As stated in Article 22 of Warsaw Convention 1929, “if the consignor has made, at the time when the package was handed over to the carrier, a special declaration of the value at delivery and has paid a supplementary sum, the carrier will be liable to pay a sum not exceeding the declared sum”

There are few points that we have to consider. First is the way to calculate the extra amount that shipper has to pay. This is called “valuation charge”. For calculation the extra charge that shipper has to pay we have to do as follow:

(Declared value for carriage – maximum liability of the carrier) * 0.75% = Amount of Insurance

For example, if shipper declares that value of a shipment of 30 KG is USD.5,000, as per rules carrier is liable to pay: 30 kg x USD.20 = USD.400, so the amount is insurance will be:

(5000 – 600) * 0.75% = USD.33

The figure 0.75% may change and we have to find it in IATA books and regulations. (Ref 3.2 IATA Rules)

The amount of liability of USD.20 is the approximate and in IATA TACT Rules it is mentioned as 19SDR (Except when Montreal Convention is applicable, which is 17 SDR).

This extra amount should be reflected on the AWB in the box “Amount of Insurance” and the value of the shipment should be reflected in the box “Declared Value for Carriage”.

The other important point is, as mentioned in Article 22, “the carrier will be liable to pay a sum not exceeding the declared sum, unless he proves that that sum is greater than the actual value to the consignor at delivery. “

This means that carrier has the right to find out whether the declared value was correct or not, and if he can prove that the value is not correctly declared by shipper, he can pay the actual value of the consignment.