Recent trucking market conditions have made it difficult for carriers to turn a profit as carrier costs continue to rise, but rates are not following the same trend. Some carriers had to buy cargo at a loss to keep the trucks running.

When it comes to major expenses for carriers, the top four priorities are fuel costs, truck/trailer rental payments, repair and maintenance, and insurance premiums. Truck insurance premiums increased by an average of 12.5% ​​compared to 2022, according to research from the American Transportation Research Institute that compared carriers’ 2023 costs to 2022 costs.

The fact that insurance is a large part of a carrier’s operating budget raises questions such as what exactly is carrier insurance and what are the benefits and pitfalls of different policies.

“The most basic form of cargo insurance is insurance that protects the goods or property of others during transportation,” said Andrew Haun, Senior Vice President of Sales, Strategic Accounts, Reliance Partners. “Carriers need insurance because they are responsible for the cargo while it is in their custody. For example, a 10-unit trucking company cannot “At the same time, he could be responsible for up to $1 million in property of others.”

The Federal Motor Carrier Safety Administration requires motor carriers to $750,000 liability insuranceNot applicable to cargo insurance for the purpose of gaining the authority to operate on highways. Some states have their own minimums for companies doing business or domiciled in the state.

The standard form of coverage is perfect for most drivers, but there are many specialized insurance policies available for different types of cargo. Haun says: “(Special cargo) is usually covered by the approval of the standard cargo cover form. Many of these have additional liability requirements and equipment restrictions. Examples could be:

perishable goods, high value goods, dangerous goods, heavy machinery and equipment, large/oversized, live animals, bulk cargo, goods transported by dump trucks, special vehicles and transportation operations.

Insurance exists to protect everyone involved in the event of an accident, damage, or other serious situation. Without insurance or the appropriate level of coverage, not only does the carrier, driver, shipper, consignee, or broker find themselves in financial difficulty, but it can also damage the reputation of a reliable and trusted carrier.

It may seem simple that carriers must have carrier insurance, but there is more to it than that. Where a carrier obtains cargo insurance can be as important as the actual value of the policy.

As for where to get a policy and why it matters, Haun says: “I would say the number one thing is speed of setting up a claim. It is often the best course of action to integrate the broker so that the sender/receiver integrates as quickly as possible, as maintaining a good relationship in this area is crucial to future benefit. The second is that the auto carrier does not have to go out of pocket to integrate any party. I find that many younger motor carriers do not place enough value on the total expense/coverage ratio. They often look for the best price on primary and secondary coverage. The only reason to buy this insurance is so you don’t have to spend your hard-earned money to make someone whole.”

The amount requested for damaged cargo may be $100,000; This is an amount that most carriers do not have. It’s a big risk that a carrier will be expected to pay a large sum of money and also repair any damage to the company’s own property in addition to compensation. A claim could potentially wipe out a small to mid-sized carrier.

Cargo theft is also on the rise and so is the rise in theft claims. top reasons for insurance rate increases relative to claims arising as a result of natural disasters or other problems. The problem has progressed so dramatically that it is causing some insurance companies to exclude the condition from policies.

Haun adds: “Due to the increase in theft, many insurance companies do not include theft in the standard policy form. This is something the agent must notify the motor carrier about and should definitely be recommended to be bought back and added to the policy. As long as specific commodity risks are discussed, insured and included in the policy form, Most damages are covered under standard shipping forms. Each shipping policy should be tailored to each motor carrier.”

Not every carrier will have the same policy or the same requirements. For example, a carrier that carries dry van cargo and heavy machinery will have different needs and policies than a carrier that primarily carries dry van cargo. While it’s a basic policy that will cover most carriers, it’s still not a one-size-fits-all situation.

As for why natural disasters are not a bigger problem for carrier insurance, Haun says: “Natural disasters are another story. Due to the Carmack Amendment, introduced as part of the Interstate Commerce Act of 1906, the insured (automobile carrier) is strictly liable for all damages except 5 causes: act of God, public enemy, carrier error, quarantine, or inherent vice.”

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