Canadian Accredited Insurance Broker (CAIB) Two Practice Exam

When contracting with private carriers, what determines their liability?

1. The type of goods being transported

2. The individual's decision on insurance

3. Market value of the goods

4. The amount of loss incurred on the goods

The correct answer is: The amount of loss incurred on the goods

The determination of a private carrier's liability primarily revolves around the amount of loss incurred on the goods being transported. When goods are lost, damaged, or destroyed while in the custody of a carrier, the financial responsibility of that carrier is often linked to the actual loss experienced by the owner of the goods. This is grounded in common carrier liability, which implies that carriers must take care of the merchandise during transportation and are liable for losses unless they can demonstrate that the loss was due to an exception such as inherent vice, act of God, or negligence on the part of the sender. Understanding that the liability of a private carrier is contingent upon the amount of loss incurred provides insight into how claims are assessed and resolved when transportation issues arise. The actual dollar figure associated with the loss acts as a key determinant of how much the carrier will financially compensate the owner of the goods. Contextually, while factors like the type of goods and market value are important in overall transportation discussions, they do not directly dictate the liability in terms of actual loss incurred. The individual’s insurance decisions are relevant for their own coverage but do not influence the carrier's liability under the contracts or terms of service agreements.