Every business comes with its risks, including goods transportation. Since there are so many steps that goods take in transit from supplier to customer, things can go wrong at any part of the journey, no matter how many precautions are taken. Numerous containers are lost every year at sea. Luckily, your clients can protect the value of their goods through cargo insurance.
Many shippers are unsure how liability works if there is a loss of goods. Regulations and rules regarding the loss of goods can make liability concerns even more complex. To help you and your clients navigate this liability, we cover what cargo insurance is, why this insurance is important for commercial trucking operations, the types of transportation operations that cargo insurance can help, the highlights of this coverage, the benefits of offering cargo insurance to commercial transportation operations, and what to look for in a partner that provides cargo insurance.
What Is Cargo Insurance?
Cargo insurance provides coverage on the commodity or freight hauled by for-hire truckers. This type of insurance covers liability for cargo damage or lost cargo due to covered events like collision, fire, or striking of a load. For example, if a load is accidentally dumped into a waterway or on a roadway, cargo insurance may cover the expense of removing debris.
This type of insurance can protect against financial losses while goods are in transit during shipment on the road. Cargo insurance may also cover costs of preventing additional loss to damaged cargo, legal costs in the settlement or defense of claims, and freight charges customers lose due to not delivering a load.
Types of Cargo Insurance
Cargo insurance falls into either motor truck cargo insurance or marine cargo insurance.
- Motor truck cargo insurance: If your client needs coverage for goods that are transported on land via utility vehicles or trucks, they need motor truck cargo insurance. This type of insurance covers some risks related to shipping freight on land, such as collision damage or theft.
- Marine cargo insurance: If your client frequently has international shipments that travel via ocean and air, they need marine cargo insurance. This type of insurance covers damage from accidents, weather, loading, and unloading, along with other risks associated with airplanes and ships.
Marine cargo insurance comes in several different types of policies, including:
- General coverage: For maritime shipments, general coverage is the standard insurance policy that covers partial losses for policyholders.
- All-risk coverage: With cargo insurance, your clients can gain protection against significant damage or loss caused by external factors like vermin, theft, or damage by improper handling.
- Warehouse-to-warehouse coverage: This coverage protects your client against damages or loss caused while the cargo is being transported between warehouses.
What Is Covered by Cargo Insurance?
Cargo insurance can cover external causes of damage and loss to shipments. Common causes of damage or loss that may be covered by cargo insurance include:
- Piracy
- Acts of war
- Natural disasters
- Customs rejection
- Vehicle accidents
- Cargo abandonment
- and more
Why Cargo Insurance Is Important for Commercial Trucking Operations
Though cargo insurance isn’t required by law, it is highly valuable to those who need to protect their goods from risks. Some risks could be catastrophic, which makes having adequate insurance essential. You can help your clients consider the costs of cargo insurance and the potential losses that they may face if they forgo coverage.
For example, even if an ocean carrier or an air freight carrier is liable, there is a dollar limit to their liability based on costs per package, the weight of the package, or the actual value of your client’s goods. Most goods have a greater value than these rates, which could mean your clients suffer a major loss without the right insurance.
Proving a carrier’s liability can be difficult, however. Since there can be many companies handling the freight during transit and storage, tracing where the damage occurred and who should be held liable can be challenging. Additionally, there are damages that are considered to be outside of carrier liability, such as:
- Fire
- Natural disasters
- Conditions of the sea
- Packing insufficiency
Think of cargo insurance like car insurance. If you own a vehicle, you purchase auto insurance because no matter how carefully you drive, accidents and theft can still happen. Some things, like natural disasters, simply can’t be avoided, so even if you’ve gone years without any accidents, you still want to have coverage for your vehicle in the event that an accident does occur.
Cargo insurance is similar — your client pays a small portion of their goods’ value to protect their finances in the event that an incident occurs, resulting in loss. With cargo insurance, you also don’t need to worry about tracing and proving liability.
Types of Transportation Operations Cargo Insurance Can Help
Transportation operations can involve hazardous travel conditions. These potentially hazardous conditions can mean there is a higher risk for accidents, which makes carrying cargo insurance essential. Selecting the right insurance carrier can help you make sure your clients have the coverage they need, along with fast, reliable service throughout the claims process.
The classes of transportation operations that our commercial trucking insurance at Prime Insurance Company cover include:
- Long-haul trucking
- Short-haul trucking
- Dump trucks
- Auto fleets
- Tow trucks
- Cement mixers
- Delivery trucks
- Cargo vans
- Garbage trucks
- Dually pickups
- Box trucks
- Car haulers
- Tractors
- Flatbeds
The types of commercial trucking coverages we offer include:
- Motor truck cargo: Typically, for-hire truckers need motor truck cargo insurance to cover damage to cargo when it is in their possession.
- Excess auto liability: To get your clients additional liability coverage for a catastrophic accident that causes major injuries or death, you may want to offer excess auto liability coverage.
- Terminal operation: An owner or operator of a trucking terminal may want terminal operation insurance to cover cargo damages while the cargo is under their care, control, and custody.
- Transport plate liability: Transporting an unregistered vehicle between locations should be covered with this insurance. For example, if your client’s business involves driving a newly purchased company vehicle from the dealership to the business facility, they may want transport plate liability coverage.
- Specialty liability coverage: This coverage gives liability protection to special events your client’s business stages, such as conventions, fundraisers, or off-site conferences.
- Commercial truck coverage: For vehicles like tractor-trailers, commercial truck coverage can cover vehicles owned by your client’s business in areas like damaged property, liability, false advertising claims, and accidents at delivery locations.
- New operators coverage: Many truck drivers are required to have a certain amount of experience to qualify for coverage under an insurance plan, but new drivers may not meet this threshold. This is where new operators coverage comes in.
