An airline's liability for lost, damaged or delayed cargo is capped at 26 Special Drawing Rights (SDRs) per kilogram under the Montreal Convention, regardless of what the goods cost. Air cargo insurance, bought separately for the full invoice value, covers the difference.
Key takeaways
- The Montreal Convention cargo limit rose from 22 to 26 SDRs per kilogram on 28 December 2024 (BIFA, Clyde & Co).
- The limit is set by weight, not value, so a dense, expensive shipment is covered for only a small share of what it is worth.
- You can ask a carrier or forwarder to accept a higher declared value for carriage, usually for a supplementary charge and with written acceptance.
- Cargo insurance on all-risks Institute Cargo Clauses (Air) terms covers physical loss or damage from outside causes, but excludes delay, inadequate packing and inherent vice.
- Written complaint deadlines can be as short as 14 days for damage, so inspect on delivery and note exceptions on the receipt.
How much is an airline liable for if air cargo is lost or damaged?
Usually far less than the goods are worth: the Montreal Convention caps cargo liability at 26 SDRs per kilogram, whatever the invoice says.
The British International Freight Association (BIFA) reports that from 28 December 2024 the limit under Article 22(3) of the Montreal Convention 1999 rose from 22 to 26 SDRs per kilogram, covering destruction, loss, damage or delay of cargo. Clyde & Co confirms the same change and notes that claims are governed by the time of carriage, so the new limit applies to losses from that date onward. BIFA adds that the convention's review mechanism adjusts the limits for inflation every five years.
An SDR is a unit defined by the International Monetary Fund, so its dollar value moves daily. BIFA gave a reference point: 1 SDR was worth US$1.33038 on 25 October 2024. At that rate, 26 SDRs is roughly US$34.60 per kilogram. Look up the current rate before you do your own sums.
Why does a weight-based limit leave a gap?
Because value and weight are unrelated: the cap pays by the kilogram, so the denser and more valuable your freight, the bigger the shortfall.
Take an illustrative example, using the October 2024 rate above purely for arithmetic. A 100 kg shipment of instruments invoiced at US$50,000 has a basic carrier limit of 2,600 SDRs, or about US$3,460. A 100 kg shipment of machine parts invoiced at US$2,000 is covered much more fully. Neither figure includes your own costs, such as expediting a replacement or a missed sale.
| Shipment type | Value density | Exposure above the cap |
|---|---|---|
| Bulky, low-value goods | Low | Small, often fully covered by the limit |
| Consumer electronics | Medium to high | Meaningful; theft target |
| Pharmaceuticals, precision instruments | High | Large; also temperature risk |
| Art, jewelry, valuable cargo | Very high | Very large; cap is a rounding error |
The same logic explains why our guides on shipping high-value electronics and shipping fine art by air both tell shippers to insure the full value separately.
Can you raise the carrier's limit with a declared value?
Yes, in most cases: you can declare a higher value for carriage and pay a supplementary charge, if the carrier or forwarder accepts it.
Carrier and forwarder terms follow this pattern. In Flexport's air waybill terms, for example, a shipper may increase the limit by declaring a higher value for carriage and paying a supplemental charge if required, and where Flexport acts as a forwarding agent the higher value must be accepted in writing. Other carriers set their own rules and charges, so ask for them before you tender and have the declared value written on the air waybill. Our air waybill guide shows where the field sits.
Declared value raises what the carrier owes if it is at fault. It does not make the carrier an insurer against every cause of loss, and the carrier's defenses still apply. That is the job of cargo insurance.
What does air cargo insurance actually cover?
A marine cargo policy on Institute Cargo Clauses (Air) terms is an all-risks cover for goods in transit, subject to listed exclusions.
MSIG's cover comparison describes the Institute Cargo Clauses (A) and (Air) as basically all-risks cover for the goods in transit with certain exclusions, with the (Air) version used for transits by aircraft. A standard marine cargo policy, it says, covers cargo from warehouse to warehouse during transit by ship, aircraft, land conveyance or courier for physical loss or damage caused by insured perils. In its comparison, the all-risks (A) form includes theft, pilferage and robbery, malicious damage and non-delivery of an entire package, which the narrower (B) and (C) forms do not.
