Commercial drivers face a number of risks while on the road, such as accidents, severe weather conditions, and equipment breakdowns. Trucking liability and physical damage insurance can help cover motor carriers and drivers from these losses. However, one commonly overlooked risk is lost or damaged cargo.
Because for-hire transporters do not own the cargo they haul, standard trucking liability policies may not provide the coverage needed if anything happens to the goods while they are in transit. Since cargo can be extremely valuable, it’s important to have coverage for possible losses, as transporters can be held responsible for costly damages.
What Is Motor Truck Cargo Insurance?
Motor truck cargo insurance provides coverage for the liability transporters have over the goods they carry. The Federal Motor Carrier Safety Administration (FMCSA) requires vehicles involved in interstate commerce to carry cargo insurance, and other federal and state laws may also apply depending on where you operate and what you haul.
What Does Motor Truck Cargo Insurance Cover?
This type of policy covers liability for goods in transit if they are lost or damaged due to events such as:
- Fires
- Crashes or collisions
- Theft
- Water damage
Cargo insurance policies may also compensate for expenses related to:
- Removing debris from public roads
- Preventing further damage to cargo
- Legal defense costs
How Are Premiums Determined?
The cost of a cargo insurance policy depends on multiple factors, including:
- The specific trucking operation
- The number of vehicles insured
- The type and value of cargo being transported
Some transporters may opt for blanket coverage based on gross revenue, which is useful for large fleets or shipments that frequently change vehicles.
Why Cargo Insurance Matters for Your Business
Clients may require a transport vendor to purchase cargo insurance as part of their contract to protect their interests. Failing to have proper coverage could result in severe financial losses and damage to business relationships.
Before purchasing a policy, transporters should work with clients to agree on a mutual cargo value. If a loss occurs and the policy doesn’t provide enough coverage, the transporter could still be responsible for the remaining costs.
Common Exclusions in Cargo Insurance
While cargo insurance offers flexible coverage, most policies exclude:
- Goods stored in a transporter’s warehouse for over 72 hours
- Certain vehicle types, such as:
- Garbage trucks
- Passenger vehicles (buses, limousines, hearses)
- Certain cargo types, including:
- Shipping containers
- Art, jewelry, money, and important documents
- Live animals
- Contraband, pharmaceuticals, alcohol, tobacco, explosives, and radioactive material
Final Thoughts
Cargo insurance is essential for protecting freight transporters from costly liabilities. Working with a knowledgeable insurance broker can help ensure you have the right coverage for your business needs.
For further questions on this or any other risk management topic, please contact us. We’ll see you again soon!
