Is Your Cargo Adequately Insured?

Just like a homeowner’s insurance policy, your cargo insurance policy has a limit. If your limit is $50,000, then that is the maximum that will be paid to mitigate damages in the event you are involved in a covered cargo loss for which you are legally responsible. While that seems obvious, experience shows that this detail is often overlooked. Many trucking companies have found themselves underinsured after a cargo loss, not realizing that the value of their cargo surpassed their cargo insurance limit. In some cases, this shortfall has put companies out of business.

What should you do to avoid this potential financial disaster? 

• Make sure contracts you have with shippers or brokers clearly outline cargo insurance requirements and that your cargo insurance policy meets those requirements.

• Make certain you know the value of the cargo you are transporting and that your policy limit is adequate.  If it’s not apparent, ask the shipper or broker to provide this information.

• Don’t assume the shipper or broker will step in to pay the difference if your insurance policy won’t cover all the damages.

• Be aware of changing commodity prices.  The load of aluminum you hauled last year may be worth much more today.  If you have not increased your policy limit, you might not be fully protected.

If you are planning to transport cargo that exceeds your policy limit, notify your insurance representative in advance.  Trip insurance may be available.