Do you own a trucking company? If you do, then it becomes essential for you to protect the cargo you transport while it is in transit. Motor truck cargo insurance offers the necessary protection for your priceless belongings while they are being transported.
Transporting freight over the road comes with risks. Damage or loss of cargo can result in significant expenses for trucking companies. Purchasing a Motor Truck Cargo insurance policy is essential to limit liability in the event of a covered loss.
Overview of Motor Truck Cargo Insurance
Motor Truck Cargo insurance, also know as MTC or Inland Marine,. protects the cargo against damage or loss to goods being shipped for hire. It compensates for losses from causes such as:
- Accidents and collisions.
- Fire, explosion, or natural disasters.
- Goods falling off the truck.
Typical policies cover cargo from the point it’s loaded until it is safely delivered. There is a common misconception that an MTC (Motor Truck Cargo) Policy automatically covers the cost of cargo in case of theft, but not all policies do. It’s crucial to check the terms and conditions provided by your insurance company to fully understand your coverage.
It may be hard to believe, but cargo hijacking is more common than we might think. Both common carriers and contract carriers, such as trucking companies, need adequate coverage.
Common Coverage
Key categories of damage covered by best commercial truck insurance include:
➔ Broad Form Coverage
The most comprehensive option covers loss from any external cause except those specifically excluded. It combines basic perils and extended coverage.
➔ Names Perils Coverage
This narrower coverage lists specific causes of loss like fire, overturning, collision, natural disaster, etc. Anything not named is excluded.
➔ Refrigerated/ Temperature Controlled Goods
For cargo requiring regulated temperatures, like food, covers damage from temperature variations.
➔ Unlisted Commodities
For cargo not specifically listed in the Motor Truck Cargo policy, coverage will not extend to those goods. In the event of an accident, if the vehicle is transporting a commodity that is not included in the policy, the coverage may not be effective, leaving the cargo unprotected.
➔ Earned Freight Coverage
Covers transportation fees you have earned on lost shipments. Protects revenue.
➔ Blanket Coverage
A set protection limit for all covered loads rather than scheduling each shipment individually. Simpler for frequent transport.
Read also: What You Should Know About Global Health Insurance Options
Factors Impacting Premium Costs
Multiple variables determine the pricing for motor truck cargo insurance policies. Carriers need to understand these key factors that influence premium expenses:
1. Value of Goods Transported
The value of the cargo being shipped directly impacts premiums. More expensive freight represents a higher liability for the insurer, so premiums climb accordingly.
For example, electronics and other high-value goods will lead to higher premiums than raw materials of lower intrinsic value.
2. Distance Traveled
Longer transportation distances equal greater exposure and more opportunity for accidents or loss. Shipping coast to coast costs more to insure than short urban routes. Geographic remoteness also raises risk.
3. Type of Cargo
Delicate, perishable, or hazardous materials represent more significant care requirements and risks. Refrigerated goods, electronics, and chemicals need specialized handling and conditions, so premiums are elevated. Durable goods like raw lumber have lower rates.
4. Routes
Routes through congested urban areas introduce more variables like traffic and poor road conditions, raising the potential for accidents and cargo damage. Busy interstate highways also carry greater risks than rural backroads.
5. Truck Driver Safety Records
Motor carriers with drivers with clean records without moving violations or accidents qualify for lower premiums reflecting lower perceived risk. Speeding tickets, DUIs, and other infractions raise insurance costs.
6. Deductible Level
Policies with higher deductibles reduce the insurer’s monetary exposure, lowering premium expenses. However, high deductibles mean the policyholder pays more out of pocket for any covered losses. Setting deductibles requires balancing premium savings against upfront costs.
Tips for Securing Affordable Coverage
Follow these best practices to get competitive cargo insurance rates:
- Comparison shop- Get quotes from several commercial truck insurers.
- Maintain clean driving records- Document safety training and compliance.
- Consider higher deductibles- Raise the deductible level to lower base rate premiums.
- Institute security and loss control measures- Installing tracking devices or alarms can reduce premiums.
- Review exclusions- Understand what causes of loss are excluded to avoid coverage gaps.
- Bundle policies- Insure vehicles and cargo with the same provider for potential cost savings.
- Examine claim history- Good loss run record with few claims typically earns lower rates.
Conclusion
Motor truck cargo insurance provides essential protection against loss or damage during transport. Understanding common coverages, pricing factors, and cost-saving techniques allows trucking companies to secure optimal coverage at affordable rates.
Comparing insurers and being proactive about safety and security are keys to controlling premium expenses. With the right policy, transporters gain invaluable peace of mind knowing their trucking operations and cargo are fully insured.
