Insurance 26.07.2025
Freight Forwarder’s Liability Insurance in Losses Resulting from Fraud
In previous articles, we discussed the issue of so-called fake carriers and outlined the main methods used by fraudsters. We also referenced multiple real-life cases where cargo disappeared as a result of such schemes.
It is obvious that one of the most effective ways to reduce the risk of subcontracting transport to a fraudulent entity—one that will simply appropriate the entrusted cargo—is proper due diligence of the contractor.
As thorough a verification as possible should allow a freight forwarder to:
detect most cases where fraudsters impersonate an existing transport company (using its documents without authorization),
identify irregularities in situations where fraudsters have “taken control” of an existing transport company (with access to transport platforms, bank accounts, etc.),
confirm that the engaged contractor is a reliable and trustworthy carrier providing a high standard of service.
However, considering the methods used by fraudsters, eliminating the risk entirely (100%) is very difficult.
In such cases, appropriate insurance coverage in the form of an adequate civil liability policy can provide protection for these events. Obtaining such coverage is not easy, but it is still achievable on the Polish insurance market.
The most common mistake: choosing the wrong liability policy
A fundamental mistake made when purchasing liability insurance among companies providing freight forwarding services is misidentifying the nature of their operations, which ultimately leads to purchasing only a Freight Forwarder’s Liability (OCS) policy.
As a rule, the Freight Forwarder’s Liability policy applies only when the insured entity acts strictly as a freight forwarder within the meaning of civil law—i.e., when it concludes a contract with its customer to organize transport.
The Court of Appeal in Katowice, in its judgment of 08.03.2022 (Case No. V AGa 415/19), clarified:
“The basis for distinguishing a contract of carriage from a forwarding contract is the content of the obligation assumed by the undertaking accepting the order, not the type of activities performed by that undertaking. If the offer submitted to the carrier refers solely to the carriage of goods, and no conclusive actions indicate the existence of additional contractual provisions covering services related to the carriage, then the contract concluded by accepting such an offer is a contract of carriage, not a forwarding contract. This does not exclude the possibility for the parties, within the limits of the principle of freedom of contract, to conclude a mixed contract. If the only performance intended was carriage, carried out in practice by subcontracting it to another undertaking, the prerequisites required for a contract of carriage are fulfilled, and at least one of the services other than carriage referred to in Article 794 § 1 of the Civil Code is absent. For if an entrepreneur offers only the carriage of goods, and even conclusive actions do not indicate the existence of contractual provisions covering services related to the carriage, the contract concluded by accepting such an offer is strictly a contract of carriage, not a forwarding contract. Forwarding services should be regarded as those which constitute professional assistance in handling freight transport.”
In simplified terms, if a forwarding company (with no fleet and no EU Community license) accepts a transport order from its client, it enters into a contract of carriage and is treated as a contractual carrier, not a freight forwarder.
A freight forwarder may be classified as a contractual carrier based on:
the sole title of the order (e.g., “Transport Order”),
how the party is defined (e.g., “Carrier”),
the contract terms (e.g., reference to the Polish Transport Law Act or the CMR Convention).
Based on over 14 years of handling transport-related cases, it can be concluded that contracts in road transport are, in the overwhelming majority of cases, contracts of carriage.
What happens when damage occurs and a claim is filed under OCS?
When a claim is submitted under a Freight Forwarder’s Liability policy, insurers consistently request the order received from the client and analyze whether a contract of forwarding or a contract of carriage was concluded. In most cases I have reviewed, insurers issue a claim denial due to the absence of coverage.
Insurers—correctly, from a legal standpoint—argue that the policy covers only damages arising during the execution of forwarding contracts. If the insured concluded a contract of carriage, the OCS policy does not apply.
A justification for denial may read as follows:
“Pursuant to § … section 1 of the General Terms and Conditions of Insurance, the subject of the insurance is the freight forwarder’s civil liability for damage arising during the insurance period as a result of the non-performance or improper performance of a forwarding contract, for which the Policyholder is liable in accordance with the provisions of the Civil Code. Under Article 799 of the Civil Code, the freight forwarder is liable for carriers and further freight forwarders unless the freight forwarder is not at fault in their selection.
The order dated ……… issued to you by ………, in our assessment constitutes a transport order and concerns a contract of carriage, not a forwarding contract. According to the document entitled “Order ………….” provided by you, your company ……… was indicated in that consignment note template as the carrier. Furthermore, the date and places of loading and places of destination were specified therein.
Although a forwarding contract does not require any specific legal form, it must nevertheless be clearly defined by the activities expressly assigned therein. In the absence of such activities, a contract of carriage is concluded. The carrier does not have to perform the carriage personally. It may subcontract another carrier for this purpose. However, it remains liable for that carrier’s actions as for its own. This is precisely the situation that occurred in the present case.
Since your liability as a freight forwarder does not arise, our liability as your insurer under the Freight Forwarder’s Liability policy likewise does not arise.”
Available solutions
To avoid such issues, companies may consider:
1. Concluding only forwarding contracts i.e., contracts to organize transport.
2. Purchasing a Freight Forwarder’s Liability policy with an extension covering Contractual Carrier Liability.
3. Obtaining an EU Community license and then purchasing a Carrier’s Liability (OCP) policy with appropriate extensions, including a subcontractor clause.
When does Freight Forwarder’s Liability insurance apply?
Only when the insured concludes a forwarding contract in the meaning of the Civil Code—i.e., explicitly undertakes to organize carriage rather than perform it.
Even then, insurers may limit their liability through:
exclusions related to specific events (e.g., gross negligence, intentional misconduct, identity theft),
exclusions tied to insufficient verification procedures (e.g., obligation to confirm the subcontractor’s insurance directly with their insurer),
sublimits for damages resulting from fraud (e.g., EUR 10,000 per occurrence under a general sum insured of EUR 300,000).
Purchasing the correct policy type is only the beginning.
To ensure protection in cases involving fake carriers, it is essential to include specific extensions/clauses in the policy wording.
A detailed discussion of how insurers attempt to limit their liability in these types of claims will be covered in a future article.