Cargo insurance

Whether a shipper deals directly with a carrier or use an intermediary, they typically question the amount of cargo insurance coverage the carrier will be providing on the shipment. Shippers do not assume that full-coverage insurance is provided, as it almost never is. Many carriers offer minimal cargo coverage, typically pennies per pound, and intermediaries typically just pass along the carrier’s coverage. In the event of a damage claim, shippers may find themselves without enough coverage and having to file a claim with the carrier directly without the assistance of the broker. Shippers typically ask the broker about the procedure the broker has in place regarding freight loss or damage claims. Responsible carriers and intermediaries will always have additional insurance available for purchase; and the will have fast and easy ways to manage claims.


About 10% of all freight shipments will experience some significant loss or damage. It is a common misconception that a freight rate includes full coverage insurance, when in fact a base freight rate typically includes only a bare minimum of cargo insurance. A shipper should always ask their carrier or intermediary what the insurance coverage is for every specific shipment. LTL shipments will often be insured for less than 25 cents per pound, and TL shipments will often be insured for only slightly more than LTL shipments. Most good TL carriers have maximum cargo insurance of $100,000 for the entire load; but for a 40,000 load, that’s only about $2.50 per pound.
Furthermore, cargo insurance only covers significant loss or damage to the cargo only. Carriers’ insurance does not cover “consequential” damages like lost sales or downtime on a production line. Also, carrier insurance does not cover the cost of returning damaged cargo to the shipper. Again, cargo insurance is very low and very tightly defined; so shippers must package shipments extremely well and be sure to clarify the specific insurance that will apply to each shipment.
Carriers and intermediaries do typically offer “additional insurance” though known insurance companies like Fireman’s Fund. Rates vary widely depending on the item to be covered and the amount of additional insurance that the shipper would like to purchase