The shippers who keep the country supplied with food, medicine, equipment and other goods need to do more than get their freight from Point A to Point B. They need to ensure it arrives at its destination in pristine condition.
But the motor carriers who truck this property from one city or state to the next face any number of unforeseen events on the road, from collisions to theft to vandalism to civil unrest. These and other hazards can jeopardize the cargo truckers carry, which can range from the mundane to the highly valuable.
While no longer federally mandated for most carriers, most shippers and brokers still require trucking companies to add motor truck cargo liability insurance to their commercial truck insurance policy so their cargo is covered by the carrier in case of an incident while in their possession.
Motor carriers obtaining cargo insurance will quickly learn that premiums, deductibles, and policy limits are highly variable, and change based on cargo type, vehicle type, the driver’s history, and other factors.
Every trucking business should do extensive research in order to find the coverage that aligns with their needs so they are covered when an incident occurs.
Motor truck cargo insurance shields motor carriers from full liability if the goods they transport are damaged or lost during transportation.
Under some policies, the coverage can extend to times when cargo is stored at a terminal or dock before it is distributed, and also when freight is being loaded or unloaded.
A type of truck liability insurance, motor truck cargo insurance falls under the broader category of inland marine insurance, which covers goods, equipment, tools, and other items that are not tied to a fixed location and are not covered by a standard commercial property policy.
It is the responsibility of trucking companies to obtain cargo coverage, though most coverage has not been required by the Federal Motor Carrier Safety Administration since a 2011 decision by the agency.
After previously mandating that for-hire carriers carry cargo insurance, the FMCSA noted that shippers and brokers have gained far more bargaining power over the past decade, and that they can make cargo insurance coverage a prerequisite for truckers who carry goods for them.
Today, the agency only requires that motor carriers hauling household goods carry cargo insurance of $5,000 per vehicle. Motor carriers must file a BMC-34 form with the FMCSA to obtain coverage for household goods.
Even without the federal mandate, nearly all trucking companies will need to obtain a motor truck cargo policy when they transport non-household goods because shippers and brokers will require it.
Motor truck cargo liability insurance is a type of carrier liability insurance that protects the goods the motor carrier is transporting. While shippers and brokers will often purchase additional cargo insurance, motor truck cargo insurance policies specifically protect trucking companies.
Although shippers and brokers require that the trucking companies transporting their loads carry motor truck cargo liability insurance, they generally obtain their own policies for three reasons:
The cargo insurance held by the broker or shipper is usually what is referred to as simply “cargo insurance,” while “motor truck cargo liability insurance” or simply “motor truck cargo insurance” is understood to mean the policies that trucking companies obtain to insure the cargo they carry. In some contexts, the term “cargo insurance” may also be used since it is clear that the cargo insurance being referenced is applicable only to trucking companies.
While both types of insurance shield trucking companies from full liability in case something goes wrong on the road.
Cargo liability protects the goods that are being transported while motor truck general liability insurance covers incidents that may occur in the course of business outside of transportation.
General liability coverage would include incidents such as customers slipping on premises, slander/libel, or a driver being involved in an incident while representing the motor carrier on a loading dock, etc.
Primary liability on the other hand will cover other vehicles, drivers, and passengers if there are injuries or damage sustained to third parties or their property in the event of an accident.
All three types of liability coverage can usually be packaged together under a single commercial truck insurance policy but some carriers may opt to purchase separately as standalone products based on policy options and pricing.
Motor truck cargo liability covers motor carriers when it comes to any damage or loss to the goods they are transporting.
Fire, collision, and theft are commonly covered by commercial cargo insurance, and some policies cover cleanup to roadways and waterways and legal expenses incurred because of damage to freight.
Cargo coverage breaks down into two categories: all-risk policies and named perils policies.
Also called open perils policies, cover all causes of loss or damage unless they are specifically excluded. As this coverage is more comprehensive, all-risk policies generally cost more.
On the other hand, only cover a trucker’s liability for perils named in the policy. Common occurrences listed in named perils policies include:
The expenses motor truck cargo policies will typically help pay include:
Most trucks, including semi trucks, cargo vans, box trucks, dump trucks, and flatbed trucks, will qualify for cargo insurance. But some vehicles, for example garbage trucks, hearses, buses, ice cream trucks, or vehicles not designed to haul cargo will have a harder time finding a policy.
