What is L.O.T.T. Insurance and Who is Obligated to Offer It?

Carrier's Civil Liability Insurance, commonly known as L.O.T.T. Insurance (Land Transport Ordinance Law), is a compulsory insurance policy for all carriers providing road freight transport services for remuneration in Spain, where the origin and destination are both within Spain, commonly known as "domestic service".

Its name comes from the Land Transport Ordinance Law (Ley 16/1987), which establishes the rules governing the sector. This law obliges carriers to have minimum coverage to respond to damages they may cause to goods during transport vis-à-vis their shippers/clients.

Its purpose is not to insure the goods, but to cover the carrier's legal liability to the cargo owner.

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The most important aspect, and often unknown to shippers, is the indemnity limit. In case of total or partial loss or damage to the goods, L.O.T.T. insurance only covers a maximum amount based on weight, not on the commercial value of the cargo.

The indemnity limit is €6.67 per kilogram of gross weight of the lost or damaged goods.

Practical example:

If you send a pallet of 200 kg with laptops valued at €30,000 and it is lost or damaged, the carrier's L.O.T.T. insurance will compensate you a maximum of:

200 kg × €6.67/kg = €1,333.33

This leaves a shortfall of €28,666.67, which must be borne by your company, demonstrating why this insurance, although mandatory, is insufficient for high-value goods.

Work out the Spanish LOTT cap for your shipment

Cap: 6.67 €/kg

per kilogram of gross weight of the goods lost or damaged.

One third of the daily IPREM (20.00 €).

Ley 15/2009, art. 57.1

Example: 200 kg × 6.67 €/kg = 1,333.33 €

Source: Ley 31/2022, d.a. 90.ª, letra a) · 2022-12-24

Work out your compensation

Gross weight affected, in kilograms

What Cargo Does It Cover and What Not?

This insurance covers the loss or physical damage to goods. However, it has important exclusions that you should be aware of before contracting a national freight transport service:

Delays

L.O.T.T. insurance does not cover financial losses arising from delivery delays.

Inadequate Packaging

It does not cover damages caused by deficient packaging on the part of the shipper.

Nature of the Goods

It does not cover damages caused by the inherent nature of the product itself (for example, deterioration of perishable foods).

Force Majeure

It does not cover damages caused by force majeure events (floods, earthquakes, etc.).

Who Does This Insurance Truly Protect?

The answer is clear: it primarily protects the carrier. It allows them to operate legally and covers them against claims from their clients up to the limit established by law. For the cargo owner, it offers minimum coverage that rarely approaches the actual value of the cargo.

To ensure, as the shipper, that your goods are protected throughout the transport process for their full value, all-risk cargo insurance is the perfect and necessary complement. This policy, contracted by you as the shipper, covers the total commercial value of your cargo, without weight limitations.

Remember that there are only these two options:
L.O.T.T. Insurance:

Mandatory for the carrier
Protects the carrier
Limit of €6.67/kg

All-Risk Insurance:

Optional for the shipper
Protect your investment
Covers the total value of the goods

Frequently Asked Questions

01.What damages are not covered by LOTT?

Damage due to deficient packaging, Force Majeure events, and inherent vice of the goods would not be covered.

02.How is LOTT compensation calculated?

The basis is the daily IPREM. Spanish law (Ley 15/2009, art. 57.1) caps compensation at one third of the daily IPREM per kilogram of gross weight of the goods lost or damaged. With the IPREM in force at €20/day, the limit is €6.67/kg. It is calculated on weight, not on the value of the goods.

03.Difference between LOTT and cargo insurance?

LOTT is a Spanish statutory liability limit. All-risk insurance covers the total value of the goods, compensating 100% of the value.

Other types of transport insurance

CMR Insurance (Europe)

Covers carrier liability for international road shipments under the CMR convention.

More information

All-Risk Insurance

Protects the total value of goods against damage, loss or delays during transport.

More information