Skip to main content
Business Protection Bulletin

FREIGHT CARGO INSURANCE 101

By December 3, 2013No Comments

If you rely on shipping your products, you could lose a bundle, unless you have freight cargo insurance. Freight carriers are legally required to carry a minimum amount of insurance (“carrier liability”) of 10¢ per pound, and this total liability can be no higher than the invoice value of your shipment. Check with your carrier(s) for specific information on coverage, deductibles, and claims management.

Because your goods will probably be worth far more than these limits and freight is more susceptible to damage than smaller shipments, it makes sense to buy a freight cargo policy.

Some policies cover all modes of transit. Others only cover ocean vessels, or exclude warehouse storage. If you have separate insurance on your own warehouse, fine. If not, you’ll be vulnerable to a dangerous loophole for uncovered losses.

Anything can happen in transit from natural disasters, theft, damage, train derailment, accidents, fire, containers falling overboard, collision, to anything else you can think of. Freight cargo coverage sometimes excludes such perils as war and piracy. To learn which risks your policy does and doesn’t cover, read it carefully. For peace of mind, you can also take out “all risk” coverage (by paying a higher premium).

Bear in mind that freight cargo insurance covers only damage or loss to the goods transported, it will not reimburse you for lost time, labor, or shipping costs.

If you suffer a loss, file with a claim with your freight carrier and insurance company as soon as possible, preferably within 24 hours.

Because prices and coverages of freight cargo policies vary widely, our insurance professionals would be happy to help you shop for the best value. As always, we’re here to help.