Motor Truck Cargo Policy
Motor truck cargo policy provides liability insurance for trucks that transport customer goods. It covers property damage, like fires and collisions, as well as theft and other risks.
It also typically pays for cleaning up debris and pollutants from a crash and legal expenses related to the incident. This coverage is essential for trucking companies that want to earn customer trust.
Coverage
If you haul valuable cargo for a client, you may have to pay out substantial sums if that cargo is lost or damaged on the way to its destination. Cargo insurance is designed to protect you against such risks and helps to reassure your clients that their goods are in safe hands. In some cases, your clients might even require you to have motor truck cargo coverage as part of your transportation contracts.
The coverage offered by a motor truck cargo policy can vary between insurers, with some offering both “all risk” and named perils policies. The more comprehensive all risk policy will offer protection against any cause of loss not excluded, and tends to cost more. In contrast, the named perils policy is more restricted and offers less cover, typically only a proportion of any loss that occurs.
It’s also possible for a motor truck cargo policy to include provisions for storage at your depot or warehouse, which is an additional exposure you might face during transit. It’s important to discuss this with your broker so that the right type of coverage is included in your policy.
In most instances, your policy will require that you insure a minimum percentage of the value of your cargo in order to claim. This is called coinsurance and it’s there to discourage companies from underinsuring their cargo. If you fail to meet this requirement, your insurer will reduce your policy’s payouts accordingly.
Another essential feature of a motor truck cargo policy is legal liability protection, which will pay for your defence costs and any ultimate settlements ordered against you in respect of the insured property while it’s in your care, custody or control. This covers losses from a range of common risks, including vehicle collisions, fire and theft.
The cost of a motor truck cargo policy can vary depending on the value and types of goods you transport. For example, some policies exclude coverage for shipments of aggregate or sand, while others offer more comprehensive all risk coverage. Other factors that can influence the cost of your policy include the number and types of vehicles you own, the distances you travel and the cargo types you carry.
Limits
The limits of coverage available under motor truck cargo policies vary based on the average load, commodity type and location to and from where it is being transported. Most of the time a trucking company will purchase this policy as an endorsement to a commercial auto or general liability policy, but it can also be written on its own. It is important to work with a truck insurance broker that understands the transportation business and can clearly explain the different exclusions and limitations of this type of coverage.
Cargo liability limits are usually expressed in terms of a dollar amount or as a percentage of the value of the goods being transported. The higher the limit, the more compensation you will receive in the event of a loss or damage to your cargo. Limits can be increased by paying a premium. You should routinely review your limits to ensure that they are adequate. This is particularly important if you are hauling high-value commodities or private cargo.
Generally, the most common causes of loss are fire, collision and striking of a load. However, many carriers include additional coverages for special situations such as the cost to remove debris or extract pollutants from a roadway (removal expenses coverage) or the loss of equipment needed to complete the trip (contingency expense coverage).
On average, cargo limits range from $20,000 up to $100,000. Some states require truckers to carry a minimum amount of cargo insurance before they can obtain PUC authority. In these cases, the minimum limits are typically specified on the Bill of Lading.
Other special circumstances that can be included on a policy are Refrigeration Breakdown Coverage and Temporary Storage coverage. This covers the freight in the event of a sudden, accidental breakdown or change in temperature that could affect its quality or usability. Also, a number of cargo policies include coverage for the cost of repacking and repair expenses for covered losses resulting from securing, handling, packing or unpacking. This is especially helpful for truckers that transport refrigerated or frozen foods and building supplies.
Exclusions
There are many different types of coverage available under motor truck cargo policies. However, it is important to understand the exclusions that are built into these policies. This can help trucking companies and owners determine which policy is the best fit for their needs.
Insurance agents should be sure to discuss all the coverage options and exclusions available under a motor truck cargo policy with clients. This is especially important for customers with specialized commodities that require additional considerations, such as furs, electronic goods and food items. Some insurance companies may also have specific commodity exclusions or limits on their policies.
The type of property that can be covered under motor truck cargo coverage includes property that is in the care, custody and control of the insured transporter. This includes property that is owned by the insured, but that they are transporting on behalf of others. Unlike commercial auto insurance, cargo policies are expressly designed to cover contractual liability and property in transit.
Typically, motor truck cargo policies are offered on either an all-risks or named perils basis. All-risks policies will provide broad coverage for the property that is in transit, whereas named perils policies will limit the types of risks that are covered. Both types of policies have a premium associated with them.
Other common limitations in a motor truck cargo policy include the requirement that the insured maintain a certified weight station on their route to ensure compliance with FMCSA regulations. In addition, some insurers will only offer a cargo policy if the insured has a current AAIS or ISO financial rating.
Finally, some cargo policies will exclude property that is left unattended while the vehicle is parked. This can include a trucker who parks at their home or at a truck stop to rest and sleep, but has a loss that occurs while the truck is unattended.
In order to avoid these coverage gaps, it is important that motor truck cargo insurance is purchased from a broker with transportation expertise. Brokers that don’t have this experience will often overlook coverages or have them limited. Moreover, some brokers will even try to pass the responsibility of securing this coverage onto their client, which can be a mistake.
Requirements
Motor truck cargo insurance, also known as inland marine coverage, insures freight and property while it’s being transported by a for-hire trucking company. Typically, companies that ship goods with a trucking company will require the trucking company to carry this type of policy. It’s an important type of insurance for trucking companies because there are many things that can go wrong during transportation.
When purchasing a motor truck cargo policy, it’s essential to select the right limit for the coverage. The limit determines the maximum amount that the insurance company will pay for damaged or destroyed cargo. You also need to choose a deductible, which is the amount you’re willing to pay out of pocket before the insurance starts paying on a claim. A higher deductible can lower your premium, but make sure you choose a deductible you can afford to pay in the event of a claim.
Some policies also include additional coverage for cargo that’s stolen during shipment. However, this is usually capped at a lower limit than the overall policy’s maximum and has a high deductible. Moreover, the theft coverage does not cover damage to other vehicles or property during shipment.
The policy may also include coverage for cargo that’s left at the warehouse or storage facility (storage liability), costs to remove debris or extract pollutants from a roadway or waterway (removal expenses coverage), legal fees associated with the defense or settlement of claims by third parties, and freight charges customers lose due to the carrier not delivering their shipment on time (earned freight coverage). In addition, there are policies specifically designed for certain types of commodities such as reefer commodities, which can be purchased separately from other coverage.
It’s important to note that a motor truck cargo policy does not replace auto liability coverage, which covers the trucking company for bodily injury and property damage to others that they might injure while driving. In fact, trucking companies will need to purchase both motor truck cargo and auto liability coverage in order to comply with regulations set by the FMCSA and the companies that they work for.