When cargo arrives wet, dented, short or totally lost, many businesses assume the ocean carrier must automatically reimburse the full cargo value. In practice, carrier liability only arises when the legal and evidentiary requirements are met and may be subject to defences, liability limits and time bars. Cargo insurance operates under a separate insurance contract, with its own insured risks, insured value, deductible, exclusions and claims duties. The two mechanisms can work together, but neither replaces the other. This article explains how to identify the correct recovery route, preserve evidence and manage parallel claims without losing rights.

Operational update: 21 July 2026 · TGIMEX Logistics B2B

QUICK FACTS

They are not substitutes

Carrier liability is contractual/statutory liability; cargo insurance is first-party indemnity under an insurance policy.

Carrier recovery may be limited

Not every loss occurring at sea makes the carrier liable for the full invoice value.

Insurance is not literally “all risks”

Coverage depends on ICC(A), ICC(B), ICC(C), endorsements, exclusions, deductibles and declared shipment data.

Parallel notice is usually essential

Notify the carrier/forwarder and the insurer at the same time; after payment, the insurer may pursue the responsible third party by subrogation.

Lock the deadlines at delivery

Where Vietnamese law governs, concealed loss or damage must be notified in writing no later than 3 days after receipt, and the action time bar for cargo loss or damage is 1 year. The B/L or foreign law may prescribe different deadlines.

SCOPE OF APPLICATION

This article mainly applies to commercial cargo carried by sea under a bill of lading or sea waybill, including FCL, LCL and multimodal movements with an ocean leg.

Users: importers, exporters, cargo owners, consignees, shippers, logistics, procurement, finance and compliance teams.
Losses: physical loss, shortage, wet damage, dents, breakage, contamination, container loss, general average and certain mitigation costs.
Boundary: the outcome depends on the transport document, governing law, place and cause of loss, insurance wording and evidence.
Do not transfer mechanically: air, road, rail, courier, domestic cargo, dangerous goods, reefer and project cargo may follow different liability regimes.

KEY TERMS

Term	Meaning	Operational role
Carrier	The party contracting or named to perform carriage under the transport document.	Primary target of a cargo claim where loss, damage or delay falls within its responsibility.
Actual Carrier	The party physically performing all or part of the carriage on behalf of the contracting carrier.	May participate in the claim depending on contract and applicable law.
Carrier Liability	Liability arising under the contract of carriage and mandatory law.	Requires evidence of loss, custody period, causation and recoverable value.
Cargo Insurance	Insurance of the financial interest in the cargo under a policy or certificate.	Pays covered loss subject to insured amount, conditions and exclusions.
Insured Peril	A risk or cause of loss within the policy coverage.	Determines whether the loss is insured.
Deductible / Excess	The portion retained by the insured under the policy.	Reduces the insurer’s payment even for a covered loss.
Subrogation	After indemnifying the insured, the insurer may pursue the responsible third party up to the amount paid.	Allows insurance recovery while preserving the carrier claim.

NATURE AND OPERATING MECHANISM

An ocean shipment normally involves at least three separate relationships: the sales contract, the contract of carriage and the cargo insurance contract. Incoterms allocates obligations between buyer and seller, but does not itself create carrier liability or rewrite the insurance policy.

Relationship	Main parties	Trigger	Primary documents	Typical result
Sale of goods	Buyer – Seller	Non-conforming delivery, quantity/quality issue or breach of the sales contract.	Sales contract, PO, Incoterms and governing law.	Replacement, price adjustment, damages or contractual remedy.
Carriage	Shipper/Consignee – Carrier/NVOCC	Loss, damage or delay within the carrier’s responsibility period.	B/L, sea waybill, booking terms, tariff and mandatory law.	Claim accepted, rejected or limited.
Cargo insurance	Insured/Beneficiary – Insurer	An insured event occurs during the policy period and geographical scope.	Policy/certificate, clauses, endorsements, deductible and exclusions.	Indemnity under the policy followed by possible subrogation.

