Understanding the Carmack Amendment: What Transportation Companies Need to Know
Transportation carriers have some degree of control in their relationships with the owners of the goods they are transporting. However, the provisions of the Carmack Amendment have shifted traditional rules of negligence when it comes to lawsuits involving damages. At a high level, let’s look at what the amendment is and how it applies to the transportation industry.
What is the Carmack Amendment?
The Carmack Amendment was enacted in 1906 by the Interstate Commerce Act of 1877—legislation that regulates the relationship between shipping companies and the owners of goods in shipment. Simply put, the amendment spells out the rights, duties and liabilities of shippers and carriers as they relate to a cargo loss by establishing liability standards in the event goods being transported become damaged or lost. The amendment also lists procedures that must be followed when filing claims and obtaining reimbursement for a loss.
Carmack Amendment Basics
Contained in the amendment are three basic rights for transportation companies:
- The right to collect reimbursement for lost or damaged goods.
- The right to collect freight charges from the shipper.
- The right to put a lien against a shipper’s property for any unpaid freight charges.
As a national liability system for interstate carriers, the amendment allows a carrier to require that all claims for loss or damage by a shipper be made in writing within nine months from the date of the loss or damage and that a civil action be instituted within two years after the denial of a claim.
In addition, the amendment allows a carrier to limit its liability “to a value established by written declaration of the shipper or written agreement, provided that all conditions / prerequisites of the amendment have been met.” The purpose of this claim period is to provide the carrier with advance notice that the shipper will be seeking reimbursement for damages.
Burden of Proof Falls on the Transportation Company
A critical item to note about the amendment—especially for motor carriers—is that it holds the carrier/transportation company liable for damages to the goods being transported without having to provide proof of negligence.
However, for a shipper to hold a carrier responsible for cargo damages, it must provide evidence that the goods were in satisfactory condition at the time of shipping or were damaged upon delivery. The shipper must also provide documentation of the dollar amount of the loss. Exceptions to the amendment include shipments of household goods, personal effects, live animals, perishable goods, hazardous materials and international cargo.
According to the law firm MehaffyWeber:
For motor carriers, provisions of the Carmack Amendment are important to understand because they protect the carriers from automatically assuming full responsibility for damage to goods that happened outside their control. In addition, if a motor truck cargo claim for physical damage is filed, the amendment provides vital information as to the process that must be followed.
If you’re a broker serving commercial transportation clients, now may be an ideal time to discuss mitigation efforts when transporting goods, including a review of provisions under the Carmack Amendment.
About Across America Insurance Services
Companies that transport merchandise should consider the protection of cargo insurance. At Across America Insurance, we offer cargo insurance coverage at competitive rates and with same day quotes. In the event of a loss, our experts are here to assist businesses with concerns regarding damage claims.
To learn more about our transportation products and how we can best serve you, please email info@acrossamericainsurance.com or visit acrossamericainsurance.com