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Before you skip researching cargo insurance companies, make sure you know what they cover and how coverage could benefit your business.

Operating a trucking company gets expensive. Fees can rack up quickly from the start. You’ll be looking at hundreds of dollars in getting your business registration, US DOT number, and UCR fee. Then there’s the cost of buying your vehicles. Even if you go with a used truck, you could pay anywhere from $15,000 to $175,000.

There’s truck repair, with regular maintenance averaging around $15,000 annually – and that’s assuming nothing else goes wrong. Fuel for the average 18-wheeler can rise to over $70,000 in a year.

Most trucking companies want to find ways to cut costs without putting themselves at financial or legal risk. Some try to do that by keeping insurance expenses as low as possible. 

While you can save money by looking for insurers that offer fair rates and good coverage, you should think twice about skipping some coverages altogether. For example, cargo insurance companies can make a big difference if something goes wrong while you’re hauling a client’s goods or materials.

What Will Cargo Insurance Companies Cover?

Cargo insurance companies are there to protect you from losses related to damaged or missing cargo. It’s impossible to predict what will happen out on the road or while your truck is parked somewhere. This type of coverage will usually pay out if you lose cargo due to a natural disaster, abandonment, act of war, piracy, customs rejection, or vehicle accident.

It is different from the coverage you typically get with carrier liability. This type of policy is available in two main types: land and marine.

Marine isn’t usually applicable unless your company handles shipping cargo in the air or over the ocean. This type is common for international shipments where things like water-related weather conditions and piracy can be a concern.

Land cargo insurance is available for small utility vehicles and trucks. It protects you in case of theft, damage, and other risks that are common in land freight shipping. It is also typically only used for domestic shipments.

Cargo insurance companies should be open about what is covered and what isn’t. Most policies do not pay out if the cause is related to poor or inadequate packaging or flawed products. They may also have limitations related to the type of freight you are hauling. For example, high-value, fragile, or hazardous materials may be excluded. Some electronic products may also be ineligible.

How Much Does Cargo Insurance Cost?

The cargo insurance companies that you speak to should be able to provide an estimate based on your specific needs. Your annual cost will be directly related to your policy limit. Average yearly premiums usually range from $400 to $1,800. 

The typical annual cost for a policy with a $50,000 limit is between $400 and $700. That increases to between $800 to $1,400 for a policy limit of $100,000. If you want a cargo insurance policy with a $250,000 limit, then expect to pay between $1,100 and $1,800 annually.

Cargo insurance companies will also look at two other factors to calculate your premium. One is what you are shipping. Something that comes with a higher risk like natural gas will likely cost more to insure compared to other types of freight.

The other factor is your loss history. If they see an excessive number of losses in the past, the company may view you as a high-risk and charge a heftier premium.

What is covered will also play a role in the amount you have to pay to get coverage. Some of the most common cargo insurance coverages include:

  • Reefer Breakdown – Pays for cargo lost due to a malfunctioning refrigeration equipment
  • Loading and Unloading – Pays for losses that occur when cargo is loaded or unloaded
  • Hijackings – Pays for losses related to cargo hijacking
  • Sue and Labor – Pays for damaged goods due to an incident
  • Dishonesty – Pays for losses due to driver theft
  • Earned Freight – Pays for lost income due to damaged cargo that is undeliverable
  • Debris Removal – Pays for removal of cargo dropped on waterways or roads
  • Pollution Liability – Pays to clean up spills like gasoline
  • Water Damage – Pays for losses related to moisture and water leaks

Am I Legally Required to Work with Cargo Insurance Companies?

There are situations where you may not be legally required to work with cargo insurance companies. Everyone must have liability insurance, but cargo can be optional depending on what you are hauling.

The Federal Motor Carrier Safety Administration (FMCSA) requires trucking companies that transport household goods as well as freight forwarders of household goods to have a minimum amount of cargo insurance.

The FMCSA website defines household goods as “personal items that will be used in a home.” That includes products that are “shipped from a factory or store if purchased with the intent to use in a home and transported at the request of the householder who pays for the transportation charges.”

Cargo Insurance Companies Can Protect Your Business

The value of freight can vary wildly and can add up fast. Can your business recover if you have to reimburse a client for a lost or damaged shipment? Even if you can, is it going to be less than the cost of buying cargo insurance?

