CMR, or the Convention on the Contract for the International Carriage of Goods by Road, has been mandatory in Europe for international haulage for many decades now. But just how effective is it as a form of carrier liability insurance, and what impact do the gaps in this coverage have on businesses? Keep reading as I unpack the key limitations of CMR, and explore the benefits of all-risk insurance as an invaluable alternative to traditional shipper’s interest.

First, let’s take a closer look at the CMR. 

Implemented back in 1956, the CMR was designed to regulate cross border road freight on an international scale. Its founding members included Belgium, Germany, France, Austria, Sweden and Switzerland, but it has since been ratified by over 50 countries, including several outside Europe like Morocco, Jordan and Tunisia. 

The ultimate goal of the convention was to standardise the best practices for the transport of freight by road. It touches on everything from cargo integrity to the specific responsibilities of the carrier — it even lays out the protocol for handling any disputes on liability between parties. Over time, the term “CMR” has become interchangeable with carrier liability insurance in Europe, which is mandatory for all cargo travelling internationally by road haulage. These policies provide cover for cargo that’s damaged or lost as a direct result of carrier negligence. Yet the complexity of the intermodal supply chain, and the high-stakes impact of cargo loss on SMBs, render CMR an inadequate solution in today’s freight market.

CMR has considerable limitations. 

The cover that CMR provides is severely limited; ultimately this type of policy is designed to give the carrier protection if they’re held liable for the physical loss or damage to goods in their custody, rather than protect the owner of the goods. Here are a few of the key limitations to note:

• As I mentioned earlier, you can only claim for damage or losses caused by carrier negligence. That means that any cargo loss caused by Acts of God — or factors like careless loading or inadequate packaging — isn’t covered. 
• On top of this, the cargo owner has to provide proof of carrier negligence when they submit a claim, or there’s no payout. As you’d expect, the process of gathering evidence is both stressful and time consuming, which inevitably delays the settlement.  
• There’s also the financial limitation of CMR, which can massively hinder recovery from loss. In line with article 29 of the convention, the limit the claimant can recoup is 8.33 SDRs (Special Drawing Rights) per kilogram. 
• If a cargo owner wants to make a claim that exceeds this limitation, they’re required to take matters up with their insurer, or even to court. This delays the settlement even further, meaning that shippers often have to front the cost themselves in the interim, leaving them out of pocket. Taking the case to court can also result in considerable legal fees, depending on the outcome. 

All-risk cover goes beyond these limitations. 

These limitations can have a huge impact on cargo owners — particularly for SMBs without the same financial safety net that larger corporations tend to have in place. But shipper’s interest “all-risk” policies offers a comprehensive solution that can close these gaps in coverage, and deliver a range of other benefits too. 

Firstly, there may be some exclusions, but all-risk cargo insurance fundamentally provides far broader coverage than CMR. All-risk products pay for losses that occur outside the control of the carrier — including nat cat loss events, many forms of theft, and poor cargo integrity. As well as this, proof of negligence (or similar) isn’t required as a condition of payout. Instead, the insurance provider settles with the shipper, but the onus is on them to recoup any costs from the liable party, so the cargo owner will never have to absorb that cost. The coverage per kilo doesn’t have the same prescribed limit as CMR either, as all-risk policies pay the shipper for the full invoice value of the cargo lost or damaged, plus the cost of the transport and other associated costs. 

When you purchase all-risk cover from Loadsure, the time from filing a claim to receiving a settlement can be just minutes. Not only does this help to prevent further supply chain disruption, it also reduces the risk of any associated reputational damage.

Loadsure offers a flexible all-risk solution to the European freight community. 

With Loadsure’s technology, our European insurance broker partners can deliver the best possible protection to their freight clients, at an affordable rate. 

Two products in our catalogue make a superior alternative to CMR: Orinoco™, our dynamic shipper’s interest insurance, and Thames™, our dynamic, on-demand cargo insurance, both are now available in Europe. Conventional CMR isn’t available to purchase on a per-load basis, so opting for a flexible, on-demand product like Thames™ enables logistics companies to offer complete protection to cargo owners to move their goods, even if they’re only sending a single shipment.

Accurate pricing is a key tenet of the Loadsure offering; we use high-resolution data to match price with individual risk profiles, and tailor the level of coverage to the shipper’s specific needs. This access to — and expert interpretation of — data enables us to offer bespoke rates and deductibles for our clients, and ensure the shipper never pays for unnecessary coverage.

Ultimately, an all-risk policy like Thames™ or Orinoco™ can deliver the protection that cargo owners deserve, where CMR fails to. 

To find out more about Loadsure’s launch in Europe, our specific product base, or how to get started please don’t hesitate to get in touch.