Cargo insurance is absolutely essential for businesses whose operations involve the movement of freight or cargo trucks. It protects your business from any unwanted losses from incidents related to the operation or movement of your trucks. In this article, we tackle the basics of motor truck cargo insurance; what it is, who needs it, what limits and restrictions there are, plus other vital details.
Motor Truck Cargo insurance is a policy or a contract which covers the financial responsibility of the freight in the instance of damage or loss due to unwanted events such as:
This form of insurance can also cover road damage, cleanup costs, costs related to the damage of goods, and - most importantly - legal expenses. Insurance companies that offer motor truck cargo insurance might also offer specialized policies that cover particular liability issues and additional coverage for your cargo.
Both the transporter of goods and the shipper must clearly understand the responsibility which the transporter undertakes before the freight is moved. Any details in this area must never be taken for granted nor overlooked, as this will help with the evaluation of which insurance policy fits your needs. Constant assessment of your freight is a must in order to ensure that the coverage of your insurance meets the demands.
Commercial truck insurance is mandatory for businesses with commercial truck operations. Truck drivers, independent owner-operator truck owners, or anyone with a business that transports goods via land freight will need a motor truck cargo insurance. Unwanted events may arise during the handling and transportation process of goods. If these occur, your cargo liability insurance will provide you aid in paying clients for the damages and losses sustained.
Cargo insurance costs do vary as these can be specialized or tailor-fit to certain demands. You will need to assess the available policy offers of insurance companies - some may not cover the nature of the items that you haul or the maximum load capacity of your freight.
When acquiring your insurance policy, you will need to determine the maximum load you expect to haul. You will need to make clear estimates with regard to this number as under-insuring your load capacity may prevent you from making a claim.
There may be a point in time when your average load gets heavier. When this happens, you should opt to increase your insurance benefits to accommodate the weight increase.
Your coverage limit determines the maximum amount of cash your insurance company will have to pay for in the event of any unwanted freight damage. A deductible is the agreed-upon amount of money which you will have to shell out when you have a claim. You may decide to increase your deductible to reduce the premium which you will have to pay for. Just be sure to have a sufficient amount of pocket money in case an accident actually happens.
Cargo insurance rates and limits vary depending on:
If you are transporting potentially more delicate materials or products, you are likely to have a higher insurance rate than transporters hauling wood, plastics, or steel products.
For household furniture, children’s toys, or lightweight steel product delivery, $100,000 is the common limit typically covered for damages.
For businesses that deliver automobiles, chemicals, or cold chain goods, you can expect limits of up to $250,000 - or even higher than $1,000,000.
Depending on the amount and type of goods you are delivering, your insurance limit and cost will vary. Ultimately, it will be up to the owner of goods to decide on the limits.
Truck body types such as trailer trucks, box trucks, cement mixers, cargo vans, flatbed trucks, dually pick-ups, car haulers, and dump trucks can be insured under motor truck cargo insurance. Vehicles such as passenger vans, buses, limousines, garbage trucks, and ice cream trucks are not covered by this type of insurance.
Your insurance company may, at their own discretion, choose to exclude cargo items from your insurance coverage, such as (but not limited to):
Other risks that involve ignorance or negligence will not be considered by your insurance company; for example, if your cargo items were subject to theft due to you leaving them unattended.
Before you can begin operating a commercial truck, you will need to acquire a Motor Carrier (MC) number from the Federal Motor Carrier Safety Administration (FMCSA). Here are a few things you need to know before you get your MC number.
Obtaining an MC number is simple. You will need to present your public liability insurance cover, physical damage insurance, bobtail insurance, and cargo insurance to the FMCSA.
Public liability insurance is a type of insurance that covers the cost of claims made by the public in relation to your business activities. This policy covers the cost of injuries, property damage and/or loss, and death. This form of insurance is designed to protect businesses that regularly come into contact with the general public.
Businesses that own trucks are required to have physical damage insurance. This form of insurance covers the costs of any physical damages involving your truck in the instance of an accident. You should always consider the risks involved when having a truck on the road, and if problems do arise, physical damage insurance can help you avoid unwanted financial setbacks.
Bobtail insurance covers any damages which may occur when you are driving without a trailer and not making a delivery. It is generally an off-the-clock protection. This type of insurance is a great financial safety net for off-duty trucks or trucks in between delivery tasks.
Your truck and its hauled goods are exposed to a number of potential risks, on the road. Without any form of financial protection, you will be paying for truck-related incidents, stolen or even damaged goods out of your pocket. Not only will this negatively impact your business and dramatically lower your cash, you might be turning away potential clients too. Motor truck cargo insurance protects the truck owner and the cargo on delivery against any potential road-related risks.
Arthur Williamson graduated with a degree in Business and Management at the University of California, Berkeley. He is knowledgeable about what small and big businesses require to keep operations moving.
