• Greg Botson

Cargo Liability Insurance - What you need to know.

Updated: May 22, 2018

Cargo liability insurance provides coverage for the cargo that for hire truckers haul on their trucks. As the trucker for hire, you are responsible for what happens to the cargo and the financial impact can fall on you if something were to happen.


A small accident could cause tens of thousands of dollars worth of damages that would have to come out of your pocket if you are not equipped with a #cargoliabilityinsurance policy.


This article will help you get a better understanding of #cargoinsurance and the details you need to know.


Why Cargo Insurance?

I think it is legitimate to ask why you need cargo liability insurance if your commercial truck policy covers damages. Mainly, your general liability and property coverage will not include cargo that you are hauling.


Your property coverage is designed to protect your vehicle in an accident, while auto liability insurance covers damages you cause while on the road.


Now, there may be some coverage under your commercial truck policy, but often it is limited on how much of the cargo is covered and the conditions that the cargo was damaged. For example, what if a refrigerated truck's cooling element breaks down and the cargo spoils before delivery. There was no accident or theft to be claimed under the auto policy.


So, if you want to ensure that you are properly covered if something happens to the cargo then you will want to consider cargo insurance. It complements the rest of your commercial truck insurance policies by covering an area left unprotected.


What is covered under the cargo liability insurance policy?

Another reason to have cargo insurance is the unique coverage it provides. Coverage that goes beyond just protecting the cargo in an accident. It provides protection from a number of incidents that could cause you financial harm.


Here are a few examples of what cargo liability insurance can cover:

  • Losses from theft.

  • Damages to cargo due to accident, malfunction of equipment or even water leakage.

  • Debris and pollution clean up costs.

  • Losses or damages due to dropped cargo during the loading or unloading process.

Cargo liability insurance covers damages and losses that can occur but it will even cover additional losses that happen after the cargo is damaged. So if the cargo is lost you will have to pay for the cargo, but then the company who hired you may sue for loss of income because their shipment did not arrive.


As you can tell, the purpose of cargo insurance is to protect you from a range of events that can happen to the cargo you carry which could cause you financial harm.


Cargo insurance details

Like any insurance policies there are finer details you must know about to get the full understanding of the policy. We want to help you understand so that you can decide whether the policy is right for you and if it is right, what specifics you need to fit your business.


Understanding how the policy works

Like with most insurance policies, a cargo insurance policy can have different limits, deductibles and exclusions.


The limits are how much the insurance company can pay out to you, the deductible is what you will pay out of pocket in a claim and the exclusions are the items not covered.

For your truck's cargo policy you want limits that will be high enough to cover your largest load.


Your deductible should be low enough for you to pay out of pocket but high enough that your rates can stay lower.


Before purchasing a cargo liability insurance policy you will also want to ensure that your common load is not listed as an exclusion. (Common exclusions are: illegal loads, explosive or hazardous materials, art, jewelry, money, paper, or your personal property/goods.)


Understanding how rates are determined

There are a number of things that go into cargo insurance rates, but three items really make up an impact in how much you will pay.


They are:

  1. The nature of what you are shipping.

  2. Your policy's limits.

  3. Your prior insurance loss history.

It really comes down to the bigger the risk, the bigger the premiums will likely be. Of course an experienced agent may be able to help you keep costs low while providing you with the necessary level of coverage that you need.


Best way to buy cargo liability insurance

With the use of the internet you can buy cargo insurance just about anywhere, but that does not necessarily mean you are buying the best policy available.


There are three things you will want to think about when buying a policy:

  1. Rates. For your well being you must be able to profit from your truck.

  2. The right coverage. Skimping on coverage can leave you financially vulnerable which ultimately defeats the purpose of having insurance.

  3. The agent. When things get bad, your agent is going to be the deciding factor in how well your insurance experience goes.

Out of these three areas, I believe the agent will have the most impact in your insurance.

Sure many agents can write you a policy, but are they certain that you are getting the right coverage and the right limits? Do they know the trucking industry and know what you need or are they just calling their carrier for a quote? Can they also right the rest of your commercial trucking policies? While you can buy cargo liability insurance as a stand alone policy, it will work best if you can have all of your policies under one agent.


I have been working with local truckers for over 20 years and often speak with clients about changing risks in the industry. I know what trucking companies need because I spend time exploring their needs not just writing quotes.


Give me a call to better understand cargo liability insurance or to get a quote. Call 440-537-2292 or send an online request and I will get in touch with you.

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