Cargo Coverage Is Required by Law! Both State and Federal regulatory agencies require it, as does the shipper
Cargo Insurance Coverage is needed by truckers since the “Goods of Others” are excluded under the Comprehensive General Liability (CGL) of your Truckers policy. And, the trucker is by common law a “Bailee” and therefore responsible for any damages to the load. That is the reason that the Shipper requires the coverage, for the protection of their load. Both State and Federal regulatory agencies require the coverage as well.
Underwriters need to know who the insured trucker is hauling for to determine the correct policy form to use i.e. “For Others” (normally the case), or “Own Product” or “Both”. The underwriter will also want to know the type of commodity as some require special care such as refrigerated or heavy equipment, or livestock. Livestock are very fragile and improper care can cause the death of some of the animals while in transit. There will be instances where “special higher limits” may be needed, temporarily, for a high value load. The limits can be increased for a very specific load, exact route and time frame for the load to be delivered. The pricing for this coverage can be based on Gross Receipts, Gross Mileage, or most commonly, Per Power Unit.
Cargo Coverage always follows the power unit. All Cargo Insurance policies are not created equal. There are different policy forms used, and the highest and best form is the “All Risk” form if available from the particular carrier. If “All Risk” is not available then the “Broad Form” is the next best policy form to look for. Broad Form is Limited “All Risk” coverage with a few of the most common exclusions.
Cargo coverage is in effect during transit, while attached to a tractor, or while in a terminal. All loads are carried under a “Bill of Lading” which normally states “who, what, where, and how much”. Make sure your Bill of Lading is clear and makes sense to you in all aspects as it is very often the primary controlling document for the load.