In most cases, cargo insurance is the better option – or may be the only legal option. Protect yourself and your business by visiting to get a fast, free online quote for truckers insurance.

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If you are a trucker and haven’t spoken to cargo insurance companies, now is the time to do so. Trucks are responsible for transporting a lot of very expensive materials and items across the nation every day.

According to American Trucking Associations, over 10 billion tons of freight were moved by trucks across the United States in 2017. To put it into perspective, that amounts to around 30 pounds of goods for every adult and child in the country.

Trucks are responsible for moving over 70% of all goods transported across the U.S.

The value of each load hauled varies greatly, but it’s easy to see that the cost can get very high very quickly. Even if an individual item isn’t expensive, the total value can be high due to the quantity being carried.

Every trucking business should know whether they need to contact cargo insurance companies before they start working with clients.

Do I Legally Need Coverage from Cargo Insurance Companies?

The minimum amount of insurance legally required for truckers is called carrier liability. This level of coverage will keep you legal, but it will likely not provide complete financial protection if you lose your cargo. These policies typically cover up to a certain amount, which is usually less than the total value of the goods you are shipping.

It also has other limitations. You may not receive compensation for cargo lost due to anything that is labeled an act of God, like a natural disaster, or an act of war. It also won’t pay for goods that are damaged or lost due to poor or inadequate packaging.

Even if it does pay something towards lost cargo, it will likely leave you with a big gap that your business may have to cover.

While you can stick to the minimum coverage required, it is not recommended. Cargo insurance companies offer better protection in case something unexpected happens. You may not be breaking the law without it, but you could seriously harm your business if expensive cargo is lost or damaged in an accident.

What Can Cargo Insurance Companies Do for You?

Cargo insurance companies provide another layer of protection in case you lose or damage freight. It will reduce the losses taken by your business in case of an accident or incident. It also offers better flexibility in what it will cover.

For example, cargo insurance companies will pay out if goods are damaged due to an act of God. Most policies will pay a claim as long as the damage wasn’t your fault. Even if you haven’t had an accident, cargo insurance will help you keep peace of mind every time you or one of your drivers gets behind the wheel.

Do I Need an All Risk or Named Perils Cargo Insurance Policy?

The cargo insurance companies you talk to will likely offer two types of coverage. These vary in cost with different limitations, so make sure you know what you are getting. Don’t make a decision based on insurance rates alone.

  • All Risk Cargo Insurance

This one is called “all risk” because it covers just about anything. This policy will pay claims any time you experience loss or damages due to external forces. That can include customs rejection, negligence, abandonment, natural cargo defaults, and other situations. 

This is a good choice for businesses that haul high-value or fragile items. It reduces your financial risk significantly. The only downside is that cargo insurance companies charge more for this type of policy.

  • Named Perils Cargo Insurance

The difference between all risk and named perils cargo insurance has to do with what is covered. Named perils coverage is limited and will only pay out in certain situations. These circumstances will be outlined in the policy. As long as the cause matches what is stated in the policy, you are covered. 

This option gives trucking companies a way to select coverage in an al la carte fashion. You can add as many things as you like, and the cost will reflect what you want to cover. The benefit is that you won’t pay as much for the policy. The less that is covered, the less you have to pay. The downside is that you could face a situation not protected by your policy and wind up having to pay out of pocket for it despite having insurance.

Speaking to cargo insurance companies will help you determine which type of coverage is best for you.

Do I Need Cargo Insurance Coverage?

Cargo insurance is optional, so you technically don’t have to have it. Choosing to skip it will expose you to enormous financial risks. Trucking businesses rely on having a steady stream of goods to transport. If your clients aren’t happy, this will hurt your business. And they won’t be happy if their cargo is missing, damaged, or late with no compensation. 

Carrier liability will pay for some things, but it is very limited and most likely will leave you with some financial burden afterward.

Anything can happen when you’re out on the road. If you aren’t sure if you need cargo insurance, ask yourself if you or your business can handle the cost of losing all of the freight you transport in a shipment and still be profitable. If not, then you need coverage.

If you are looking for cargo insurance companies, contact Insure Trucking. We’re here to discuss your needs and help you find affordable insurance that will protect you and your business.

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