What is motor truck cargo insurance? Common question, simple answer. No matter if you truck in Los Angeles or Orange County CA.
Commercial cargo insurance is protection carried by truckers while transporting their loads.
In the transportation industry, the trucker is deemed responsible for cargo as soon as it enters his possession. So, no matter if you’re hauling perishables or cars, this protection would ensure your cargo is protected.
The insurance provides coverage in the event the freight is damaged or lost while in transit.
Coverage is available to common carriers who are available for hire by the general public, and contract carriers, who haul cargo under terms of a contract that is engaged with a specific entity.
Cargo Truck Insurance Required
Without this protection, a common carrier would be liable for any damages to the cargo being hauled except for incidents involving an act of God.
This unfortunate scenario has happened within the insurance industry. For example, let’s say you have a new truck driver calling around for insurance quotes.
Being new to the trucking industry, a new driver may not consider the coverage aspect of cargo. This has happened where a new driver assumed that cargo coverage automatically existed on a commercial truck policy.
The Reality of Cargo Coverage
This is far from the reality of the matter. Cargo coverage can either be a stand alone policy, meaning you can purchase independent of a commercial trucking insurance policy.
Or cargo coverage can be purchased with a built in trucking policy. This is the most economically sound choice, since cargo insurance can be very costly.
More costly as a standalone in most cases, which is why you want to buy on one policy package.
Below are a few items as an example:
- a tornado or hurricane;
- public enemy, such as an act of war;
- fault of the shipper, such as improper loading of the truck;
- inherent vice, including damages from extreme weather conditions or product spoilage;
- or public authority, such as when police confiscate the cargo believed to be suspicious.
With a contact carrier, conditions of liability are specified in the contract. So, the simple answer to the question is yes, especially if you are under contract.
Even before you are able to pick up a load, you will be required to show proof that you have the required cargo limits.
These requirements can vary depending on the type of shipment and the value of the load. A good tip would to contact your carrier before you physically arrive.
Have all your driver information and truck information handy before you make the call to your dispatcher. Write down a few questions you might have for them as well.
Remember, you are an important function to the operation as well, so , make sure you understand your position and responsibility.
In most cases, you can ask for a copy of the job requirements, including the insurance portion. This portion will list the insurance requirements for your specific load.
This way when you are searching online for the best insurance deal, you will have the information ready for rating.
Insurance Policy Checklist
We always recommend that before you begin your search for cargo coverage, to make a checklist.
These items will streamline your quoting process.
You will be comparing apples for apples instead of guessing on what coverage you are required to drive with.
When your broker or agent ask for certain coverage requirements, you will have them all at hand. This is a very important step to finding the lowest rates.
How can you compare quotes if the information you are providing to rate is inaccurate.
Logical Coverage Approach
It sounds logical enough, but in some cases people will just call around getting quotes, not understanding how many layers are really involved in a commercial policy.
Remember, unlike a personal lines policy, like auto insurance or motorcycle insurance, commercial trucking is different.
Commercial policies in general are more complex and intricate than the most complex personal lines product.
Time Element of The Quote
So, do not be surprised if an agent or commercial insurance broker, tells you they will have to call you back in a few days or at best, half a day.
This is because a lot of back-end work is entailed. Since a commercial policy, like cargo insurance for example, have many more risk scenarios with a higher loss factor, more work and coverage is involved.
Meaning, most commercial policies are insured for at least 1 million with 100K cargo.
Yes, there are some variations to the limits of coverage, but in most cases this is pretty standard. So, you can see that larger numbers exist in these type of policies, than a traditional automobile policy.
Premium Amount Ratio
Usually, the premium amount will be the dead giveaway.
When your asked for a down-payment that could cover 6 months or 12 months of a personal policy, then you understand the difference.
Having said that, you can see that more questions and rating factors are involved.
This is because the payout on a loss is larger, and more risk factors exist for both parties.
Usually, during the quoting process, you will be asked a series of questions relating to your work. This work will relate to your industry of course.
So, if your in agriculture for example, your questions might be different than if you were hauling hazardous materials.
Actually the latter would involve a select group of insuring companies, since this is niche specific coverage.
Standard Quoting Questions
The standard questions however would entail:
How many miles a day do you drive, what type of loads do you carry, and do you drive outside California, to start with.
These are just a few of the many questions a true commercial policy will cover.
This is important to remember, because there are many specialized endorsements that can be added for premium to your main policy.
These questions help organize the direction of your insurance path. hey will narrow down what types of coverage options you will need and what polices exclusions you need to know about.
Review for Accuracy
Exclusions exist on every policy.
