Risk Recommendation

7 Reasons Why Freight Forward Companies Need Freight Forward Liability Insurance

Liga AsuransiRisk takers, how are you? Hope your business runs smoothly.

As usual on the blog, now we discuss risk management and insurance. This time we discuss the risks faced by the freight forwarder industry. If you are interested in this article, please share it with your colleagues so that they understand like you.

As we know, in the challenging world of international trade and logistics, freight forwarders play an essential role in ensuring the smooth movement of goods across borders.

When they run complex supply chains and manage various aspects of the transport process, these companies are exposed to multiple risks that can severely impact their finances. From potential damage to cargo during shipping to errors in documentation and unforeseen accidents, the resulting liability can be enormous and even threaten business continuity.

To mitigate these risks and protect their business, freight forwarder companies need comprehensive protection: Freight Forwarder Liability Insurance (FFLI). This insurance is specifically designed to address the unique challenges faced by freight forwarder companies, providing financial security and peace of mind.

In this article, we will explore the compelling reasons why all freight forwarder companies should prioritize obtaining freight forwarder liability insurance.

We will discuss the main risks these companies face, the extraordinary scope that FFLI provides, and the invaluable benefits it offers. By understanding the importance of this insurance, freight forwarder companies can protect their operations, build trust with clients, and confidently navigate the ever-changing global logistics business field.



A freight Forwarder is a company engaged in the delivery and receipt of export and import goods, often called a Shipping Agent/Carrier agent.

Because this type of business faces many risks, freight forwarders must carry out their duties and services professionally so as not to cause harm to their customers.

To ensure freight forwarder companies run their business correctly, the Indonesian government has issued a Regulation of the Minister of Transportation of the Republic of Indonesia No. PM 74 of 2015 concerning the Organization and Operation of Transportation Management Services, Part IX Responsibilities Article 18. According to this regulation,” to reduce the risk of liability and guarantee the parties who are harmed, transportation management service companies are required to insure their goods and/or their responsibilities (liability insurance).”

The Indonesian Logistics and Forwarders Association (ALFI), as a forum for the association of freight forwarders, also encourages each of its members to fulfill all requirements set by the government, including having liability insurance.

By the International Convention, Freight Forwarding Liability Insurance is insurance that must be owned by every freight forwarding company related to the required rights, duties, and responsibilities. Almost all multinational companies need that the freight forwarder company they use to have an FFLI policy.

With an FFLI insurance policy, companies can avoid bankruptcy and losses due to third-party claims for negligence arising from service activities carried out by freight forwarding companies.



To provide a clearer picture of Freight Forwarder Liability (FFL) insurance coverage, here we write down 7 important things that must be considered:

  • Risiko Freight Forwarder

The process of transporting goods from one location to another, both throughout Indonesia and worldwide, involves many parties, such as goods owners, ship owners, port authorities, subcontractors, land transportation parties, loading and unloading workers, customs officers, and many others. other third parties. In each process, there are potential risks that can occur.

  • Potential Errors and Omissions

Claims and claims may arise due to violations of the contents of the contract of carriage, bills of lading, airway bills, warehousing contracts, and so on. Legal liability can also arise due to errors and negligence of the Freight Forwarder, which causes damage and loss of the goods transported.

  • Marine Cargo Insurance

Marine Cargo insurance policies are purchased to protect the interests of the owner of the goods, not to protect the freight forwarder. The owner of the goods pays premiums to guarantee damage or loss that occurs to the cargo during transit.

  • Subrogation of Rights

If there is damage, loss, or loss to the cargo due to errors and negligence that are in the handling and supervision (care, custody, and control) of the Freight Forwarder, the owner of the goods or the insurance company can claim subrogation rights to the Freight Forwarder company.



Freight Forwarders’ Liability Insurance (FFLI) Guarantee Coverage

Freight Forwarders’ Liability Insurance insurance policies generally provide guarantees for responsibility for all activities of freight forwarding services, including, among others:

  • Responsibility for Cargo (Cargo Liability)

The FFLI policy guarantees liability and lawsuits for loss or damage to cargo in the care, custody, and control of the freight forwarder in accordance with the contract of carriage or international convention of carriage.

  • Responsibility for customers’ Equipment

The FFLI policy guarantees liability and lawsuits for loss or damage to ships or equipment used in transportation activities.

  • Loss of Income and Profits (Consequential Loss)

The FFLI Policy guarantees legal responsibility for loss of income and profits of third parties due to loss or damage to the cargo being transported or loss or damage to ships or equipment used in transportation activities.

