A major activity of commercial trucking is transporting cargo. There are two parties with a huge interest in the cargo: the property’s owner and the trucking company or independent trucker transporting that property. Usually, it is the trucker’s responsibility to arrange for insurance. Insurance protection becomes the trucker’s burden since that is the party having custody and control of both the vehicle and the goods being shipped. Motor Truck Cargo coverage responds to a substantial, combined exposure. Specifically, it protects against a liability similar to taking a house full of expensive contents on the road for a long trip.
The coverage is typically written in the name of the independent trucker or trucking firm that owns the transporting vehicle. The policy protects against claims by third parties such as:
- The owner of the goods being transported – Ex.: a hit and run driver slams into Sam’s truck and takes off. Sam reports to his client, a toy maker, that the entire shipment of bikes, paint sets and dolls was destroyed. The toy maker sues Sam to recover damages.
- Other drivers on the transportation route – Ex.: Linda, of Linda’s Luxury Landliners, fails to see an SUV and destroys it as she backs out of a truck stop.
- Persons authorized to handle the truck or its contents – Ex: Jim greets Pete of Midwest Transportex, Inc. After Pete opens the truck for unloading, Jim climbs up and then falls off the back of the truck. Pete failed to properly secure the doors, causing Jim’s injury.
Cargo coverage can be complicated. While all transportation exposures have basic items in common, the total exposure is affected by the type of equipment, the routes traveled, the distance traveled, the driver’s experience, the type of cargo being shipped, the time allowed to make the delivery, whether the trip involves intrastate, interstate or even across-the-border travel.
Cargo policy limits should reflect the value of the property being shipped. However, many policies restrict coverage by providing a maximum limit for certain perils such as theft. Another restriction is to void any theft coverage if the loss occurs when the covered vehicle is unattended. Such provisions are usually used when commodities such as alcohol, expensive garments, and electronics are being transported. Such goods attract thieves, so insurers are more careful about providing insurance.
The amount and type of coverage may also be affected by various state laws, so coverage should reflect the coverage necessary to comply with the most demanding jurisdiction on the travel route. Insurance companies that offer Motor Cargo Coverage are often very knowledgeable about this type of insurance. They typically also have different preferences for the amount of coverage they wish to write, the type of property they want to cover and the type of shipping companies and/or circumstances. It is important that, when securing coverage, a trucker or trucking company be certain they receive the help of a person who is qualified to understand what coverage is needed and what is being offered by various insurers.