So, make sure you understand and review carefully your declaration page of your policy. This declaration page should have conditions and limitations to the policy.
Usually, these underwriting notes will include any language omitted from coverage to the policy. For example, no coverage to apply in the event of loss due to War or God.
In most cases, there are amendment clauses to your policy where you can add coverage from the exclusion box to inclusion box.
This is only available if it is not a standard policy exclusion.
The first task to begin with is the required coverage.
If you are an independent trucker, maker sure to collect your contracts required coverage amounts.
Normally, if coverage is required, you will find it on this sheet.
It will also include the liability requirement to uphold while contracted through the trucking organization.
Step two, if you have been through this process already and have an active policy, collect it, and have it close by in case you need to gather more information.
If you are working with a broker, make sure to let them know what company you are currently insured with so, they don’t send your application to them for rates.
It saves you time in the long run, less paperwork to process on the insurance brokers side, means a quicker turn around.
Local Agent & Brokers
Unfortunately, not all commercial brokers have direct access to commercial auto companies.
This means 1-2 week quoting delays as you may have already experienced.
Also, the rates that are not always guaranteed, since not all of them run your driving record until after your ready to purchase.
Step three and most important when shopping and comparing quotes, standalone or bundled.
Some trucking companies can offer a standalone policy, meaning if you only need the coverage.
This is because your covered elsewhere with the liability and full coverage, than this option will work great for you.
Bundle Policy Coverage
However, if you are looking to save the most on your total premium, it is always a good idea to bundle everything into one commercial coverage package.
The discounts of the bundling oversea any discounts offered by a standalone cargo insurance policy.
In most standard liability commercial automobile policies, the cargo insurance is the most costly portion of the policy.
By including cargo coverage into a package you avoid the costly rates of a standalone.
It is especially important to ask if you are buying only the cargo portion if the company you are being placed with can add other coverage later on in the policy term.
As mentioned above, not all companies will offer this coverage.
Acts of God Perils Endorsement is available.
This is because most forms are legal liability policies, flood, earthquake, windstorm and other Acts of God are often not covered.
This endorsement is used to provide coverage for one or more of these perils on a non legal liability basis for an additional premium.
Breakage Coverage Endorsement
This type of endorsement is often attached to the motor truck cargo policy of truckers who haul fragile commodities.
This can include food products such as eggs or bottled beverages as well as breakable durable goods.
Many policies automatically include breakage limitation provision in which loss resulting from breakage is limited to a percentage of the loss, such as 50% or as a maximum amount per loss.
Broadened Definition of In Transits
Common question that is referred to the provision found in a motor truck cargo legal liability form.
This form includes coverage for the temporary interruption of movement of cargo.
Examples are such as temporary storage at a terminal, break bulk facility or warehouse.
This is necessary since under the defined definition of many policies, coverage is provided only while a shipment is actually being transported.
Collision of Load Coverage Endorsement
This type of endorsement is used to extend a cargo policy.
It is to provide coverage for loss resulting from a truck’s load hitting another object, other than by impact of the truck itself.
This can be especially important for carriers who provide shipping with open trailers or oversize loads.
Debris Removal Costs Coverage Endorsement
This type of endorsement use to extend a cargo policy to include a specific sub-limit amount for removal of debris.
This is included damaged cargo when loss results from a covered peril
This might be considered as a type of pollution related coverage that can have importance from many types.
Earned Freight Coverage Endorsement
This type of endorsement often is attached to a motor truck cargo policy to provide reimbursement for payments of earned freight charges rendered noncollectable due to the refusal of consignees to accept shipments.
This is because they have been lost or damaged by a covered peril under the policy.
Please not that such endorsement usually only apply to collected freight charges.
This will not apply to prepaid charges of these costs are normally included on the invoice and would therefore be included in the adjustment of any covered claim.
As a trucker, you may on occasion need additional coverage in excess of the basic policy limits.
This endorsement allows for this eventuality by allowing for an additional specified amount to be provided for a single load as long as the excess values are reported to the insuring carrier prior to the actual haul.
An additional premium charge is then assessed based on the excess values that are actually used in conjunction with the haul.
Take note however, that this type of endorsement can also be used together than that specified in the policy declarations is to be transported.
As you can see, it is in your best interest to be proactive when finding cheaper coverage.
If you are new to the trucking industry and need some basic insurance tips, start with the above 3 steps.
With over 30 years experience with truckers, one our licensed agents can answer any questions you may have.
We understand the insurance part is something you shouldn’t be consumed with, you’re a trucker and you belong on the road not behind a computer, that is our job!
Let us help you with your commercial cargo insurance quotes or bundle car insurance Los Angeles CA.
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Cargo Truck Insurance