Goods not covered will vary by insurer. But there are also instances when an insurer will not cover certain freight, even if it is listed in the policy. These instances commonly include:
Nearly all cargo can be insured, but certain cargo requires specialty policies that may not be commonplace. Specialty policies would be required for:
There are also circumstances that may arise on the road that a policy will not cover, unless the policy spells them out explicitly. These incidents include:
As with most insurance, carriers obtaining cargo coverage will pay a premium. If an incident occurs, the carrier will be responsible for paying the deductible amount, with the insurer paying costs above the deductible up to the policy limit.
Policies sometimes feature lower sub-limits and a higher deductible than the insurance’s overall maximum for certain freight types or certain causes of loss.
Incidents like theft or vandalism, for example, are sometimes viewed as incidents that a carrier should be able to prevent. So some policies will raise deductibles and lower coverage limits for occurrences like these, while leaving the policy’s overall deductible and coverage limit intact.
Some insurers also add sub-limits restricting coverage solely based on cargo type. Claims related to electronics, for example, are limited in some policies.
To discourage carriers from under-insuring their cargo, some insurers require trucking companies to insure a minimum percentage of the cargo’s value.
For carriers, the value of cargo is listed on the bill of lading, which the carrier acquires when picking up a load. Truckers should make sure that the valuation of the goods is accurate and the actual value of the load is covered, because insurers will reduce coverage if a load is found to be under-insured.
Motor truck cargo insurance typically costs motor carriers $500-$2,000 a year in premiums for a $100,000 policy limit, which is the typical industry minimum.
However, the cost of a policy will depend upon the type of cargo hauled, the type of vehicle being used, the policy’s deductible amount and coverage limit, the carrier’s driving history and a range of other factors.
Motor carrier cargo insurance can be acquired via standalone policy, but is often bundled together with other commercial truck policies that include general liability, physical damage, and uninsured or underinsured motorist coverage.
Many carriers turn to the same provider for all of their truck insurance, including cargo coverage. But others may opt to find a separate provider to insure their cargo, especially if there is a need for specialty coverage or if there is a concern about pricing.
When comparison-shopping, carriers should keep in mind what types of carrier each insurance provider caters to, and also consider their reputation and financial strength. Aside from the standard online research, carriers should always speak directly with each insurer to make sure specific policies match both their needs and their budget.
Getting the least expensive cargo coverage often comes down to shopping around, and looking for policies with higher deductibles and lower policy limits. Maintaining a clean driving record also helps in the search for a reasonable deal.
Progressive was selected as the best overall option because it consistently receives good ratings from customers, has won a number of industry awards, is financially stable, and has flexible coverage options. It also serves car haulers and moving companies, which some insurers won’t cover. Lastly, because they let carriers select their own policy limits and deductibles, Progressive can be a great option for companies looking for cheap motor truck cargo insurance.
The company’s options include liability for cargo that is lost or damaged, as well as removal expenses for loads dumped on roads or waterways, legal expenses related to loss, and earned freight coverage, which covers financial losses by customers for loads not reaching their destination.
Progressive only offers coverage to for-hire truckers driving:
Progressive does not cover:
Carriers who select Progressive select their own coverage limits and deductibles, which means trucking companies on a budget can opt for higher deductibles and lower premiums.
Progressive is the third largest insurance carrier in the U.S., as well as the country’s top insurer of automobiles.
Progressive consistently scores high on Keynova Scorecards, scoring in the top three providers for overall experience, mobile experience and useful applications. Last year, the insurer also won second place in the service segment from JD Power Digital Experience.
The NAIC complaint index shows that Progressive logs a slightly higher-than-average number of complaints, but this is common among insurers with large customer bases.
NITIC was selected as the second best overall option because it specializes in trucking and offers flexible coverage options while still being able to offer the perks of a large insurance company since it is backed by Travelers.
NITIC offers flexible coverage and payment options, free filings, specialized heavy truck claims service, discounts and support from experts. Premiums and deductibles vary depending on the commodities carriers are hauling.
