Usually, no — the factory does not pay to re-ship a carton that arrived crushed, because its responsibility ends where the trade term on your invoice transfers risk to you. What a factory owes you is defect-free workmanship packed to the agreed specification; a carton crushed by a forklift or a collapsed stack is a transport loss, not a quality defect. Transit damage is recovered through a carrier claim, a cargo insurance claim, or both — and which applies, and whether you or the seller files it, follows the Incoterms rule on the PO. Every path carries a deadline measured in days: annotate the delivery receipt before signing, photograph before opening, keep the packaging as evidence, and notify carrier and insurer within 48 hours. Follow that sequence and the loss rarely lands on you.
Where Does the Factory’s Responsibility Actually End? Read the Trade Term on Your Invoice
Before you argue with anyone about a crushed carton, open the commercial invoice and the bill of lading and find the trade term. The Incoterms 2020 rules published by the International Chamber of Commerce are the standard reference for allocating cost, risk, and obligations between buyer and seller, and the rule named on your documents controls who bore the risk of loss while the carton was in transit.
The logic is often missed: the party who bears the cost of freight is not always the party who bears the risk of damage. Under EXW, risk passes the moment the sealed carton is placed at your disposal at the factory door. Under FOB, it passes on loading at the origin port. Under CIF and CIP the seller pays the freight and buys the insurance, yet risk still transfers early — on loading for CIF, on handover to the first carrier for CIP — so a carton crushed before it reaches you is legally your loss, claimed against the policy and the carrier rather than the factory.
Only DAP and DDP keep risk with the seller until arrival at the named destination — and even there the claim normally runs against the carrier or the seller’s insurer, not the factory’s pocket.
One insurance detail worth checking on every CIF or CIP order: under the ICC 2020 rules, CIF carries default cover at the Institute Cargo Clauses (C) level — the most limited tier — while CIP now requires Institute Cargo Clauses (A), an all-risks level. A carton crushed in stacking may fall outside a (C)-level policy but sit comfortably inside an (A)-level one. Ask which clauses your certificate names before the goods sail, not after.
What the Factory Pays For — and What It Never Will
Draw the line at the moment risk transferred. Everything provably wrong with the goods before that moment is the factory’s account; everything that happened after it belongs to the carrier or the insurance market.
The factory answers for workmanship and packing-specification defects: plating that fails color-fastness testing, stones that fall out in normal handling, a wrong hallmark, pieces that do not match the approved pre-production sample, or cartons packed below the export-packing standard your PO specified. Our own program runs AQL 2.5 final inspection on every batch before packing, pull-tests 100% of pieces, and carries a 12-month warranty covering plating color-fastness and free re-setting for non-artificial stone loss within 12 months of delivery — claims handled photo-first, with remedies decided in the buyer’s favor for confirmed defects. We wrote separately about how a plating-defect claim is split between receiving tests and the PO clause; the same division applies here — product defects come back to the factory, transit damage does not.
The factory does not answer for the transport itself: a forklift through the carton, a collapsed stow, water ingress from a torn tarp, pilferage, rough courier sorting. If sealed cartons passed final inspection and met the packing spec, a crushed carton says nothing about the factory’s workmanship — and no manufacturer can underwrite carriers it does not control.
Pre-shipment evidence settles the rest. A batch video or photo set taken before the balance payment proves what the goods and packing looked like at handover — the fact a claim turns on. We covered what to film, and what video cannot prove, in our guide to the pre-balance batch video.
The First Hour After a Crushed Carton Arrives: The Four-Step Evidence Routine
Claims are won and lost on the paperwork created in the first hour — before anything is opened or thrown away.
Step 1: Annotate the delivery receipt before you sign it
The delivery receipt is the carrier’s own record of the handover condition. Sign it clean and you have signed the carton arrived in apparent good order — every later conversation starts with you explaining away your own signature. Instead, write on the face of the receipt, in front of the driver: carton crushed at corner, contents suspected damaged, subject to detailed inspection. Have the driver countersign it and photograph the page. If the driver cannot wait, photograph the crushed carton beside the waybill with the tracking number visible, and send a written damage report the same day.
Step 2: Photograph and film before opening anything
Shoot all six sides of the carton, the stretch wrap and strapping, the shipping marks and waybill number, and the crush point in close-up. Then open on camera and film the inner boxes exactly as you find them — void fill, dividers and all — before touching the jewelry. Only then photograph the damaged pieces individually, next to the packing list. That sequence reconstructs the causal chain the insurer needs: outer damage, inner condition, product damage, piece count.
Step 3: Keep the packaging — all of it
The crushed carton, void fill, OPP bags, inner boxes: none of it goes in the bin. Insurers read what happened from the failure mode of the packaging, and a surveyor who cannot inspect the carton will often decline the claim. Count contents against the packing list while everything is still in place; dispose only after the carrier or insurer confirms it has what it needs.
