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Cargo liability insurance is obtained to safeguard against any direct physical harm or loss to the goods being transported. It ranks among the primary coverage considerations for a potential shipper or broker before entrusting their cargo to a motor carrier.
Shippers have a legitimate interest in ensuring that their merchandise is fully protected for its entire value. They are understandably concerned about the extent of cargo coverage carried by a motor carrier. However, it’s worth noting that cargo coverage terms can vary significantly from one insurance provider to another. In some cases, what is not covered by the policy can be as significant as what is covered.
To put it simply, cargo liability insurance is offered in various forms, with the Broad Form being arguably the most comprehensive. The Broad Form provides coverage for all forms of direct and accidental physical damage to the cargo, subject to specific policy exclusions.
On the other hand, other forms like the limited/specified perils form or legal liability form restrict the types of losses covered by explicitly listing the specific loss categories covered by the policy. Consequently, they restrict the scope of coverage.
Given the wide array of coverage forms and exclusions, procuring adequate and suitable cargo insurance can pose a challenge. So, what criteria should you consider when searching for a robust cargo insurance policy, and what inquiries should you make?
Start by engaging in a conversation with your insurance agent. Ask them about the nature of your coverage. Is it a comprehensive Broad Form coverage, or does it fall under a more limited category that narrows the scope of protection? Does it encompass earned freight? Does it extend to cover reefer breakdowns? Are there any coinsurance penalties? What limitations or exclusions are outlined in the policy?
As the saying goes, the devil is in the details. It is crucial to carefully review the policy exclusions to understand precisely what types of losses are explicitly not covered, thus avoiding surprises in the event of a claim.
Ensure you collaborate with an experienced commercial truck insurance agent. Your agent should not only be well-versed in your business but also have a deep understanding of the coverage forms necessary to provide the broadest protection possible in the event of a loss.