Ad valorem insurance compensates for goods based on their declared value, not their weight. It is intended for shippers whose goods are worth significantly more than what the carrier’s liability limits cover: a Carrier on a per-kilogram basis, meaning that a high-value package that is lost is covered for only a fraction of its actual value.
This guide explains exactly what the term means, how it differs from Carrier"declared value" option, how the coverage works, what it actually costs, and in which cases it is not worth it.
What is ad valorem insurance?
"Ad valorem" comes from Latin and means "according to value." In freight transport, the term refers to a basis for valuation: compensation calculated based on the declared value of the goods, as opposed to compensation calculated based on weight.
This clarification of terminology is not merely cosmetic, as it explains the most common confusion on the subject. “Ad valorem” does not refer to a single insurance product. It is a valuation method found in two very different contexts, neither of which involves the same payer or the same legal framework.
Three concepts must be distinguished:
Carrier liability is a legal obligation, not an insurance policy you purchase. The Carrier presumed liable for loss or damage occurring between pickup and delivery, but its liability is capped based on weight and subject to certain exemptions.
The “declared value” option offered by the Carrier the compensation limit in exchange for an additional fee. It remains within the Carrier’s liability limits.
Third-party ad valorem insurance, purchased from an insurer or an independent broker, is a type of property insurance. It provides compensation for property damage based on the insured value, without the need to establish the Carrier liability. This type of insurance is commonly referred to as “ad valorem insurance.”
Declared Value or Ad Valorem Insurance: The Crucial Distinction
This is the key point where most unpleasant surprises in claims management arise, and it deserves to be clearly stated.
The declaration of value, provided for under each mode of transport (Article 24 of the CMR Convention for international road transport, the general standard contract for domestic transport in France), allows the shipper to declare a value exceeding the Limit in exchange for an agreed-upon surcharge. The declared value then replaces the statutory Limit.
But it does not change the nature of the policy. It remains subject to the same grounds for Carrier exemption, the same category exclusions in its general terms and conditions, and the same claim deadlines. In other words: if the Carrier , a declared value of €5,000 will not get you anything. It raises the Limit; it does not guarantee compensation.
All-risk insurance works the other way around: it covers damage to the goods, regardless of the Carrier liability. It therefore applies in situations where the Carrier legally exempt from liability.
When should you get it, and when is it useless?
There is only one criterion, and it takes just one minute to calculate: the value-to-weight ratio.
Compare the maximum compensation you would receive (weight in kilograms multiplied by the Limit mode of transportation) to the actual value of the shipment.
As long as the two amounts are close, the statutory coverage is sufficient, and ad valorem insurance offers no added benefit. This is the case for bulky goods with a low unit value: building materials, mass-produced furniture, and common industrial parts. It’s important to state this explicitly, because most information on the subject implies that you should always purchase additional insurance. That’s not true, and it’s an unnecessary expense.
As soon as the actual value significantly exceeds the maximum indemnity, the difference becomes a net loss for each claim, and the coverage is justified. Specifically, this applies to:
- e-commerce for high-value-per-unit goods
- watchmaking, jewelry, and luxury leather goods
- High-tech and electronics
- art, antiques, and collectibles
- wines and spirits
- sensitive equipment and urgent shipments where the cost of keeping them idle is higher than the value of the goods themselves
- multimodal shipments, where responsibility is spread among successive parties involved
These categories often present two challenges: a high value-to-weight ratio, and classification as “valuable goods” in carriers’ terms and conditions, which either excludes them or sets a very low coverage limit.
How does the coverage work?
The process consists of four steps.
Declaration of value prior to handing over the shipment to Carrier. Insurance must be purchased before the goods are picked up. Once the shipment has been handed over, the risk has taken effect and can no longer be covered retroactively.
The basis of compensation. This is the most important clause in the contract—even more so than the Limit . It determines what you will actually receive: purchase price, replacement value, agreed-upon value (agreed upon in advance with the insurer, which avoids any disputes after a claim), or retail price for a retailer.
Supporting documentation. Purchase or sales invoice, shipping manifest, specific reservations noted on the manifest in the event of visible damage, and photographs of the item and its packaging. Proof of value is a prerequisite for compensation, and its absence is a common reason for denial.
Subrogation. The insurer that compensates you is subrogated to your rights and may then seek recourse against the Carrier. That is why it is your responsibility to preserve this right of recourse: file a claim upon delivery and send a substantiated complaint to Carrier three days of receipt, excluding holidays, in accordance with Article L.133-3 of the Commercial Code. This deadline applies to the claim against the Carrier the deadline for reporting the claim to your insurer is separate and is specified in your policy.
How does this differ from the Carrier 's liability Carrier
Carrier liability Carrier presumed: it is up to the Carrier to prove that it is not liable, not up to you to prove its fault. However, liability is capped based on weight, regardless of the value of the goods.
The SDR (Special Drawing Right) is a unit of account used by the International Monetary Fund, and its value fluctuates. Only amounts expressed in SDRs are authoritative; euro equivalents are for informational purposes only. A useful clarification, often misreported: the cargo liability limit under the Montreal Convention increased from 22 to 26 SDRs per kilogram on December 28, 2024, as part of the quinquennial adjustment for inflation. Any content that still cites 22 SDRs/kg is outdated.
