunities than a lane that routes through two or three break-bulk terminals.
The delivery inspection is the final - and often the most neglected - stage of freight claim prevention. The consignee's behavior at delivery determines the evidence available for any subsequent claim. Consignees should be trained to count pieces before signing, inspect for visible damage before the driver leaves, note all exceptions on the delivery receipt with specific descriptions, photograph any visible damage while the driver is still present, and refuse to sign a clean POD for freight they have not actually inspected.
Many consignees sign clean PODs because it is faster than dealing with exceptions - and then discover damage later and expect a full claim recovery. The "said to contain" notation limits this option significantly.
The words used to describe the commodity on the bill of lading have a direct legal impact on your claim recovery. This is one of the most under-appreciated aspects of freight documentation.
A specific, accurate commodity description establishes what was tendered and its value. "Industrial pump assembly, model 1200-X, serial number 94823, replacement value $4,200" is defensible. "Pump" is not. When a shipper describes freight vaguely, the carrier can challenge the claimed value in a claim settlement by arguing they could not have priced the rate or limited liability appropriately without knowing the specific nature and value of the goods.
For classification-based LTL pricing, the commodity description also determines the NMFC freight classification, which affects the rate. Using a vague description can result in the carrier reclassifying the shipment at a higher class after delivery - and issuing an inspection report that increases the freight charge. See our guide on how to classify freight density using NMFC for a deep dive on this topic.
"Said to contain" (STC) is the notation carriers use when they do not verify the actual contents or count of a shipment. It appears on the BOL when the driver does not count the pieces at loading, the trailer was pre-loaded by the shipper with the doors sealed before the carrier arrived (drop and hook), or the shipment is in sealed cartons or crates whose contents the driver cannot verify.
The STC annotation creates a legal limitation on the shipper's claim rights. Under the Carmack Amendment, if the carrier accepted freight "said to contain X units" and delivered the same sealed containers with evidence of no tampering, the carrier has an argument that any shortage existed before loading - meaning it was an act of the shipper, not the carrier.
To avoid STC limitations, shippers should have drivers verify piece counts at loading whenever possible, maintain piece-by-piece loading records, and use tamper-evident seals on trailers with the seal number recorded on the BOL. If an STC notation is unavoidable, supplement it with shipper's loading records and weight certificates that independently verify the pieces loaded.
A systematic photo documentation protocol is the single highest-leverage investment a shipper or broker can make in freight claim prevention and recovery. The protocol should include:
Photos should be stored with the shipment file and retained for at least 24 months - long enough to cover the 2-year statute of limitations for Carmack Amendment claims after a carrier disallows a claim.
When a claim event occurs, the filing process matters as much as the evidence. There is no universal claim form required by federal law for domestic freight - you submit a written notice that constitutes a proper claim under 49 CFR 1005.2. The notice must: (1) identify the shipment by reference number, (2) assert liability on the carrier's part, (3) specify or estimate the amount of loss or damage, and (4) be filed within the carrier's tariff time limit.
The claim package should include: a cover letter stating the claim amount and basis, a copy of the original BOL, the carrier's freight bill, the commercial invoice showing the value of the goods, the exception-noted POD, photographs of the damage, and a repair estimate or invoice for damaged goods (or a replacement cost statement for total loss).
The carrier has 30 days to acknowledge receipt of the claim and 120 days to pay, offer, or disallow the claim under 49 CFR 1005.7. If the carrier does not respond within 120 days, they must provide written status updates every 60 days explaining the delay. Most carriers settle legitimate, well-documented claims within 60-90 days.
Subrogation rights: If your shipper has cargo insurance and the insurer pays the claim, the insurer acquires your right to pursue the carrier for reimbursement (subrogation). This is why cargo insurers conduct their own investigations and may ask for all the documentation discussed in this guide. Cooperate fully - your duty to assist the insurer in recovering against the carrier is typically a condition of the policy.
See our companion guide on proof of delivery best practices for a detailed breakdown of the delivery documentation that forms the evidentiary foundation of every freight claim. And review our BOL generation guide to ensure your shipping documents use the specific commodity descriptions and value declarations that protect your recovery rights from the moment of tender.
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