When truckers carry various types and amounts of cargo throughout the course of their job, or even throughout a single day, it can be hard to determine how much coverage you need. The value and amount of cargo you’re carrying can change frequently, so it’s important to have a trucking insurance policy that will cover your needs.
Cargo Insurance Requirements
Cargo insurance provides compensation for cargo that is damaged or lost in transit due to fire, wind, hail, collision, theft and more. This insurance may be legally required for certain types of cargo. Federal requirements typically max at $5,000 for cargo insurance, but certain shippers and brokers require $100,000 in cargo insurance.
Before adding cargo insurance to your commercial trucking insurance policy, consider what type of cargo you will be carrying. Heavy and hazardous material should have higher limits of liability coverage than others. In fact, many carriers transporting oil and other hazardous materials are legally required to carry anywhere between $1 million and $5 million in commercial trucking insurance liability.
Each state has different commercial trucking insurance requirements, including cargo coverage. Whether you’re an independent operator or own a trucking company, be sure to check with your state about trucking insurance requirements when it comes to transporting cargo.
Types of Cargo Insurance Policies
There are three main types of cargo insurance policies:
- Contingency insurance policies are purchased and carried by the client rather than the seller, which can cause issues of the client refuses to accept goods that are damaged in transport or reject carrying coverage.
- Open cover cargo insurance covers any peril except those specifically listed on the policy as exclusions.
- Specific cargo insurance policies only cover a certain batch or consignment of cargo. For example, if a client purchases a batch of new clothing, they may want a specific cargo insurance policy to only cover this specific shipment.
Different clients may want different types of cargo insurance depending on the cargo and their needs.
Exclusions on Cargo
Some cargo has limited coverage or is often excluded from cargo insurance policies. Common exclusions include:
- Personal items owned by the driver
- Shipping containers
- Explosive and radioactive cargo
- Art and jewelry
- Money or paper
- Live animals
- Alcohol, contraband, prescription medication and tobacco
- Storage kept over three days
Personal belongings owned by the driver or the insured are not considered cargo and will not be covered under cargo insurance.
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