The transporter of freight and commodities assumes responsibility for the cargo he has taken control of. The amount of that responsibility should be clearly established and understood by both the shipper and the transporter before the shipment is moved. This is usually done by contract, by a bill of lading disclosure, or by published tariffs. Unfortunately, this level of detail is often overlooked by both parties.
Considerations when choosing a Cargo Insurance Company
- You’ll want to make sure your commodity is covered. Don’t assume that all loads will be covered. Some goods like tobacco, jewelry, and liquor are hard to find truck cargo insurance coverage for since they are prime targets for thieves.
- If you stumble upon a lucrative load that is outside the normal goods you haul, will your insurance broker be able to help you get coverage in a pinch?
- Make sure you are not over or under-insuring the goods you are hauling.
- In the event of a loss, how fast is the claims service?
Truck Cargo insurance protects the transporter for his responsibility in the event of damaged or lost freight. The policy is purchased with a maximum load limit per vehicle. Under-insuring the load can prove catastrophic to you in the event of a claim. Make sure you understand the concept of co-insurance.
This insurance policy, without question, requires careful thought and evaluation prior to purchasing. In addition, you need to be constantly evaluating the nature of your freight to make sure the coverage meets the demands.
Truck Cargo policy can be, and usually is, tailored to meet your operations and exposure. Significant exclusions, or guarantees of compliance by you, create many situations where there might be no coverage. A good insurance broker will ask you pertinent questions that properly address this concern. Truck Cargo policy can also contain provisions to ensure the cargo when it is in your terminal or warehouse. This exposure results when the freight can not be delivered the same day or is consolidated with other shipments. The coverage exists so long as there is no separate charge made for storage or warehousing.
Similar to freight moving truck insurance that is the legal liability insurance policy which protects you for the freight you charge storage charges for. You need to utilize a warehouse receipt, similar to a bill of lading, for the storage which specifies the terms of your storage contract.
This is usually the most costly portion of any trucking company’s insurance package. Protecting you from damage or injuries to other people as a result of truck accidents this coverage is also mandated by the State and Federal agencies and a form of proof is required to be sent to them.
Coverage is generally rated, and many time supplied to you, on a scheduled vehicle basis. This means that if the vehicle is not on the schedule then there is no coverage given. With only a few vehicles this is not normally a problem. The problem becomes more significant when there is a large fleet and/or many vehicle changes during the policy year. Care must be exercised and excellent communications established between your broker and yourself.
For larger fleets and company’s requiring broader forms, the policy can be issued on any auto basis where no vehicle schedule changes are needed. This type policy insures you for your use of owned, non-owned, hired vehicles, subcontracted vehicles, even for the use of private passenger type vehicles. These policies can be written on a gross revenue or mileage premium rating method. In most cases selecting these options properly simplifies and can reduce the overall cost. It is important to understand the consequences of selecting a method, however, as a rise in your prices will increase your insurance premium even though your mileage may not change if you are under the gross revenue program. As always, proper evaluation with your insurance broker will uncover the best alternative for you.
Coverage to look for in a trucking cargo policy
You’ll want to make sure your cargo is covered no matter what the risk. Some scenarios to consider would be:
- Stolen or hijacked goods
- Water leaks in the trailer that damage the cargo
- Cargo damage during loading or unloading
- If your truck is out of commission, will your cargo insurance transfer to your temporary truck?
- Refrigeration equipment breakdown resulting in spoiled cargo
If your load is strewn about the highway after an accident, you’ll need to make sure you have debris removal covered in the policy.
Various policy endorsements are available to extend alternative coverages to the auto liability. Pollution liability, as relates to the use of vehicles, is a form that should be considered always. Various deductibles are available to allow you to absorb some of your losses and reduce your overall cost. Interstate truckers will need the MCS90, the BMC91x, and the appropriate State form endorsements which extend coverage to the regulatory agencies. For a discussion on proper State and Federal requirements please see LICENSING elsewhere in these pages.