Whenever there is a risk, there is insurance. In the freight industry, cargo is handled in so many different environments. There is always a risk that something can go wrong. That is why you will find any product in a supply chain is insured along its route. Truckers, with all the hours they spend on the road shipping freight, are no exception.

When truckers are hired to ship cargo from one destination to another, they are liable for any damages or other issues that may happen to the cargo. Since they are entrusted with the safe passage of a supplier’s goods, truckers need to protect themselves in the event of a serious setback. This is the purpose of motor truck cargo insurance.

Types of Cargo Insurance

Motor truck cargo insurance is just one type of cargo insurance. Almost everyone involved in freight has some type of insurance to protect themselves or their goods.

From the owners of the product to the shipping firm hired to handle the logistics to the planes, trains, ships, and trucks, that move the cargo, everyone wants to avoid financial damages from uninsured issues.

Cargo insurance insures the cargo and its handlers during transit. Some types of cargo insurance include:

  • Land cargo insurance. Land cargo insurance, also known as inland marine insurance, is any cargo moved on land. This includes motor truck cargo insurance. Land cargo insurance usually covers reasonable issues that might strike during land-based transit.

  • Marine cargo insurance. Marine cargo insurance is for cargo moved across bodies of water, particularly the ocean. The vast majority of freight on Earth is shipped this way, either by container ships, oil tankers, or bulk goods cargo ships. Marine cargo insurance can also include freight shipped by air.

  • Open coverage. This is a type of cargo insurance that protects freight for a specific amount of time. In this case, multiple shipments can be protected. This type of insurance is generally used by carriers who make frequent shipments.

  • Single coverage. Single coverage cargo insurance only protects cargo for a single shipment. This coverage is better for carriers who make infrequent shipments.

Cargo insurance itself is a big industry. Every step of the freight process carries some risk; therefore, there is always a place for insurance to be considered. Once the cargo reaches the truck driver, then it is time for the driver and their shipping company to consider motor truck cargo insurance.

Motor Truck Cargo Insurance Explained

Motor truck cargo insurance protects all goods and property while they are being transported by a carrier company or owner-operator truck driver. The insurance protects both the carrier as well as the owner of the goods from most types of damages or other incidents during transportation.

This insurance is very important in maintaining trust between the carrier and the owner of the goods. With the insurance in place, truck drivers can feel more secure in their jobs. In the event of an accident that is covered by insurance, the driver knows that they will not be financially responsible for replacing the cargo. This is huge, considering the high costs of cargo.

Owners of the goods, meanwhile, can feel secure knowing that their cargo will be financially secured while it is shipped.

Who Needs Motor Truck Cargo Insurance

In the United States, only drivers carrying household goods are required by the Federal Motor Carrier Safety Administration (FMCSA) to carry minimum cargo insurance of $5,000 per vehicle and $10,000 per occurrence. This generally applies to moving companies and other carriers that ship personal household items.

However, most companies require motor truck cargo insurance before they do business with carriers. This makes sense because it is quite risky to entrust a non-insured carrier to ship products. If damages occur, then there is no law saying that the carrier has to pay. It also makes sense for carriers to be insured because the owner of the goods may still try to take legal action.

Motor truck cargo insurance is good for both parties because it relieves the stress if any accidents occur. Instead, the products can be shipped with the comforting knowledge that there are contingencies in place if anything goes wrong.

What Is Covered by Motor Truck Cargo Insurance?

Motor Cargo Insurance protects properties and risks involved during the shipment of goods by motor carriers.

This includes:

  • Damage and replacement costs.

  • Removal expenses.

  • Cargo liability.

  • Legal expenses and settlements.

  • Earned freight coverage.

Only certain types of incidents are covered by motor truck cargo insurance. They include:

  • Fire or explosions.

  • Lightning or sudden windstorms.

  • Collision or overturned auto.

  • Theft or attempted theft.

  • Vandalism.

  • Damage from aircraft.

  • Riot or civil commotion.

What Is Not Covered By Motor Truck Cargo Insurance

Like most insurance policies, not everything is covered by motor truck cargo insurance. Generally, what is not covered are damages that are the result of another liable party, including the carrier themselves.

Such incidents that are not covered by Motor truck cargo insurance include:

  • War and military action.

  • Governmental authorities seizure and destruction of property.

  • Nuclear dangers.

  • Improper handling and/or packaging resulting in damage to goods.

  • Refrigeration equipment breakdown.

  • Negligent acts, including criminal or dishonest acts.

  • Deterioration damage or damage caused by product defects.

  • Extreme temperatures or humidity damage.

  • Insects or vermin damage.

  • Indirect losses causing loss or damage.

There are also certain types of goods that are not covered by motor truck cargo insurance. This is usually because the goods are expensive or rare and need their own special type of insurance. Such goods include:

  • Pharmaceuticals, tobacco, alcohol.

  • Live animals/livestock.

  • Art, jewelry, money, or paper.

  • Dangerous items, explosive or radioactive material.

  • Contraband.

  • The insured’s personal property or goods.

  • Property not under Bill of Lading.

Deductible, Coinsurance, And Motor Truck Liability

It is important to note that motor truck cargo insurance is different from other types of items found in the greater umbrella of cargo insurance. For example, motor truck cargo insurance comes with a deductible, meaning that there is generally an additional cost the carrier has to pay in the event of an accident.

There is also coinsurance, which is when the insurance company requires policyholders to insure a minimum percentage of the cargo’s value if they want to receive full coverage for their claims. This is to prevent cargo from being underinsured by companies.

Motor truck insurance should also not be confused with motor truck liability insurance. This is an insurance policy that covers injuries to other people or damages to other property in the event of an accident. Instead of protecting the cargo, as is the role of motor truck cargo insurance, motor truck liability insurance provides a way for the carrier to pay for damages to other parties.

Frequently Asked Questions

  1. Is motor truck cargo insurance required?

    In the United States, the FMCSA only requires drivers carrying household goods to carry minimum cargo insurance of $5,000 per vehicle and $10,000 per occurrence. Most companies, however, will usually require motor truck cargo insurance to protect themselves and their products.

  2. Should I get motor truck cargo insurance?

    If you are a carrier company or an owner-operator, you most certainly should consider getting motor truck cargo insurance. Without it, you will find many opportunities to do business shut off because people will not want their goods shipped by someone who is uninsured.

  3. How much does motor truck cargo insurance cost?

    Motor truck cargo insurance can vary in price. It depends on the value of the cargo being protected, the length of time it is protected for, and how many incidents are covered by the policy.