The same document lists the usual exclusions:
- Wilful misconduct of the insured
- Ordinary leakage or loss in weight or volume, and ordinary wear and tear
- Insufficient or unsuitable packing
- Inherent vice or the nature of the goods
- Delay
- War, strikes, terrorism and nuclear weapons
Two exclusions matter most to air shippers. Inadequate packing means that if a carton fails because it was packed for road rather than air, the insurer can decline. Delay means that the missed production run caused by a flight that arrives late is not covered by the standard clauses. Policies differ, and cover can be tailored, so read the wording rather than the certificate.
Carrier liability vs cargo insurance: which one do you need?
Usually both layers: the carrier's liability is a fault-based, weight-limited claim, while cargo insurance is your own contract, written on your goods' value.
| Question | Carrier liability | Cargo insurance |
|---|---|---|
| Who pays? | The carrier, if it is liable | Your insurer, whoever is at fault |
| Amount | 26 SDRs per kg unless a higher value is declared | Insured value, usually invoice plus a margin |
| Delay | Covered up to the same limit under the convention | Typically excluded |
| Theft | Depends on carrier fault and defenses | Included on all-risks wording |
| Cost | Included in freight; supplemental charge for declared value | Premium, set by the insurer |
The insurer, after paying you, may then pursue the carrier. That is why the claim steps below matter even when you are insured: you must not prejudice the insurer's recovery rights.
Who has to insure the shipment?
Your sales contract decides, usually through the Incoterms rule you chose.
Under some trade terms the seller must buy insurance for the buyer; under others the obligation is only to arrange carriage and each side insures its own risk. Whichever applies, check whether the cover reaches the point where risk passes. Our guide to Incoterms 2020 for air freight explains where responsibility transfers. If you only insure to the airport and the buyer's risk begins at the airline's warehouse, there may be a gap on the last leg.
What should you do if cargo arrives damaged or short?
Record it at delivery and send a written complaint within days, not weeks.
- Inspect before signing. Note any damage, wet or crushed cartons, broken seals or shortages on the delivery receipt, and photograph them.
- Keep the packaging and all documents for inspection: the air waybill, commercial invoice, packing list and photos from the point of packing.
- Complain in writing, fast. In the Flexport terms quoted above, notice of damage is due immediately after discovery and no later than 14 days after receipt; delay within 21 days; non-delivery within 120 days of the air waybill date. Your own waybill terms control, so check them.
- Notify your insurer immediately, and ask what they need before you give the carrier any release.
- Watch the two-year limit. The same terms extinguish damages rights unless an action is brought within two years of arrival.
Use AWB tracking to document when the cargo arrived and when it was made available, because delay claims are measured from those dates.
How can you cut the chance of a claim in the first place?
Pack to the carrier's and insurer's standard, use a plain outer carton, and match the service to the value.
Insufficient packing is a standard exclusion, so it is also the cheapest risk to remove. Our guides to valuable cargo (VAL) handling and temperature data loggers cover the special handling and evidence that help prove what happened. Budget the extra cost with our air freight cost calculator and compare it to the loss you are insuring against. For high-value freight, the JumboSecure service is built around secure handling.
Ask your broker for the exact policy wording, not just a certificate, and confirm in writing that it covers air transit, door-to-door where you need it, and the full invoice value.
Frequently asked questions
What is the airline liability limit for air cargo?
Under Article 22(3) of the Montreal Convention the limit is 26 SDRs per kilogram for destruction, loss, damage or delay of cargo, effective 28 December 2024, up from 22 SDRs (BIFA). The convention's review mechanism adjusts the limits for inflation every five years.
Is air cargo insurance mandatory?
Not by the Montreal Convention itself, but the carrier's liability is capped by weight, so most shippers insure the full value. Your sales contract and Incoterms rule may also oblige one party to insure, so check the contract.
Does cargo insurance cover delay?
Typically not. The standard Institute Cargo Clauses exclusions list delay, so late delivery is a gap unless you buy specific extra cover or rely on the carrier's limited liability for delay.
What is declared value for carriage?
It is a value you declare on the air waybill to raise the carrier's limit above the per-kilogram cap. Carrier and forwarder terms generally let you do this by paying a supplemental charge if required, and some require written acceptance.
How long do I have to make a cargo claim?
Written complaint deadlines are short: one forwarder's air waybill terms require notice of damage no later than 14 days after receipt, of delay within 21 days, and of non-delivery within 120 days of the waybill date, and a court action within two years of arrival. Check the terms on your own waybill.