  • Responsibility for Misdelivery (cargo misdelivery)

The FFLI insurance policy guarantees legal liability for cargo delivery errors due to errors or negligence.

  • Delivery Destination Order Error (liability for misdirection cost)

FFLI’s insurance policy guarantees legal responsibility for wrong delivery orders or cargo handling due to errors or negligence.

  • Responsibility due to delay (liability for the delay)

The FFLI insurance policy guarantees legal responsibility for delays in the delivery or handling of cargo due to errors or omissions.

  • General Average Liability

The FFLI insurance policy guarantees legal liability against the average general contribution and salvage of the cargo owner, which is not recoverable from the client.

  • Fines and Penalties (Liability for fines and duties)

The FFLI insurance policy guarantees legal responsibility for costs, fines, and penalties due to violations of customs regulations.

  • Legal Liability to Third Parties (Third Party Liability Insurance)

The FFLI insurance policy guarantees legal responsibility for bodily injury or damage to property belonging to third parties due to accidents in transportation or freight forwarder activities.

  • Polusi (liability for unintended pollution)

The FFLI insurance policy guarantees legal liability for accidental pollution and cleaning costs.

  • Polusi (liability for unintended pollution)

The FFLI insurance policy guarantees legal liability for accidental pollution and cleaning costs.

  • Claim settlement legal costs (claim and litigation costs)

The FFLI insurance policy guarantees court fees and attorneys in the claim process and settlement.

Note: Due to the limited capabilities of each insurance company, not all insurance companies may be able to provide all of these guarantees.



FFLI insurance premium costs are relatively low compared to the benefits to be obtained. However, it needs special consideration in decision-making. The following are several factors that affect premium costs:

  • Transaction volume
  • Work experience
  • The work experience of directors and experts in the field of freight and logistics
  • Company experience so far
  • The amount of the limit of liability
  • The extent of the required guarantee
  • Others
  • Insurance Company Selection

Freight Forward Liability Insurance insurance policies, including types of insurance that insurance companies do not demand much. Not many insurance companies provide this insurance product. Therefore, the help of an experienced insurance consultant and broker is needed to simplify the process.



In freight forwarder liability insurance, engaging an experienced insurance broker is crucial. The following are some of the reasons why you need the services of an insurance broker for freight forwarder liability insurance:

  • Knowledge and Experience

An insurance broker who is skilled in freight forwarder liability insurance has in-depth knowledge of the risks faced by these companies. They understand the complexities of the logistics industry and can help identify specific risks relevant to your business.

With extensive experience handling claims and knowledge of the insurance products available, an insurance broker can help you find a policy that fits your company’s specific needs.

  • Access to the Insurance Market

Insurance brokers can access a wide range of insurance companies and products that may not be directly available to the general public. They can help you explore the insurance market, compare options, and get the best quote for your budget and company needs. With this broad access, insurance brokers can help you get comprehensive coverage at competitive prices.

  • Insurance Policy Adjustments

Every freight forwarder company has unique needs. An insurance broker will work with you to understand your business needs. They will help you customize a freight forwarder liability insurance policy to fit your company’s operations, unique risks, and budget. With these adjustments, you can ensure that your company is well protected without paying unnecessary premiums.

  • Claim Management

One of the critical benefits of using an insurance broker is their assistance with claims management. If an event triggers a claim, an insurance broker will accompany you through the claim process, providing the necessary advice and support. They will work closely with the insurance company to ensure your claim is handled correctly and on time. With the help of an insurance broker, you can reduce your administrative burden and focus on your business operations.

To ensure that your freight forwarder company gets proper liability insurance coverage, the services of an experienced insurance broker are indispensable. They will be a strategic partner helping you manage risk, navigate the insurance market, and keep your business safe and viable in the dynamic logistics industry.

One of the leading insurance broker companies in Indonesia that focuses on providing freight forwarder liability insurance in Indonesia is L&G Insurance Broker.

For all your insurance needs, contact L&G now!


L&G HOTLINE 24 HOURS: 0811-8507-773 (CALL – WHATSAPP – SMS)

website: lngrisk.co.id

E-mail: customer.support@lngrisk.co.id

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L&G Insurance Broker Registered by Otoritas Jasa Keuangan KEP-667/KM.10/2012
Asuransi Marine Cargo Lebih Untung Dengan MOP
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L&G Insurance Broker Registered by OJK KEP-667/KM.10/2012
Proses hanya 24jam
Asuransi Marine Cargo Lebih Untung Dengan MOP
(Marine Open Policy)
Chat kami di WhatsApp untuk info lengkap!