Motor truck cargo insurance, often referred to simply as cargo insurance, is a crucial component of insurance coverage for trucking companies. It falls under the umbrella of inland marine insurance and specifically protects against losses arising from damage to goods while they are in transit via truck. Here's what you need to know about motor truck cargo insurance:
Coverage Details:
Cargo insurance covers losses resulting from damage to goods while they are being transported by truck.
It is one of the three main components of a trucking insurance policy, alongside auto liability and physical damage coverage.
As a for-hire trucker, having cargo insurance is essential for assuring your clients that their goods will arrive safely at their destination or be reimbursed if they don't.
Commonly Overlooked Cargo Insurance Coverages:
While cargo insurance typically covers a broad range of risks, there may be exclusions that can be addressed by adding specific endorsements.
Some scenarios to consider coverage for include stolen or hijacked goods, water leaks damaging cargo, cargo damage during loading or unloading, refrigeration breakdown leading to spoilage, and debris removal after an accident.
Cost of Cargo Insurance:
Cargo insurance premiums for haulers and truckers typically range from $400 to $1800 per year.
Rates vary based on factors such as coverage limits, types of goods being hauled, and deductible amounts.
Underwriters price cargo insurance based on the value and risk of the cargo being transported, with higher-value or higher-risk cargo attracting higher premiums.
Stand Alone Cargo Insurance vs. Package Policies:
Truckers may opt for stand-alone cargo coverage or bundle it with primary liability and physical damage coverage.
While package policies are common, it's essential to compare coverage options and premiums for both stand-alone and bundled policies to determine the most cost-effective option.
Questions to Ask Before Getting Cargo Insurance:
How much cargo insurance coverage do I need, considering freight coverage limits required by shippers and brokers?
How quickly can I obtain certificates of insurance when needed for securing loads?
Can I easily obtain additional coverage if I encounter opportunities to haul cargo outside of my normal covered property?
Cargo Insurance Limits:
While the federal government requires a minimum cargo limit of $5,000, most policyholders and clients find this insufficient.
Typical cargo insurance policy limits range from $50,000 to $250,000, with $100,000 being the most common limit.
Clients typically require proof of cargo insurance coverage, so having adequate coverage and readily available certificates is essential.
Ensuring you have the right amount of cargo insurance coverage is critical for protecting your business and meeting client requirements. By understanding the details of motor truck cargo insurance and working with experienced insurance brokers, you can secure comprehensive coverage tailored to your needs.