DEFINITION of ‘Carmack Amendment’
An amendment to the Interstate Commerce Act of 1877 that limits the liabilities of carriers to loss or damage of the property itself. The Carmack Amendment, sometimes only referred to as Carmack, was enacted in 1906, and applies to insurance coverage for cargo.
INVESTOPEDIA EXPLAINS ‘Carmack Amendment’
Before the Carmack Amendment, companies involved in the transportation of goods across state borders were subject to state regulations applying to the amount of losses that could be recovered if something happened to goods in-transit. The Carmack Amendment was an important step in the unification of regulations applied to interstate shippers and interstate carriers. The Amendment allowed shipping companies to recover damages amounting to the loss of property caused during transit. This protects carriers from claims made by companies in excess of the value of the goods.
The Carmack Amendment made it easier for the shipping company to make a claim by reducing the effort required to track down a particular carrier. In some cases, products are shipped from end-to-end using a single carrier. In other cases, especially those involving long distances, multiple carriers across multiple modes of transportation, including roads and rails, may be involved in the shipment.
One of the most important features of Carmack is that it does not require the shipper to provide proof of negligence, only that the goods were damaged. This makes the carrier liable for the damage, regardless of how the damage was caused. The shipper is required to make sure that the items being shipped are in good condition when they were picked up by the carrier, that the goods were damaged after they were received, and that the amount of damages can be quantified. The carrier may be exempt from damage claims under special circumstances, such as damage caused by an Act of God (e.g. tornado), the government, robbers, or inherent vice (e.g. the goods were highly combustible).