Motor truck cargo insurance provides protection on the freight or commodity that you haul in your truck and insures it until shipment is over. A cargo insurance provides cover against liabilities such as fire, collision or damage of cargo during shipment.
In trucking business, a motor truck cargo insurance is mandatory and most brokers will ask for it before you get hired. Additionally, commercial transportation is a risky business that needs adequate protection to offset any costs in case of an unforeseen event. Here we look at the 5 important things you need to know about motor truck cargo insurance.
1. Variation of cargo limits and premiums
Depending on the type of cargo being transported, the average load, to and form of the transported commodities, the cargo limits and premiums may vary. On average, the cargo limits range between $20,000 and $100,000. Some states require you to carry a certain minimum amount before you can be allowed to obtain a PUC authority. Depending on the average value of the goods, the higher the limit.
2. Types of motor truck cargo insurance
There are two main types of cargo insurance which help to standardize and control shipment between different states and countries.
• Land cargo– this type of cargo insurance provides protection for all land transportations within the boundaries of a given country. It covers risks such as theft, collision, damage to goods and loss. This policy is domestic in nature and does not include shipment abroad.
• Marine cargo insurance-this type of cover provides protection when transportation occurs through the sea or air. Usually, the contingencies protected against including bad weather, damage caused because of loading and unloading, piracy at sea and other related risks. Additionally, marine cargo insurance is further categorized as follows:
Specific cargo policy-this policy applies when you approach an insurance company or broker to insure a specific consignment. The specific cargo policy is only used for voyage policies and falls under them.
Contingency insurance policy– a contingency policy serves to insure against several remote risks that may not be covered adequately by the primary policy. It is especially useful where legal remedies to a certain loss are slow or do not exist. A contingency policy helps to rectify this kind of situation.
Open cargo cover- this type of marine cargo insurance provides coverage during the policy period for all types of consignment shipped during that specific period.
3. Unattended Vehicle Exclusion
This states that a vehicle that is loaded and left unattended to is not covered by a cargo policy. In this case, if a loss occurs, the insurance company will not cover the costs. For example, if a
driver leaves his truck at home or at a truck stop and an event occurs that leads to damage of goods, then there is no coverage.
Motor truck cargo insurance is not available for all types of commodities such an as jewelry, money, contraband, pharmaceuticals, animals, tobacco, alcohol, explosives and own-cargo. These restrictions may vary from one company to another and therefore wise to consult your agent to learn the details.
5. Types of coverage
Cargo insurance provides coverage for air, water, and land under various umbrellas. These include the different types of coverage such; as all risk coverage, free from particular average, general average, and warehouse to warehouse coverage.
All risk coverage offers protection against damage or loss caused by external factors. However, its all-risk coverage tag does not literally mean all type of risks. Only a select type of risks are covered which include protection against damages due to improper loading, abandonment of cargo, dishonesty by employees, and infestation.
General average – this is the basic cover requirement for marine transits that only covers the partial loss. In case of damage or loss, all cargo holding parties in the shipment will be required to compensate for any loss.
Warehouse to warehouse cover – this cover applies from when the shipment is unloaded and transported to the client’s warehouse. Insurance companies will only compensate for the cargo of the insurance holder as opposed to other owner’s cargo.
Free from particular coverage – this coverage offers protection against particular risks such as earthquake, theft, collision, sinking, non-delivery, fire and heavy weather.
When procuring a commercial truck insurance, those are some of the highlights that will determine whether you get an adequate coverage or not. Knowing the right details before getting a policy will go a long way in saving you costs and acquiring the right cover.