Understanding Three Kinds of Cargo Insurance

Cargo insurance can get confusing. After all, several different kinds of insurance are available, and deciphering the differences and overlaps between your client’s options can be tricky. However, that doesn’t mean your client should blindly select insurance coverage without doing research. Having a good understanding of cargo insurance to ensure your assets and business could make the difference between sink or swim.

To help you best assess your client’s needs and bring clarity to the coverages available, we explore Motor Truck Cargo, Cargo Legal Liability, and All-risk Shipper’s Insurance policies below. 

Motor Truck Cargo (MTC)

Motor Truck Cargo (MTC) insurance is designed for truckers as it covers shipments transported by for-hire trucks. It protects against shipments that are lost, damaged, or stolen while being loaded, unloaded, transported, or waiting at a terminal. 

This coverage typically covers risks and losses associated with theft, collision, fire, water damage, and equipment failure, except those that occur due to government/military action, war, and nuclear hazards.

It’s important to understand that each carrier has a specific appetite for commodities, limits available, distance traveled and others, while also adding or removing coverages based on the risk. As always the coverage is in the wording.

Cargo Legal Liability

Next, there’s Cargo Legal Liability, which is geared toward carriers, such as ship, train, and truck operators. Now, compared to other kinds of coverage, this insurance is somewhat limited in that it only provides coverage when the goods are in the care of the carrier. Unlike MTC insurance, the shipper must prove that the carrier’s negligence was the cause of the loss or damaged goods to receive payment. That said, some expectations can take the burden off the carrier, like if the lost or damaged goods were due to an act of God or a public enemy. 

Because of those exceptions, quite a few scenarios can prevent payment for loss outside of the carrier’s control, leaving cargo exposed to risks. We should also point out that even if negligence is proven, the carrier’s liability is capped and does not typically cover the full value of the goods.  

All-Risk Shipper’s Insurance

All-Risk Shipper’s Insurance falls into the third category of cargo coverage. Considered the more comprehensive insurance option of the three, all-risk offers door-to-door coverage, meaning the cargo is protected during every stage of the shipping journey. This policy pays out regardless of whether the shipper proves the carrier’s negligence, and it covers the full value of the lost or damaged goods since it does not set limits like those seen with cargo legal liability. This is another reason why understanding cargo insurance is crucial, especially in shipper’s insurance.

While all-risk insurance does provide the broadest coverage, some exceptions apply, including damages or losses due to normal wear and tear, improper packing/loading, and governmental interference. 

At-A-Glance

Falvey Insurance Group Coverage

Because every policy is different, your client may need a combination of them to cover all the bases. If your client is having trouble deciding which coverage is best, Falvey Insurance Group can help. We offer an All-Risk Shipper’s Insurance policy, MTC coverage under our Wholesale Division, and cargo legal liability, which falls under our Transportation and Logistics Liability product. Contact us to customize your policy today.