Key control: Do not sign a carrier waiver, discharge or settlement before assessing its effect on insurance and subrogation rights.

HOW CARRIER LIABILITY DIFFERS FROM CARGO INSURANCE

Criterion	Carrier liability	Cargo insurance	Decision implication
Legal nature	Liability for breach of carriage duties or under law.	Contractual indemnity under an insurance policy.	Rights under one contract cannot be inferred from the other.
Claimant	A party entitled to claim under the transport document and applicable law.	The insured or valid beneficiary.	Legal entity and insurable interest must be correct.
Burden of proof	Prove condition/quantity at handover, loss during custody and recoverable value.	Prove an insured event, amount of loss and compliance with claims duties.	The evidence overlaps, but the tests are not identical.
Time scope	Usually linked to the carrier’s period of responsibility under B/L and law.	May extend beyond the sea leg, including warehouse-to-warehouse if stated.	Pre-carriage or post-delivery damage may be outside carrier liability.
Defences/exclusions	Carrier may rely on statutory/contractual defences and limits.	Insurer relies on exclusions, deductible, packing, disclosure and notification terms.	Neither mechanism guarantees 100% recovery.
Quantum	Where Vietnamese law governs and the cargo nature/value was not declared, accepted by the carrier and recorded in the transport document, the maximum is 666.67 SDR per package/unit or 2 SDR per kg of gross weight, whichever is higher; delay has a separate cap. Article 153 sets circumstances in which the carrier loses the right to limit.	Based on covered loss, insured amount and indemnity principles.	For high-value cargo, the gap between actual value and carrier limits can be substantial; a value declaration only matters when the carrier accepts and records it correctly.
General average	Carrier liability is not insurance for the cargo owner’s GA contribution.	A suitable policy may provide a general-average guarantee or contribution cover. Where Vietnamese law governs, Article 328 requires the insurer to sign a contribution guarantee within the insured amount unless the policy provides otherwise.	A major reason to maintain cargo insurance.
Recovery speed	May be slow due to causation, defences, limits and jurisdiction.	Can be more direct, but still requires survey and coverage confirmation.	Claim proceeds should not be treated as immediate cash.
After payment	Carrier performs under settlement or judgment.	Insurer may subrogate against carrier or another third party.	Do not sign broad waivers without insurer approval.

LOSS-SCENARIO PROTECTION MATRIX

Scenario	Carrier claim	Insurance claim	Control point
Water ingress from container damage or improper handling	Possible if causation falls within carrier custody/duty.	Possible if insured and not excluded.	Preserve seal/container photos, EIR, survey and opening report.
Storm, heavy seas or voyage casualty	Carrier may rely on defences depending on law and due diligence.	May be covered depending on clauses and extensions.	Identify the proximate cause; “weather damage” alone is not enough.
Natural leakage, ordinary loss or inherent vice	Often difficult to attribute to carrier absent handling/storage fault.	Commonly excluded unless specifically agreed.	Review commodity characteristics and moisture/temperature evidence.
Insufficient packing by shipper	Carrier may be relieved or liability reduced.	May fall under insufficient packing exclusion.	Keep packing standard, pre-loading photos and lashing/fumigation records.
Theft during transit	Possible if within custody and no defence applies.	Possible subject to wording and evidence.	Seal log, tally, CCTV, police/terminal report.
Delay without physical damage	May have a separate limited regime if recognised by law/contract.	Standard cargo policies generally do not automatically cover delay loss.	Do not treat lost sales as automatically insured physical damage.
General average declaration	Not an ordinary fault claim against the carrier.	A suitable policy may support GA guarantee and contribution.	Notify insurer immediately and follow guarantee instructions.
Damage before carrier receipt or after carrier delivery	Usually outside carrier responsibility.	May fall within transit coverage if attachment/termination permits.	Lock the custody handover times for each leg.

