Motor Truck Cargo Coverage
Motor truck cargo insurance is designed to protect freight and commodities hauled by for-hire truckers while it is in their possession. It covers truckers’ liability for cargo that is lost, damaged or stolen during transit and offers protection for the owner of the cargo as well. Motor carrier liability coverage, which is often legally required, is often not enough coverage to offer adequate defense against losses.
FAQs
What does motor truck cargo insurance cover?
Truckers assume a great risk on every run they do. This coverage is intended to cover the most common perils associated with hauling cargo of others and there are many risks associated that could cause damage or loss on the road.
Standard motor truck cargo policies offer coverage for the following types of losses:
- Fire
- Collision
- Lightning
- Overturn
- Water damage
- Explosion
- Vandalism
- Refrigeration failure
- Windstorm
- Theft
Some policies also cover debris removal, pollutant cleanup, legal defense costs and costs to prevent further damage as well.
Motor truck cargo coverage is usually available to for-hire trucking risks that utilize the following vehicle types: dump trucks, tractor, most trailers, box trucks, cargo vans, some pick-up trucks, flatbeds, cement mixers and car haulers. Cargo is generally covered while in the custody of a connecting carrier and for up to 72 hours when it is held at a warehouse.
Example: Extreme wind causes your truck to overturn and your shipment is damaged in the accident. Motor truck cargo would pay for the damage to your cargo.
What doesn’t motor truck cargo insurance cover?
This type of coverage typically does not cover the following types of loss:
- Loss caused by indirect means (like delays or loss of use)
- Pests
- Damage caused by extreme temperatures or dampness
- War
- Dishonest, criminal or negligent acts
- Loss caused by improper packing or rough handling
- Nuclear hazard
- Damage due to defects in or deterioration of the property (like rust)
- Government seizure
- Loss due to voluntarily giving up the property by way of fraud
- Military action
Motor truck cargo coverage may exclude specific kinds of property. Exclusions usually apply to property that is at a higher risk of theft, is costly to replace or property that is especially dangerous. Carriers that transport these kinds of property can usually add back coverage via endorsements. Some examples of typically excluded property are:
- Money
- Artwork
- Jewelry
- Alcohol, tobacco & pharmaceuticals
- Live animals
- Property owned by the insured
- Explosives
- Precious metals & stones
- Furs
Motor truck cargo is not available for every vehicle type. Usually the following types of vehicles are not eligible for this coverage: garbage trucks, buses, passenger vans, limos, hearses and ice cream trucks.
Motor truck cargo coverage vs motor carrier liability coverage
Transporters of cargo are legally obligated to purchase auto liability coverage that meets the minimum requirements. Motor carrier liability, which is a type of auto insurance, covers physical damage to the property of others and bodily injury to others. This type of coverage will cover damaged property, like a guardrail you crash into, but it won’t cover the damage to the property you are hauling, which is where motor truck cargo coverage comes into play. Motor truck cargo offers coverage for specific shipments while motor carrier liability offers broad continuous coverage.
Coinsurance
Many insurance companies require that a certain percentage of the cargo’s value be insured to receive full claims coverage. This is called coinsurance. Coinsurance is intended to discourage the undervaluing of cargo. It is important to select coverage that is adequate to cover the value of the goods you are carrying. If your insurance limits aren’t enough to cover a claim, your business may be required to pay for the loss.
Example: You policy includes an 80% coinsurance clause. You insure your cargo for $500,000, which is only 50% of the actual value of the property being hauled. You suffer a covered loss of $400,000. Even though this is less than the insured amount of $500,000, the insurance company will only pay for 50% of the loss, or $200,000.
Who should purchase motor truck cargo coverage?
When you provide cargo transportation services, you could be held liable if the property you are hauling is damaged or destroyed. There are numerous risks to cargo during its journey to the destination, making cargo insurance an essential coverage for truckers.
Is motor truck cargo insurance required?
Many cargo transporters are required to carry this coverage by the Federal Motor Carrier Safety Administration (FMCSA). Most companies that hire truckers to haul their goods also require this coverage in their contracts.
What is the cost of motor truck cargo insurance?
Premiums for this coverage can vary greatly but generally, cost is dependent on the type of cargo, amount of cargo, distance to be traveled and the time it will take to complete the journey. The amount of the deductible you select will also factor into the cost of your premium.