- Madeline Eby
Why is cargo coverage important for commercial truck insurance?
Updated: Feb 13
Cargo coverage is insurance coverage that protects goods transported by land. Cargo insurance is a common insurance coverage option for commercial motor carriers. This type of insurance protects against financial losses due to damage, theft, or loss of goods in possession of the freight carrier. According to the Federal Motor Carrier Safety Administration (FMCSA), entities that transport household items, such as moving companies, must possess cargo coverage. Additionally, many firms that partner with you for shipping goods may mandate this coverage as well. In this blog, our goal is to outline the importance, benefits, and cost of cargo insurance for commercial truck insurance.
What is cargo coverage?
Cargo coverage refers to an insurance policy that protects the owner of goods being transported from financial loss in case of damage or loss of the shipment during transit. The coverage applies to various modes of transportation. There is no federal law stating you are required to have cargo insurance, however, the owner of the goods may require the coverage. The company you are hauling for will let you know if there is a cargo limit they require in order to haul the load.
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Importance of Cargo Coverage for Commercial Truck Insurance
Cargo insurance is crucial for trucking companies for several reasons:
Protection against financial loss: If cargo is lost, damaged, or stolen, the financial consequences can be substantial. Cargo insurance can cover these losses, ensuring that the trucking company is protected against financial loss.
Meeting legal requirements: In many cases, cargo insurance is a legal requirement, especially when transporting goods across borders. Failure to obtain the required insurance can result in legal penalties and fines.
Building trust with clients: Having cargo insurance can demonstrate to clients that the trucking company takes the safety and security of their goods seriously. This can build trust and lead to repeat business.
Peace of mind: Knowing that cargo is covered by insurance can provide peace of mind for the trucking company and its clients. This can help to reduce stress and ensure that the transportation of goods runs smoothly.
Who Needs Cargo Insurance?
As a business owner, you know that protecting your products and inventory is essential to your success. But what about protecting your shipments when they're in transit? That's where cargo insurance comes into the picture.
Cargo insurance is a type of insurance that covers your shipments in the event that they are lost, damaged, or stolen. It's an important part of doing business, and it can give you peace of mind knowing that your products are protected.
However, not all businesses need cargo insurance. If you're shipping low-value products or you have a good track record of never having any problems with your shipments, you may not need it. But if you're shipping high-value products or you're worried about the possibility of lost or damaged shipments, cargo insurance is a good option to consider.
Cargo Insurance Cost
You'll need to purchase cargo insurance to protect your investment if you're shipping goods. But how much does cargo insurance cost?
The monthly cost for commercial truck insurance varies, with truckers typically paying an average of $400 - $2,000 per year. It's important to note that these figures are only averages, as insurance companies use a variety of factors to determine your premium.
Factors that can impact your rate include the type of commodity being transported, limits on your cargo policy (higher limits may be needed if you haul for example cars), and your company's loss history.
Cargo coverage is important for commercial truck insurance because it protects your truck and its contents in the event of an accident. If you are interested in learning more about cargo coverage or any other type of commercial truck insurance, give our client success team a call at (866) 621-4145, our Indianapolis-based team is here to help. We would be happy to answer any of your questions.