DOCUMENTS AND DATA TO VERIFY

Document/data	Issuer/source	What it proves	Fields to reconcile
B/L, Sea Waybill, HBL/MBL	Carrier/NVOCC/Forwarder	Contract of carriage, parties, cargo, route and claim terms.	Shipper, consignee, container, seal, packages, gross weight, clauses.
Insurance Policy/Certificate	Insurer/Broker	Insured party, amount, voyage, clauses and deductible.	Voyage, commodity, value, endorsements and beneficiary.
Commercial Invoice & Packing List	Seller/Shipper	Cargo value and quantity structure.	SKU, packages, weights, currency and Incoterms.
Booking Confirmation / Shipping Order	Carrier/Forwarder	Scope, equipment, cut-offs and special handling.	Commodity, DG/reefer status, route and mode.
EIR / Tally / CFS receipt	Terminal, depot, CFS	Condition at custody handover points.	Container, seal, time, remarks and quantity.
Survey Report	Surveyor	Cause, extent, salvage and loss valuation.	Time, place, samples, photos and invited parties.
Notice of Loss / Letter of Protest	Cargo interest	Preservation of rights against carrier and others.	Correct legal entity, deadline and delivery evidence.
Photos, seal log, temperature log	Warehouse/Carrier/Consignee	Physical chain of evidence and timing.	Timestamp, source, continuity and cargo identity.
Claim statement & loss calculation	Claimant/Accountant	Claim amount and calculation basis.	Invoice value, salvage, deductible, taxes and reasonable costs.
Correspondence & release documents	All parties	Notices, mitigation instructions and settlements.	Avoid waivers prejudicing insurer subrogation or residual claims.

PROCESS WHEN LOSS OR DAMAGE IS DISCOVERED

Step	Input	Action	Required output
1. Stabilise the loss	Cargo, container, EIR and photos.	Stop further handling if needed, segregate cargo, preserve scene and mitigate.	Initial condition and salvage control record.
2. Give parallel notice	B/L, policy and contacts.	Notify the carrier/forwarder/terminal and insurer/broker immediately, and record reservations at delivery where external signs exist. Where Vietnamese law governs, concealed loss or damage requires written notice no later than 3 days after receipt; delay loss requires notice within 60 days. Also check the B/L and governing law.	Evidence of timely notice to the correct legal entities, plus a separate calendar for notice deadlines and the 1-year action time bar under Article 169 where Vietnamese law applies.
3. Arrange survey	Opening schedule, warehouse and parties.	Conduct joint survey where appropriate; do not destroy or repair without approval.	Survey record, cause hypothesis, photo/sample set.
4. Build custody timeline	EIR, tally, GPS, seal and gate records.	Map who had custody and when abnormality first appeared.	Evidence-based responsibility timeline.
5. Quantify loss	Invoice, PL, inspection and salvage.	Separate total/partial loss, repair, repacking, salvage and reasonable expenses.	Supported loss statement without double recovery.
6. Submit two tailored claim files	Carrier file and insurance file.	Follow each party’s document requirements, reservations and deadlines.	Claim numbers, acknowledgements and deficiency list.
7. Control settlement and subrogation	Offers, discharge and subrogation letter.	Review releases, deductible, limits and impact on remaining rights.	Valid recovery without prejudicing residual or subrogated rights.

