The transport of goods by sea has a number of characteristics resulting in a system of risk allocation that cannot be found in the legislation applicable to other models of transportation (air, road, rail and river). In this regard, the notion of nautical fault appears as the basis for the exculpation of carrier from liability for damages. It has a long history in shipping, although it has not been devised to favour the carrier, as it may be inferred by someone less acquainted with the complexities of maritime law. Instead, its aim has been risk distribution between carriers and transport users. It is the goal of this paper to examine the characteristics of the specified legal construct, and on that basis provide the reader with a systematic understanding of the subject matter, with a special focus on the liability insurance of carrier in case of nautical fault. The first part of the paper looks at whether the historical purpose of the notion is still viable today. In this respect, the standpoints of maritime law scholars and insurance industry professionals are considered. Secondly, the type, scope and nature of the specified term in the Croatian maritime law is analysed, including its placement in the contracts of carrier liability insurance. A caveat: although the Croatian legislation is in focus, it is impossible to ignore the application of its international aspects. Indeed, a failure to illustrate its role would restrict the usefulness of the analytic view this paper seeks to provide. The concluding segment of the paper focuses on a case study of marine accidents brought about by nautical faults of shipmasters. These indicate the need for further reflection on the popular but yet contested notion of nautical fault as the basis for the exemption of carrier from liability in maritime transportation. Has the time finally come for the carriage of goods by sea to be placed on an equal footing with other models of transport, where the carriers are responsible for their own acts and omissions as well as for those of their agents?