The insurer offers policy limits ranging from $5,000 up to $250,000 with excess insurance also offered.
For more than 20 years, NITIC has grown to be a leading commercial truck insurance company. The insurer, which is backed by Dow 30 company Travelers, is the second largest commercial auto insurance provider and offers a wide range of insurance options, including cargo insurance.
Sentry was selected as the best option for small carriers and owner operators because they specialize in small fleets, receive few customer complaints compared to other insurers, and because they have strong financial ratings.
Sentry Insurance has been in business since 1904, and offers truck insurance through a group of specialized independent agents. Their commercial policies are only available through 65 individual agencies that specialize in trucking and the insurer does not offer online quotes. Trucking companies must work with a local agent to learn about coverage options and obtain a quote. Sentry insures more than 37,000 truck drivers.
Sentry specializes in insurance products for various industries, including trucking. The insurer operates in all 50 states and its cargo insurance protects carriers from a variety of losses. Beyond typical perils on the road, Sentry can cover trucking businesses for losses due to mechanical reefer breakdown, debris removal, and freight charges earned but not collected after a covered loss.
For its commercial auto coverage, Sentry has a low complaint index with NAIC, scoring a .68 which is lower than the industry average.
The Hartford was selected as the best option for large fleets because of their FleetAhead management program, which aims to improve driver safety and performance while reducing the risk of loss through telematics and other data technologies that help businesses identify and mitigate risks. The Hartford also has few complaints from customers and is financially sound.
The Hartford is not designed for owner-operators or single fleet operations.
The Hartford offers a range of insurance products. In addition to insuring cargo when it is in transit, in temporary storage, or being loaded or unloaded, the Hartford offers additional coverage options that give trucking businesses flexibility, such as separate coverage limits for named shippers when a shipper requires separate limits of insurance under the terms of a policy. The Hartford also offers separate coverage limits for specified trips.
The Hartford works primarily with operators of:
The Hartford Financial Services Group is an investment and insurance company and a Fortune 500 company. For its commercial auto coverage, The Hartford logs a low complaint index for commercial auto of .65, which is significantly lower than the industry average.
OOIDA was selected as the best option for new trucking companies because the organization offers policies to carriers who do not have an extensive track record. OOIDA is an active lobbyist on behalf of smaller businesses, and offers its members free online business classes and other resources.
OOIDA is run by the Owner-Operator Independent Drivers Association, an international trade association for professional truckers, and has been in business since 1973.
The association serves owner operators in the trucking industry, both independent and those operating under someone else’s authority. Their coverage includes debris removal, earned freight, and refrigeration breakdown. Motor carriers can also get supplemental towing and cleanup coverage.
OOIDA has a moderately high complaint ratio by NAIC. Its financial strength has not been rated by A.M. Best, which may be an issue for some shippers and brokers.
Liability coverage through OOIDA is provided by OOIDA Risk Retention Group (RRG). A risk retention group has distinct pros and cons for the insured. RRGs are created and owned by the businesses being insured. The businesses, in a sense, share all risk-management. While this can mean lower premiums, fewer rate increases, simpler licensure for multi-state operators and other perks, it also means less regulatory oversight and the potential for one costly claim to affect the entire group.
Zurich was selected as the best option for standalone motor truck cargo insurance because it offers coverage to “for-hire” carriers and those under contract as an unbundled service.
In addition to covering property while in transit, Zurich policies cover loading or unloading and periods when cargo sits at a terminal or dock awaiting final distribution. Zurich’s unbundled cargo insurance coverage meets the U.S. DOT requirements for cargo load pick up. The insurer offers limits up to $250,000 per vehicle and $500,000 per occurrence for small to medium sized motor carriers with current operating authority.
Zurich operates throughout the continental United States, including Hawaii, but does not operate in Alaska or Puerto Rico. The insurer does not cover:
Zurich also will not cover drivers with vehicle-related misdemeanor and or felony convictions in the past three years. The company requires a minimum of two years operating authority and drivers 23 years old or older with two years CDL experience.
Zurich has a relatively high complaint index for commercial auto of 2.43, which is higher than the industry average. However, A.M. Best has given the insurer’s financial strength an A+grade and S&P Global lists Zurich among its Top 20 commercial auto insurance providers.