Step 4: Notify carrier, seller, and insurer in writing within 48 hours
Send the same evidence pack to all three: annotated proof of delivery, photo set, packing list, commercial invoice, and waybill number. The seller is not the payer for transit damage, but it is your fastest source of claim documents — carton dimensions, the packing specification, invoice copies, and the sealing photos that prove each carton left the factory intact.
Carrier Claim or Cargo Insurance Claim: Who Files, Against Whom, by When
Think of recovery as two doors; the trade term decides which opens first.
The carrier claim
You claim against whoever transported the goods when they were damaged. On FOB and EXW purchases you booked the freight, so the claim is yours to file — with the ocean carrier for the sea leg, with the express courier for DHL/FedEx door-to-door moves, as most sample and reorder shipments travel. On CIF and CIP the seller contracted the carrier, but the loss is still yours; you file through the seller or directly as consignee holding the bill of lading.
Deadlines are short. For sea cargo to and from the United States, the Carriage of Goods by Sea Act requires written notice of non-visible, concealed damage within three days of delivery and discharges the carrier entirely unless suit is brought within one year. It also caps liability at $500 per package unless the goods’ value was declared and inserted in the bill of lading before shipment — which is why high-value cartons should travel with a declared value line rather than a generic description. Couriers run their own short windows, so file on the courier’s claims portal immediately with the annotated receipt, photos, and invoice attached.
The cargo insurance claim
Insurance is the door that actually pays. Under FOB and EXW you bought the policy, so you claim on it directly and the insurer pursues the carrier afterward — that subrogation is the insurer’s problem, not yours. Under CIF and CIP the seller bought the policy for your benefit; as the party holding the insurance certificate you notify the insurer, and on CIP cover you argue from the all-risks (A)-clauses position — a far stronger start than the (C)-clauses minimum a CIF certificate may name.
Insurance claims have their own discipline: notify promptly — marine policies commonly condition cover on immediate notice of loss — and expect a surveyor appointment on any significant claim, which is why the intact packaging from Step 3 matters. The route also pays without the carrier’s package cap, up to the insured value.
How the two doors fit together
In practice: file the carrier claim to preserve your rights inside its short window, file the insurance claim to get paid, and let the insurer recover from the carrier. Where the trade term kept transit risk with the seller — DAP and DDP — the same documents go to the seller, who runs the identical two-door sequence on its own policies.
Make the Next Shipment Argue-Proof: The PO Clause Checklist
Every step above can be pre-agreed on paper, which is cheaper than arguing it after the fact:
- Fix the packing specification in the PO: inner boxes, OPP bags, void fill, carton grade and stacking limit. If the carton that arrived was under-packed against that clause, the damage is a factory breach, not bad luck. Our guide to packing sterling silver for a humid sea container shows the detail a spec can carry.
- Require pre-pickup evidence: sealing photos of each carton and a carton weight list, so the handover condition is never in dispute.
- Declare value on the transport documents — the declared-value line on a waybill, or value inserted in the bill of lading for sea cargo — rather than relying on a default package cap.
- Name the insurance clauses and the policyholder: Institute Cargo Clauses (A) for CIP, and state who holds the certificate.
- Write the damage SOP into the contract: annotated receipt, photo set, notification within 48 hours to carrier, seller and insurer, and replacement pieces prioritized on the next shipment.
Frequently Asked Questions
The carton was crushed but the inner boxes look fine. Do I still annotate the receipt?
Yes. Concealed damage — product harmed while the packaging looks intact — is the most common claim failure, because a clean signature plus unopened boxes reads as a good delivery. Note carton crushed, concealed damage possible, subject to inspection; open on camera within 24 hours; and keep the three-day written-notice habit for sea shipments.
I signed clean and found broken stones two days later. Is the claim dead?
Weakened, not dead. Concealed-damage notice under COGSA runs three days from delivery, so notify the carrier in writing today and explain the delay. Separately, stone loss from non-artificial causes is a warranty matter regardless of transit: within 12 months of delivery it is covered by free re-setting under our warranty program, decided photo-first.
Won’t the factory just remake the crushed pieces for free?
Not as a rule. The factory’s liability covers workmanship and packing defects — and with payment structured as a 30% deposit and 70% balance before shipment, the transaction is settled at handover. A replacement run for transit damage is a new production order. It will, however, supply the packing evidence, invoice copies and specification documents your claim needs — quickly, because your window is days, not months.
Who buys the cargo insurance — me or the factory?
The trade term decides. EXW and FOB: you insure. CIF and CIP: the seller buys the policy for your benefit, at (C)-level clauses minimum under CIF and (A)-level under CIP. DAP and DDP: the seller carries the risk to destination and arranges its own cover. Whoever buys it, confirm the named clauses and insured value before departure.
What if the carrier denies the claim?
That is the insurance door’s job. The insurer pays your loss up to the insured value, then pursues the carrier itself. Denials most often cite a clean proof of delivery or late notice — which is why Steps 1 and 4 decide these cases.
