Cargo Coverage Insurance

Cargo loss occurs at various stages of transportation, from loading and transit to unloading. It poses financial and operational challenges for both trucking companies and their clients. Cargo coverage insurance provides protection for goods or cargo being transported by a vehicle.

Having a cargo policy in place is crucial for trucking companies and owner-operators engaged in the transportation of goods for themselves or others. It helps mitigate the financial risks associated with damage to or loss of the transported cargo during transit.

Cargo insurance is a specific policy that falls under trucking insurance, which encompasses various types of coverage designed to protect commercial trucking operations. Cargo insurance is one component tailored to address the specific risks associated with the transportation of freight.

Cargo Insurance Policy: Key Coverages and Limits

While specific policy details can vary greatly, cargo insurance generally includes these common coverages and limits:

Coverage for Damage or Loss

Cargo insurance covers damaged goods or loss of the goods being transported. This can include coverage for various perils such as collisions, overturns, theft, fire, and other specified events.

It is always important to review the policy terms because many cargo policies will exclude coverage for theft under special circumstances such as: unattended vehicles in high theft areas, specific commodities, and more.

Various Types of Cargo

Cargo coverage can be tailored to the specific types of goods being transported. Whether it’s general merchandise, refrigerated goods, hazardous materials, or specialized cargo, the insurance can be customized to address the unique risks associated with different types of cargo.

Limits and Deductibles

Trucking insurance policies have coverage limits, indicating the maximum amount the insurance company will pay for covered claims. Deductibles may also apply, representing the amount the insured must pay out of pocket before the insurance coverage takes effect.

Loading and Unloading Coverage

Cargo insurance may extend coverage to the loading and unloading of cargo, addressing risks associated with these activities.

Transit Coverage

The insurance typically covers the cargo during transit. The cargo normally only has coverage when it is connected to a power unit/truck listed on your insurance policy. Most cargo insurance policies require special additions to the policy for an extra charge to cover the cargo while in a warehouse or for loading and unloading.

Valuation Methods

Cargo insurance policies often specify the method used to determine the value of the cargo for insurance purposes. Common valuation methods include “actual cash value” and “stated value.”

Perishable Cargo Coverage

For trucks transporting perishable goods, such as food or pharmaceuticals, cargo insurance may include coverage for losses due to spoilage or damage affecting the quality of the goods.

Contingent Cargo Insurance

Contingent cargo insurance provides coverage when the primary carrier’s insurance is insufficient or does not respond to a claim. This can be relevant when a freight broker subcontracts part of a shipment to a trucking company.

The Importance of Cargo Insurance Coverage

Cargo insurance is essential for protecting the financial interests of trucking companies and ensuring that truckers fulfill their contractual obligations to transport freight safely. It not only helps cover the cost of damaged or lost cargo but also provides assurance to shippers and clients that their goods are protected during transit.

Trucking businesses should carefully review their cargo policy needs and work with insurance professionals to tailor coverage to their specific operations and the types of cargo they transport.

Managing Loss History

Loss history refers to a record of incidents and claims related to damage, loss, or theft of cargo during transit. This history provides a comprehensive overview of cargo-related losses that a trucking company has experienced over a specified period.

It is a critical factor considered by insurance underwriters when determining insurance premiums and coverage terms for cargo insurance policies. Key aspects include:

Incident Details: This includes details of specific incidents, such as the date, location, nature of the incident, and a description of the circumstances surrounding the cargo loss.
Claim Amounts: Loss history documents the amount claimed by the insured for the damaged or lost cargo. This information helps insurers assess the financial impact of previous losses on the insured party.
Cause of Loss: This typically includes information on the causes of cargo losses, whether they resulted from accidents, natural disasters, theft, or other perils.
Frequency and Severity: Insurers assess both the frequency and severity of cargo-related incidents. High-frequency or severe losses may indicate higher risk, potentially impacting insurance premiums.
Patterns and Trends: Examining loss history allows insurers to identify patterns or trends in the types of cargo losses experienced by a trucking company.
Risk Assessment: Underwriters use loss history to assess the overall risk profile of a trucking company. A favorable loss history with fewer and less severe claims may result in more favorable insurance terms.
Risk Management Practices: Insurers may evaluate a trucking company’s risk management practices based on its loss history. Companies with effective risk management measures may be viewed more favorably.
Impact on Premiums: Loss history is a key factor in determining insurance premiums. A trucking company with a positive loss history may be eligible for lower premiums.
Safety scores on the FMCSA website: Safety Measurement System (dot.gov)

Trucking companies can proactively manage cargo loss by implementing robust risk management practices, investing in safety measures, and addressing any recurring issues contributing to cargo losses. Truckers may utilize cargo insurance, which can indirectly impact its loss history over time.

How Much Does Cargo Insurance Cost?

Cargo insurance cost can vary widely based on several factors. Cargo insurance premium is determined by assessing the specific risks associated with the type of cargo being transported, coverage limits, shipment value, and other relevant factors. Additionally, rates can be influenced by the insurance provider, the deductible amount selected, and additional coverage options.

Most trucking businesses can expect to pay several hundred for basic coverage to tens of thousands of dollars per truck each year for high-risk freight with high limits of coverage. Many are willing to pay a premium for a robust policy to insure their cargo. Get in touch with an insurer to have your cargo insurance calculated.

Securing a robust cargo insurance policy is often a wise decision because it is one of the few coverages that can allow you to make more money. Has your policy got no coverage for cargo, not allowing you to get high-paying loads? Pay extra for a good cargo policy to make more money.

How to Choose an Insurance Company

While it’s common for commercial trucking business owners to talk to one insurer at a time, it is generally advisable to reach out to several insurance providers. This will make it easier to compare rates and cargo insurance cost. Choosing the right provider is key to insuring your commercial trucking business and getting the full value of your insurance policy. CTI works with over 20 cargo insurance companies so they can provide you with options.

Inquire About Cargo Insurance Coverage

Take proactive steps to risk management and safeguarding your business. Get comprehensive coverage with cargo insurance and additional policies when you reach out to an insurer. Whether you want to inquire about cargo insurance cost, selecting a deductible, or simply want to learn more about your options, we’re here to assist you. Request a truck insurance quote today.