What Is Motor Truck Cargo Insurance?

Whether cargo is damaged, destroyed, or stolen, motor truck cargo insurance protects you and your company.

Cargo insurance protects you from having to bear the cost of repaying for the full value of the goods lost or damaged. Just like other forms of insurance, if a loss occurs, you’ll pay a deductible to cover the damage. Without enough coverage, you’ll have to pay any remaining value of the goods above your insurance coverage.

What is Cargo Liability Coverage?

Liability insurance covers costs that may be associated with injuries and property damage resulting from an accident involving your truck or the trailer attached to your truck. It covers the property that you are transporting via motor carriers. Without the coverage, shipping companies will often not work with your transportation company because it leaves them in a vulnerable position if anything should happen to their property in transit.

Your insurance premiums vary based on the value and the types of property that you transport. Another factor impacting your total insurance cost will be how far you transport the goods. Motor carrier cargo liability coverage is not a replacement for auto liability coverage, which provides liability insurance for your trucks and bodily injury for your drivers or others on the road that they might injure. If you’re transporting goods, you’ll need both auto liability coverage and cargo liability coverage.

Why is Cargo Insurance Needed?

Accidents can happen to cargo, and as a transportation company, you assume liability for the goods you transport while they are under your care. This kind of insurance protects you from a large financial burden if a shipment is damaged or stolen.

In addition, cargo insurance is often a requirement for shippers to work with you.

What Are the Requirements for Cargo Insurance?

The Federal Motor Carrier Safety Administration (FMCSA) does not require cargo insurance for most general freight motor carriers. Federally filed cargo insurance is generally required for interstate household goods carriers and household goods freight forwarders, with minimum filing amounts of $5,000 per vehicle and $10,000 per occurrence. Even when federal filing is not required, many shippers, brokers, and contracts still require motor truck cargo coverage.

Motor Truck Cargo Insurance Deductibles

As with all insurance policies, motor truck cargo insurance has deductibles that you must pay before the insurance company will pay for the damage to the goods you were carrying. To lower your insurance rates, you can increase the deductible you pay.

How Cargo Insurance Cost Is Calculated

Insurance companies usually price cargo insurance based on factors such as the type and value of the freight, your claims history, and your operating exposure. Depending on the insurer, your routes, radius, commodity class, and loss history can all affect the premium.

Motor truck cargo insurance covers the goods you’re transporting. Here are some of the areas of coverage you can select as part of a motor truck cargo insurance policy:

• Cargo coverage to replace the value of the cargo under your care
• Freight income coverage for lost payments when you can’t complete a job
• Debris removal, traffic control, security, towing, reloading
• Fire department surcharge in case of a fire
• Reward coverage for offering a monetary award to individuals who provide information that leads to the arrest or conviction of a person responsible for the loss of goods in transportation
• Loss data preparation coverage to cover costs when gathering information on inventory, and appraisals to determine a covered loss

Motor truck cargo insurance excludes several types of cargo, including those with high values or products that could be dangerous. Examples of some of these excluded properties include the following.

• Animals
• Contraband
• Furs
• Gold, precious metals, or stones
• Jewelry
• Money, coins, or stamps
• Works of art

Covered causes of loss vary by insurer and policy form. Some policies cover cargo damage from events listed below, while others use narrower named-risk wording. Review your policy carefully to confirm exactly which causes of loss are covered and which require endorsements.

• Theft or attempted theft
• Damage to goods from a collision
• Damage from aircraft
• Explosion
• Fire
• Lightning
• Overturned auto
• Riot
• Vandalism
• Windstorm

Commonly excluded from coverage:

• Property that governmental authorities seize or destroy
• Nuclear hazards
• War and military action
• Damage to goods or loss of goods from poor packing or handling
• Indirect losses, such as delays, loss of use, or unfavorable economic conditions
• Breakdown of refrigeration equipment not related to a covered loss scenario
• Acts that are criminal, dishonest, or negligent
• Damage to goods from defective property or deterioration
• Damage from extreme temperatures or moisture
• Insect or vermin damage
• Voluntary surrender of the goods, such as in the case of fraud

Motor truck cargo insurance and commercial auto liability insurance are two different coverages. Motor truck cargo insurance protects the freight you haul when it is damaged or lost in a covered event. Commercial auto liability insurance protects against bodily injury and property damage you cause to others in a truck accident. To protect both freight exposure and on-road liability exposure, many trucking operations carry both.

All insurance policies are not created equal. Here are some important factors when you’re seeking coverage from a top commercial truck insurance company at an affordable rate.

Value

Your insurance policy will outline the specific value of goods that it covers. Without adequate coverage, you could have to make up the difference between the actual value of the goods you are transporting and the allowable value in your insurance policy.

Responsibility

Liability for cargo in transit is complicated because the cargo will likely trade hands several times before reaching the end-user or consumer. Who is responsible for the cargo as it is unloaded from a ship onto your truck? And who is responsible when the goods are being offloaded from your truck to the warehouse?

Before finalizing your insurance purchase, review these factors with your commercial truck insurance agent or underwriter so you have a clear idea of your liability in all situations.

Coverage

As you review the types of cargo insurance and coverage options available, make sure you select the right options based on the cargo you transport and how you transport the cargo.

Cost

Review your cargo insurance cost and weigh it against the risks of not carrying coverage. The goal is to get the right amount of coverage without overpaying for insurance you don’t need.