RISKS AND COMMON ERRORS

Common error	Cause	Impact	Control
Waiting for the carrier before notifying insurer	Assuming the claims are mutually exclusive.	Late notice, missed survey and weaker insurance rights.	Notify both immediately.
Signing a clean receipt despite visible concern	Operational pressure or no opening inspection.	Harder to prove condition on receipt.	Record specific reservations and photos.
Disposing of or selling salvage unilaterally	Warehouse pressure.	Loss of evidence and reduced indemnity.	Obtain written insurer/surveyor approval and document salvage value.
Submitting invoices without custody evidence	Commercial documents are complete but operations record is weak.	Unable to identify responsible party.	Combine EIR, tally, seal, GPS, email and survey.
Treating ICC(A) as literally every risk	Relying on label instead of wording.	Claim excluded for delay, inherent vice, packing or other exclusions.	Read clauses, endorsements and warranties.
Incorrect commodity/value declaration	Insurance arranged from generic data.	Underinsurance or coverage dispute.	Declare commodity, packing, voyage, value and special risks accurately.
Signing an overly broad carrier discharge	Desire for quick partial payment.	Prejudice to insurer subrogation.	Send draft settlement to insurer first.
Missing B/L notice/time bar	No claims calendar.	Loss of legal rights.	Lock delivery reservations, the 3-day concealed-damage notice, the 60-day delay notice and the 1-year Vietnamese action time bar immediately; use any shorter deadline required by the B/L or governing law.

LEGAL AND OPERATIONAL SOURCES

Source	Use	Application note
Vietnam Maritime Code – Consolidated Text 101/VBHN-VPQH dated 26 Aug 2025	Due-diligence duties, defences and liability limits; responsibility period; actual carrier; survey/notice; the 1-year action time bar; marine insurance, mitigation, indemnity and subrogation.	Review especially Articles 150–153, 169–174, 303 and 321–328. Use these deadlines and limits only where Vietnamese law governs; the B/L may select another law and forum.
Institute Cargo Clauses (A) 01/01/2009 – IUA	Model wording for risks, exclusions, duration and claims duties.	Actual policies may amend the wording by endorsement.
Institute Cargo Clauses (B) 01/01/2009 – IUA	Named-risk cargo wording.	Do not infer coverage from the letter “B”; read the policy.
Institute Cargo Clauses (C) 01/01/2009 – IUA	More basic named-risk cargo wording.	Consider extensions for theft, wet damage, war, strikes and special cargo.
Shipment B/L / Sea Waybill / Service Contract / Tariff	Governing law, jurisdiction, responsibility period, notice, limitation and claim procedure.	Mandatory source for the actual shipment.

View Vietnam Maritime Code View ICC(A)

FREQUENTLY ASKED QUESTIONS

1. If cargo is damaged on the vessel, must the carrier pay?

No. The claimant must establish the carrier’s responsibility period, causation and recoverable loss, while addressing any applicable defences and limits.

2. Should we still claim the carrier after buying cargo insurance?

Yes. The insured must preserve recourse against responsible third parties. After payment, the insurer may pursue those rights by subrogation.

3. Can we receive full payment from both carrier and insurer?

No double recovery beyond the actual loss. Amounts received from one party must be disclosed and adjusted under indemnity and subrogation rules.

4. Does CIF mean the buyer is fully insured?

No. Check the insured party, amount, clauses, voyage, exclusions, transferability and certificate wording. CIF sets a seller obligation but does not guarantee the buyer’s preferred coverage.

5. Does ICC(A) cover every cause?

No. ICC(A) is broad but still contains exclusions and conditions. Delay, inherent vice, insufficient packing, misconduct and war/strikes issues require careful wording review.

6. The seal is intact but packages are short—who is liable?

An intact seal is only one fact. Review stuffing tally, weights, seal issuance, CFS/depot records, B/L wording and custody at each stage before attributing liability.

7. Is cargo insurance worthwhile for low-value cargo?

Assess risk tolerance, cargo sensitivity, route, packing, general average exposure and the gap between cargo value and carrier limitation—not value alone.

APPLICATION NOTE: Carrier liability and insurance coverage vary with the B/L, booking, service contract, policy, endorsements, mandatory law, jurisdiction and causation evidence. All notice periods, time bars, limits and claim conditions must be checked against the actual shipment file. Vietnamese legal references are translated for operational reference only and are not official legal translations.

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