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.
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:
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.
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 limited 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.
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 they've had experiences where 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 a few days 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.