Not all cargo insurance is the same. The breadth of coverage, service, pricing, and loss prevention varies with each insurer. A low cost policy might save you money, but it could also mean you have less coverage. Because cargo insurance covers the legal liability of the carrier as the transporter of freight, carriers cannot afford to be cheap with cargo insurance. The carrier may have to do some research, but if the carrier knows what to look for, there are many cargo insurers that offer good policies at an affordable cost. It also helps if the insurance agent that understands the nature of your business.
Here’s what to look for when considering cargo insurance:
1. Description of Covered Property:
This section of the policy informs you what is covered and what isn’t. For example, if you have a policy that covers only ferrous metals, it the cargo doesn’t contain iron, aluminum, or copper, it wouldn’t be covered. If the policy excludes garments, clothing wouldn’t be covered. Another example is that if the policy excludes electronics in which anything that can be plugged in or uses batteries wouldn’t be covered.
2. Insuring Agreement:
There are two different types of insuring agreements. Be sure to know which insurance agreement you have. The Named Peril Policy covers only those perils that are listed, subject to exclusions. Perils include the overturn of a vehicle, collision bridge collapse, and so on. Theft is usually covered, but exclusions or endorsements may remove coverage for driver theft or theft from a vehicle which was left unattended. If the incident in question is not covered on the list then you will not be covered.
This is the section of the policy where you find that certain perils are not insured. Exclusions, as mentioned above, included theft by the drive (or any other employee), theft from an unattended vehicle (many policies will cover an unattended vehicle if it is completely locked and located in a secure place), and loss when the trailer is not attached to a power unit.
4. Scheduled Vehicle Policies:
When the FMCSA removed the cargo insurance requirement, the BMC-32 endorsement was eliminated as well; therefore, the use of a truck that is not listed on policy will no longer be covered. No exceptions.
Endorsements covers modifications to the policy. This allows the insurer to expand, restrict, or eliminate coverage. One example is that some cargo policies exclude temperature damage, but with a endorsement coverage is provided if the damage is caused by damaged refrigeration unit. Pay close attention to endorsements since they can add to or limit your policy. Endorsements included removal of refrigeration breakdown coverage due to lack of maintenance records, providing limited theft coverage for unattended vehicles if certain security requirements are met, or removal of any theft coverage for an unattended vehicle. Carriers make a common mistake of looking only at the Exclusions section when analyzing a cargo policy. Be sure to read the full policy and understand its limits.
Do your research and find an insurance agent who has working knowledge of your industry and will answer your questions.