- Commercial auto liability: Commercial auto liability coverage compensates a third party for property damage or injuries due to an accident that was caused by your client or a covered employee. Keep in mind that this coverage is not available in all states.
- Hired and non-owned auto (HNOA): With this coverage, policyholders gain liability protection for accidents that involve vehicles that a company uses for work but doesn’t own.
- Commercial auto physical damage: This coverage is intended to pay for damage to vehicles a policyholder’s company owns after a collision with an object or another vehicle. This coverage also covers incidents like fire, vandalism, and theft.
- Contingent auto liability: With this coverage, freight brokers are protected in the event of injuries or damage caused by hired drivers.
Whether your clients need long-haul trucking insurance for extended trips or short-haul trucking insurance to cover them over local routes, we offer customized liability plans that meet policyholders’ unique coverage needs. Our wide array of coverage options can ensure that your clients get the exact coverages and protection they deserve.
Highlights of Motor Truck Cargo Insurance Coverage
At Prime, our goal is to offer cargo insurance coverage solutions that insurance producers like you may not be able to find elsewhere. Highlights of motor truck cargo insurance coverage with Prime include:
- Flexible underwriting: We have flexible underwriting that can support all types of businesses, including new or experienced businesses, businesses with growing fleets, and businesses with claims history issues.
- Customized solutions: At Prime, we specialize in providing solutions that are customized to policyholders’ needs and outside of the box. When you partner with us for cargo insurance coverage, you can recommend policies that serve your client’s best interests.
- Risk management services: With our risk management services, we can help your clients reduce their odds of filing a claim. We have experience with providing insurance for high-risk industries, and we don’t shy away from risky states, regions, or classes.
- Extraordinary claims results: Even if it requires extensive litigation, our team of in-house claims professionals aims to achieve the best possible outcomes for each policyholder.
- Long-term partnership approach: At Prime, we can support you and your clients through each step of the process, from underwriting to filing claims. When you partner with Prime, you partner with a reliable insurance entity. We work closely with you during the underwriting process and over the long term. We’re proud to offer a personal connection that our competitors don’t.
Benefits of Offering Cargo Insurance to Commercial Transportation Operations
Regardless of whether your clients’ goods are damaged or not, cargo insurance can reduce financial loss. Some benefits of offering cargo insurance to commercial transportation operations include:
- Lower your clients’ out-of-pocket costs: Your clients may have lower out-of-pocket costs with cargo insurance, as they’ll have coverage for unexpected damage.
- Get your clients the protection they need: Your clients need the insurance policies that give them the coverage and protection they need. They may underestimate the costs associated with cargo damages or losses, and therefore, underestimate what they may be liable to pay for out-of-pocket without insurance. As an insurance producer, you can give your clients the information they need so they can get adequate coverage to protect them against risks.
- Give your clients peace of mind: Perhaps one of the greatest benefits of offering cargo insurance to commercial transportation operations is the peace of mind it brings to your clients. They can rest assured that their cargo is safe and finances are protected.
- Expand your business: You can expand your business by offering cargo insurance to your clients. When you partner with us at Prime, we offer financing access, opportunities for profit sharing, and fewer limitations or restrictions. For insureds, we make sure paying for coverage is more affordable.
What to Look for in a Partner That Provides Cargo Insurance Policies
There are a few qualities to look for in an insurance company that provides cargo insurance. With just a little research, you can find the right partner for your business. There are factors beyond rates to consider for the best coverage, such as:
- Qualified team: The right partner should include a team of insurance experts who can guide you and your policyholders through the processes of purchasing and making claims. A great cargo insurance partner knows how to navigate the complex regulations and rules to resolve claims quickly.
- Flexible insurance policies: A cargo insurance company should offer flexible insurance policies based on your clients’ needs. Look for low deductibles.
- All-risk coverage: The right provider should be able to provide coverage for all standard commodities against physical loss, damage, or financial exposure while a client’s goods are in transit.
At Prime, we specialize in solutions for declined and specialty risks. If your client has been denied coverage, we can help. In the trucking marketplace, we have decades of success in providing customized liability insurance solutions.
Contact Prime Insurance Company About Carrying Cargo Insurance
At Prime, we have been thinking outside standard insurance limitations for more than 40 years. We provide insurance producers with liability solutions for specialty risks. We are a proud leader in surplus and excess insurance so those who would otherwise go uninsured can get the coverage they need. We are rated “A” (Excellent) by AM Best*, so you can rest assured that we are reliable and trustworthy to work with.
Our partnership methodology with insurance producers like you starts with a meeting, and then we provide you with a quote. We work with you to write a flexible, customized cargo insurance policy for every client who needs one. Contact us at Prime about carrying cargo insurance.
*For latest ratings, access www.ambest.com.
Authored by Rick J. Lindsey, CEO, President, and Chairman of Prime Insurance Company
Rick J. Lindsey hails from Salt Lake City, Utah. He began working in the mailroom of his father’s Salt Lake City insurance firm, getting his introduction to the business that became his lifelong career. Lindsey quickly rose through the ranks while working in nearly every imaginable insurance industry job. As an entrepreneur, specialty lines underwriter, claims specialist, risk manager, and a licensed surplus lines broker, Rick J. Lindsey is highly skilled in all levels of leadership and execution. As he progressed on his career path, Rick discovered an urgent need for insurers willing to write policies for high-risk individuals and businesses. He was frequently frustrated that he could not provide the liability protection these entities desperately needed to safeguard their assets. He also formed the belief that insurance companies acted too quickly to settle frivolous claims. Lindsey decided to try a different approach. He started an insurance company and became the newly formed entity’s CEO. This opportunity has enabled Rick to fill a void in the market and provide a valuable service to businesses, individuals, and insurance agents who write high-risk business. Read more…
