Cargo Insurance: What CMR Liability Covers and When You Need All-Risk Cover

Carrier liability under a CMR consignment note is not cargo insurance — it's a legally capped compensation that only applies when the carrier is at fault. The CMR Convention limits payouts to 8.33 SDR per kilogram of gross weight of goods lost or damaged, regardless of what the goods are actually worth. For high-value, fragile or business-critical freight, that ceiling is often far too low, which is exactly the gap a separate all-risk cargo insurance policy is built to close.

What CMR liability covers by default

Any shipment moving under a CMR consignment note is automatically covered by the carrier's statutory liability — there's nothing to buy or activate. The 1956 CMR Convention, ratified by virtually every European country, makes the carrier liable for total or partial loss of the goods, for damage occurring between pickup and delivery, and for delay — but only when the carrier is at fault.

That's the part shippers often miss: CMR is a fault-based liability regime, not insurance. If the damage results from the nature of the goods themselves, from packing the sender was responsible for, or from circumstances the carrier genuinely could not have avoided, there may be no compensation at all, no matter how large the loss.

The carrier's liability cap: 8.33 SDR per kilogram

Even when the carrier is found at fault, the payout is capped. The 1978 Protocol to the CMR Convention replaced the earlier limit with a new figure: compensation cannot exceed 8.33 units of account (SDR) per kilogram of gross weight of the goods lost or damaged. The "unit of account" here is the Special Drawing Right, defined by the International Monetary Fund — not a fixed euro or dollar amount. This is set out directly in the official text of the 1978 Protocol to the CMR Convention, registered in the United Nations Treaty Series.

In practice, the cap tracks weight, not value. A 500 kg pallet of electronics and a 500 kg pallet of steel fittings get the same maximum CMR payout if totally lost — even though their real value can differ by an order of magnitude. Light, high-value cargo, such as electronics, pharmaceuticals or precision equipment, feels this gap the hardest.

A sender can raise the carrier's liability ceiling by declaring a higher value, or a special interest in delivery, on the CMR note itself — usually for an extra fee. But it's still fault-based liability: if the carrier proves it wasn't at fault, there's no payout at all, whatever value was declared.

When carrier liability under CMR isn't enough

The gap between the CMR cap and the real exposure shows up most often in a handful of situations:

• High-value, lightweight cargo. Electronics, medical devices, precision instruments — the 8.33 SDR/kg cap covers only a fraction of their real value.
• Fragile or sensitive goods. Glass, ceramics, temperature-controlled products carry a higher damage risk, and proving carrier fault isn't always straightforward.
• Theft or hijacking in transit. These cases often turn into long disputes over carrier fault, while a cargo insurance policy pays out on the loss itself, without waiting for that dispute to resolve.
• Force majeure and events outside the carrier's control. Natural disasters, accidents caused by a third party, civil unrest along the route — CMR liability may simply not apply.
• Groupage shipments with multiple transfers. Every transfer point is a place where it becomes harder to pin down exactly when, and whose fault, damage occurred — see our comparison of groupage versus a full truck for how that risk factors into the choice.
• Business-critical delivery dates. CMR's delay liability is also capped and requires proving the loss — it doesn't automatically cover lost business.

How all-risk cargo insurance actually works

A cargo insurance policy is a separate contract the cargo owner — shipper or consignee, depending on the Incoterm — takes out with an insurer. Unlike CMR, it isn't fault-based liability; it's cover on the goods themselves: the policy pays out on physical loss or damage regardless of whether carrier fault can be proven, as long as the event isn't excluded under the policy.

The market standard here is the Institute Cargo Clauses. As the ICC Academy explains, Clauses "A" provide "all risks" cover — the broadest level of protection — while Clauses "C" offer minimum cover against a short list of named perils only. The difference matters: minimum cover can be enough for robust, low-value goods on a stable route, but for high-value, fragile or heavily-handled cargo, "A" cover is close to a necessity in practice.

The sum insured is set by the commercial value of the goods, not by their weight — which is exactly where it diverges from the CMR cap. It typically includes the value of the goods plus transport costs, so a total loss is reimbursed at something close to the real financial exposure, not a figure tied to kilograms.

How to declare the value of your cargo correctly

Two different mechanisms exist here, and they're often confused:

• Declared value on the CMR note raises the carrier's liability ceiling above 8.33 SDR/kg — but payment still depends on proving the carrier was at fault.
• The sum insured on a cargo policy is set by the cargo owner independently of the carrier, and covers physical loss or damage across a much broader set of causes, without needing to pin fault on any one party.

For either to work, the value has to be accurate and set before loading, not reconstructed after a claim. Under-declaring the insured value usually reduces a partial-loss payout proportionally rather than saving on premium. For recurring shipments, it's worth agreeing a valuation method with your forwarder or insurer up front, instead of recalculating it manually for every batch.

Common mistakes

• Assuming CMR liability replaces cargo insurance. It's fault-based carrier liability with a hard weight cap, not cover for the goods' full value.
• Not raising the declared value for high-value cargo, leaving the calculation stuck at 8.33 SDR/kg when the real value is several times higher.
• Taking minimum cover, Clauses "C", for fragile, high-value or theft-prone goods instead of all-risk cover.
• Not checking the policy's exclusions — inadequate packing, undeclared dangerous goods and certain types of natural loss are typically excluded from both CMR and standard cargo insurance.
• Signing the CMR note at delivery without noting visible damage — this weakens any later claim against both the carrier and the insurer.
• Leaving it unclear in the contract who insures the goods. Under some Incoterms the obligation to insure sits with the seller, under others with the buyer, and confusion here can leave the cargo with no cover at all.

Next step

Before shipping valuable, fragile or business-critical cargo, it's worth deciding upfront whether standard CMR carrier liability is enough or whether the shipment needs a separate all-risk policy covering its full value. At Layner Group we operate under the CMR Convention on every shipment and can advise on the right level of cover for your specific route and cargo type. If you regularly ship volumes that don't fill a dedicated truck, take a look at our LTL groupage service between Germany and Belgium, saving up to 45% — and raise the insurance question as part of that same quote.