For domestic shipping within France, the general standard contract applies only in the absence of a written agreement between the parties. Express carriers and couriers publish their own terms and conditions, the Limits of which Limits and are subject to change. Check the terms and conditions of Carrier as of the date of shipment rather than relying on a generic figure.
The example that sums it all up: An €8,000 watch weighing 500 grams, shipped via international truck transport. CMR compensation: 0.5 kg × 8.33 SDRs, or approximately €5. With ad valorem insurance, compensation is based on the insured value. This discrepancy is not a contractual anomaly; it is the normal operation of transport law.
Finally, the Carrier grounds for exemption: fault on the part of the beneficiary, inherent defect in the goods, circumstances that the carrier could not avoid, missing or defective packaging, or loading performed by the shipper. These grounds account for a large portion of claims denials, and they are not enforceable in the same way against a voluntary insurer.
How much does ad valorem insurance cost?
An ad valorem premium is calculated as a percentage of the insured value, not the cost of transportation. This is what distinguishes it from carrier-based options, which are often based on a flat rate plus a proportional component, making the effective rate difficult to determine.
In the market, the rate varies depending on the insured value, the nature of the goods, the mode of transportation, the geographic region, the volume shipped, and the observed loss ratio. Carriers’ declared value options generally range from 1% to 3% of the value.
At Claisy, the rate starts at 0.75% of the declared value, with no deductible. For a package worth €1,000, the premium starts at €7.50. For a retailer €80,000 worth of merchandise per month, the monthly cost is €600.
The right way to compare plans is not to simply compare two advertised rates, but to calculate the effective rate: any flat fee, minimum premium, deductible, requirement to use Carrier premium service, and—most importantly—the actual scope of coverage. A low rate on a plan that excludes your products is worthless.
What are the exclusions and limitations?
No insurance policy covers everything, and reputable policies make that clear. Common areas to watch out for:
Underinsurance. If you declare a value lower than the actual value, compensation is limited to the declared amount, and a pro-rata rule may apply. Underinsuring is the worst possible move.
Packaging. This is the number one reason for rejection across all insurers. The package must be able to withstand normal shipping conditions: internal padding, a box suitable for the item’s dimensions and weight, and a secure seal. Take photographs of the packaging before shipping.
Excluded categories. Currency and securities, precious metals in bullion form, perishable goods, and hazardous materials are listed in virtually all contracts. Valuable goods (watches, jewelry, art) are frequently excluded or subject to coverage limits by carriers, which is precisely why specialized insurers exist.
Evidence requirements. Invoice or appraisal to establish value; specific and well-founded reservations made at the time of delivery; photographs. Vague reservations such as “subject to unpacking” are weak and often unenforceable.
Deductibles, minimum premiums, and Limits per package and per shipment.
The filing deadlines, which must be compatible with your organization’s schedule, as missing them may result in a rejection.
How do I choose the right plan?
The rate is not the right factor to base your decision on. Five clauses determine the actual coverage, and you should read them before signing:
- The basis for compensation: appraised value, purchase price, replacement cost, or selling price.
- Excluded categories: Are your products specifically covered?
- Deductibles and minimum premium requirements, which can render coverage ineffective for small amounts.
- The Limit package and per shipment, which should be compared to your maximum shipment value.
- Reporting deadlines and how they align with your logistics operations.
For professionals, there are two additional operational criteria to consider: Carrier freedom (an independent insurance policy allows you to keep your existing transport contracts) and the claims settlement time, which determines how much cash is tied up for each claim.
If your shipments fall into these categories, you can review the details of our ad valorem package insurance or calculate your premium directly.
Sources
- Commercial Code, Articles L.133-1, L.133-3, and L.133-6 (liability of the valet, protest, statute of limitations): Légifrance
- General Standard Contract, Decree No. 2017-461 of March 31, 2017, Annex II to Part 3 (Regulatory Provisions) of the Transportation Code: https://www.legifrance.gouv.fr/jorf/id/JORFTEXT000034330431
- CMR Convention, Articles 17, 23, 24, and 29
- Montreal Convention, Revision of Liability Limits as of December 28, 2024, ICAO: https://www.icao.int/news/international-air-travel-liability-limits-set-increase-enhancing-customer-compensation-0
- CIM (COTIF) Rules, Article 30, Paragraph 2, CIT-Rail: https://cit-rail.org/en/freight-traffic/case-law-old/
- Comparative Analysis of Liability Regimes (Road, Rail, Sea, Air), Benesch: https://www.beneschlaw.com/resources/cargo-liability-global-comparative-analysis-of-legal-regimes.html
- Cargo Insurance (Coverage, Policy Types, General Average), France Assureurs: https://www.franceassureurs.fr/lassurance-protege-finance-et-emploie/lassurance-protege/lassurance-en-pratique-pour-les-professionnels/entreprise-assurance-du-transport-de-marchandises/