Cargo Insurance

Cargo insurance is an insurance policy that provides coverage for the value of freight in the event of loss or damage during transportation. While carriers have legal liability for freight damage under the Carmack Amendment, cargo insurance provides an additional layer of financial protection that covers situations where carrier liability may be limited, disputed, or insufficient to cover the full value of the goods.

Cargo insurance is particularly important for high-value refrigerated shipments because a single reefer truckload of specialty food products, pharmaceuticals, or premium proteins can be worth $50,000 to $500,000 or more. Standard carrier liability coverage may be limited to $100,000 or less per load through contractual provisions, leaving a significant gap between the covered amount and the actual product value.

Types of Cargo Insurance

• All-risk coverage: Provides broad protection against virtually any cause of loss or damage, including temperature excursions, equipment failures, accidents, theft, and natural disasters. This is the most comprehensive option for cold chain shipments.
• Named-peril coverage: Covers only specific risks listed in the policy, such as fire, collision, or theft. Temperature-related losses may not be covered unless specifically named.
• Contingent cargo insurance: Covers the gap between the shipper's loss and what the carrier's insurance actually pays, providing backup protection when the carrier's coverage is inadequate or the carrier's insurer denies the claim.

Shippers should review their cargo insurance policies carefully to ensure that temperature-related losses are covered, that the coverage limits match the value of their typical shipments, and that the policy terms are compatible with their shipping practices. Premium costs for cargo insurance typically range from 0.2 to 0.5 percent of the cargo value, a small price relative to the protection provided.