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What Is LTL Cargo Insurance and Do You Really Need It?

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Most, if not all LTL (Less Than Truckload) shippers at one point have asked themselves if cargo insurance is a necessity. It’s always a top priority to protect goods from loss or damages, but many wonder if the cost of insurance is worth the advantages it provides.

We’ll discuss what cargo insurance is, how it differs from freight insurance, and what benefits come from purchasing a policy.

 

What is LTL Cargo Insurance?

Even with the best-laid plans, careful packaging, cargo mitigation strategies, and cautious handling, products may still arrive damaged. This is why cargo insurance exists. 

Simply put, cargo insurance protects shippers from financial loss due to damaged or lost cargo. It pays out the amount shippers are insured for if an unexpected event happens to the freight. Some examples of covered events are vehicle accidents, natural disasters, cargo abandonment, customs rejections, acts of war, loss, etc.

Here are the types of claims that shippers are most likely to file: 

  • Damage - This is when freight is received with visible damage and is of the most common forms of claims.  
  • Loss - This type of claim occurs when goods are lost in transit; meaning that the cargo was picked up but never delivered.
  • Concealed - When loss or damage is revealed after delivery and reported to the carrier after the driver already leaves, it's considered concealed.
  • Shortage - When the recipient only receives a portion of the freight expected, a shortage occurs. This often happen when the product falls out or pieces go missing.
  • Refused - Sometimes a shipment is delivered and the product is damaged, is the incorrect freight, or the shipment is late. If your consignee refuses the shipment, it’s returned to the carrier’s delivery terminal.

Many shippers are surprised by the number of times the above events actually occur. One such incident can cause a huge financial hit, resulting in the loss of thousands (or even hundreds of thousands) of dollars.  

 

How Does Cargo Insurance Differ from Freight Insurance?

Though freight insurance is not mandatory, most carriers/freight forwarders secure this kind of coverage to make sure that they are protected against liabilities resulting from situations wherein errors/negligence leads to goods being lost or damaged.

Freight insurance is payable by the freight forwarder, but it is often passed on to the shipper when the forwarder’s service is used. A fee for freight insurance is typically included in the sender’s shipping quote and is then included in what the sender pays for.

Filing a lost or damaged freight claim with a carrier while only being covered by carrier limit of liability is most often a losing battle for shippers. Shippers expecting to be completely reimbursed by their carrier for their lost/damaged goods are frequently disappointed by the amount they actually receive.

 

What Are the Benefits of LTL Cargo Insurance?

Unlike freight insurance, which provides payouts depending on the weight of the shipment, cargo insurance is meant to reimburse the full value of the shipped goods. With this coverage, shippers receive full value reimbursements for lost or damaged goods without restrictive liability limits.  

When utilizing full value cargo insurance, the shipper is in the first-party position, so the claim doesn’t depend on the carrier’s limited liability. Without Shipper’s interest coverage, the carrier is financially responsible for loss or damage ONLY when it's proven to be attributable to carrier negligence. More than half of carrier liability claims are denied completely. Many shippers purchase full value cargo insurance because their previous limited liability coverage was denied, or the amount paid was simply not enough to cover the cost of damages or loss.

 

Summary

The primary benefit of cargo insurance is that shippers won’t experience financial loss if their shipment is damaged or lost. The small investment (the premium) paid provides peace of mind as goods leave the warehouse. Shippers can rest assured knowing that their goods are covered at full value.

MyCarrier offers full value cargo insurance with coverage based on proof of damage rather than proof of liability. You'll receive door-to-door coverage for the total value of your package or shipment, with guaranteed coverage in the event of damage or loss - no matter where, when, or why it occurs. 

With MyCarrier, you can easily quote and purchase insurance while booking a shipment. You'll receive a policy in your name in which all the terms and conditions of coverage are transparent, instead of dealing with unwanted surprises during claims. On average, claimants receive payments in just 7 – 10 days after receipt of important documents, which translates to happier customers, quicker sales recovery, and minimized disruption to your daily operations.

No matter the size of your company, or what your individual insurance needs are, you'll have access to quality, affordable coverage that will put your mind (and bank account) at ease. Find out more about MyCarrier’s Full Value Cargo Insurance coverage.