Is CMR insurance truly mandatory in Europe?
When we talk about transport and insurance coverage, for international road transport, it is often a key question, and the answer has an important nuance: the CMR Convention does not directly oblige the carrier to take out an insurance policy, but rather establishes their legal liability for the transport service they are carrying out, as contracted by the shipper.
However, in practice, CMR insurance is commercially mandatory for any carrier operating in Europe. No transport company would assume the risk of a claim for damage or loss without a policy covering their legal liability. Therefore, if you contract an international carrier, you can assume they have this insurance, although it is always prudent to confirm this point.
The carrier's liability: the basis of CMR insurance
The CMR Convention states that the carrier is liable for loss, damage, or delay of goods from the moment they are received until they are delivered. This liability is what CMR insurance covers on a mandatory basis, as reflected in the convention itself.
But the existence of an obligation to provide coverage does not mean that it is unlimited. The very same CMR Convention establishes a maximum limit.
Indemnity Limit: 8.33 SDR per Kilogram
The most important aspect of the CMR Convention is that it limits the maximum compensation that the carrier must pay and is a matter that cannot be "discussed" or negotiated. This limit is set at 8.33 Special Drawing Rights (SDR) per kilogram of gross weight of lost or damaged goods.
How much is this in euros? The value of the SDR fluctuates, but it is approximately equivalent to between 10 and 12 euros per kilogram.
Practical example:
If you transport 500 kg of high-value machinery parts (commercial value of €50,000) and the truck suffers an accident that damages the cargo:
The carrier's CMR insurance will compensate you a maximum of: 500 kg x €11/kg = €5,500
This leaves a shortfall of €44,500 that will not be covered by this insurance.
Coverage and exclusions of CMR insurance
CMR insurance covers the carrier's liability for very specific cases, but it is essential to know both what it covers and its main exclusions:
Loss or physical damage to goods
Covers physical damage that goods may suffer during transport.
Delays in delivery
With a maximum limit of the transport rate.
Full Cargo Value
It does not cover the commercial value of the goods; only the carrier's legal liability by weight.
Deficient Packaging
It does not cover damages caused by inadequate packaging or conditioning of the cargo by the shipper.
Force Majeure
It does not cover damages caused by natural disasters, armed conflicts, or strikes not attributable to the carrier.
The difference between CMR vs. all-risk cargo insurance
It is crucial to understand that CMR insurance protects the carrier, not the cargo owner. If the value of your goods exceeds €10-12 per kilogram, CMR insurance is totally insufficient.
To protect your investment for the total commercial value, if you are the shipper, you need to take out an all-risk policy for the goods that gives you peace of mind that the total value is covered against any incident during transport. This insurance is optional, but indispensable for any valuable cargo, as it covers the difference between the carrier's limited liability and the actual cost of your goods.