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5 Tips for the Right Cargo Insurance

Updated: Jul 13, 2020

Are you properly covered? Learn how to protect your freight; get the right Cargo Insurance policy in place.

While you may be well informed on the importance of having insurance in your personal life, when it comes to protecting your company’s freight, there’s certainly more to compare and consider for the right protection.

First off, what is Cargo Insurance? By law, carriers are required to carry a minimum amount of Carrier Liability insurance, which is limited in what is actually covered. You want to make sure your freight is covered at the time it’s loaded and while in transit to protect your freight from loss, theft or damage.

Even with the most experienced carriers, there are events that can affect your shipment in getting to the final destination and in the exact same condition as it was before loading. Natural disasters, traffic accidents, and mishaps in the warehouse can occur, therefore, it’s best to be covered, and know exactly what your policy is covering for a better peace of mind.

Since freight is transported in various ways -- air, rail, truck, courier, or ocean -- there are several aspects, or policy clauses, under Cargo insurance, and which type of Cargo Insurance you need.

Do you have Cargo Insurance? Do you know what your policy entails? Are you confident that if something out of your control were to happen to your freight, that you’d be covered?

In case you’re not familiar or unsure, here’s a few helpful points about cargo insurance that’s important to know when establishing the right coverage for your freight:

Tip #1: Review your current policy

First, get a copy of your current policy to review. Speak with your account representative at the insurance company to decide whether your current policy is protecting the type of freight you are moving, or if there’s a need to change for better protection.

Tip #2: Inquire about Insurance directly with your 3PL or Carrier

Whether you are working directly with a carrier or with a third-party logistics provider, you can usually purchase the proper amount of insurance through them. Double check the default liability limit they offer based on your commodity. If it does not cover the full value of your shipment, make sure to inquire about full coverage.

Tip #3: Always know your freight's value

Know the value of your freight to be sure you are cross-checking that you have the right policy and that the value is in fact documented to protect against any disputes, loss or theft. We suggest that you provide equipment value during the RFQ and do request cargo insurance for the full value if you intend on having coverage.

  1. Note that “declared value” is not the same as “selling rates” - value should be based on cost.

  2. Assess the value of the equipment. Be careful not to go off of the commercial invoice as that’s typically not the value insurance companies will go off of.

Tip #4: Be aware of insurance deductibles

Many insurance policies do have a deductible. Cargo Insurance can carry a deductible anywhere from $500-$1000, which may be reimbursed if subrogation of the claim is successful.

Tip #5: Know your freight's specifications.

When shipping by truck, it’s good to know that LTL cargo insurance can be as low as $1 per pound for new items, with a maximum dollar amount per shipment (based on freight specifications), and a truckload driver has a $100,000 minimum cargo policy for a full truckload. How is it determined? Insurance coverage depends on weight, commodity, service level and freight class.

Now even if you have established the right policy, other mishaps can occur that are not protected by insurance. For instance, if any damages are identified during delivery, it needs to be noted on the BOL. It happens often that receivers just sign without making any notes on the BOL. As a result, on paper, it looks like the freight was received “in good order” when it was in fact damaged, and unprotected. For more information on the importance of BOLs, visit or recent blog.

Also, many people notice damages after unwrapping the materials. Ideally, the freight should be carefully inspected before the driver leaves. This will prevent so many other hurdles from ever happening.

Learn more about cargo insurance and protecting your freight by speaking with one of our logistics specialists. For more information on hot topics within the logistics industry, we invite you to subscribe to our bi-weekly newsletter: email to get on the list!

P: (925) 386.8666



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