Insurance – What Are Your Goods Insured For?

LTL Insurance Valuations As It Pertains to Claims

LTL Insurance – Released Valuations Based On The Class of The Goods

In the past, LTL carriers had provided cargo coverage of $25.00 per lb. as a part of their standard service on a particular shipment. That level of cargo coverage built into the freight charges and was provided irrespective of what was being shipped. 

Over the years, the LTL carriers have reduced their cargo coverage and many are now basing it on the actual class (per the NMFC) of the product being shipped. For instance, if you ship product that the NMFC identifies as class 50, some carriers will only provide cargo coverage of 50 cents per lb. on your goods. As other examples, cargo coverage on class 100 items may be limited to $2.00 per lb., and class 150 items may be limited to $5.00 per lb.

In addition to the cargo liability limitations that the carriers have established by the NMFC class, the LTL carriers also have limited coverage on many other items; including product that is “USED and/or REFURBISHED”. 

A refurbished product is defined as product that has been returned to a condition that is “as good as new”. Many LTL carriers are now treating refurbished product as “used” and are only providing .10/ lb in cargo coverage.

How Does a Shipper Make Sure They Have Full Coverage On a Shipment?

Each carrier has established their own cargo coverage limitations (expressed as the maximum liability per pound or per package) which they have published in their “rules tariff”. It is vital that you are aware of the cargo coverage that the LTL carriers are offering because it will impact your recovery in the event of a cargo claim for loss or damage to your shipment.

DTS can provide cost effective supplemental cargo insurance coverage on any shipment and we are happy to assist you with this process.

Simply let our team know the value of your shipment and we will offer you options so that you can rest assured that your product will be amply insured in transit.

Who Has the Responsibility of Fully Insuring A Shippers Goods?

Ultimately, it is the shipper’s legal responsibility to ensure that their goods are both well packaged and are amply insured in transit.

Many shippers make assumptions that their goods will be fully insured when in fact, given current market conditions, they are rarely fully insured. Unfortunately, many clients only discover that they are under insured when they are “short paid” on a cargo claim that they have filed with a trucking company.

Please be sure to confirm both the value of your shipment, and the cargo coverage that you will be receiving from your carrier or 3PL prior to tendering your shipment to the carrier.

If there is a gap in coverage, you can ask your transportation provider for a written quote; including both the cost to fully insure your goods in transit, and the limitations of coverage.

Are Truckload Shipments Fully Insured?

Truckload carriers typically provide $100,000 in cargo liability coverage with some carriers offering as much as $250,000.

As with LTL, it is the shipper’s legal responsibility to ensure that their shipments are fully insured and all quotes for transportation costs and coverage levels should be in writing.

Examples of Cargo Liability Coverage Provided by LTL Carriers.

Example 1.- A 2,000 lb. shipment of product that the NMFC determines is class 100 goods may be insured by Carrier A for $5.00 per lb.  Therefore, in the event of a total loss, the maximum recovery to the claimant would be limited by the carrier to $10,000.  If the value of the goods were $30,000, the shipper would then be under insured by $20,000.  

Example 2- A 1,000 lb. shipment of a fully rebuilt automobile engine would receive cargo coverage of .10/lb. and thus, the maximum recovery to the claimant would be limited to $100 in the event that the product was lost or damaged in transit.

Please contact DTS for more information about our supplemental insurance programs to ensure that your shipments are fully insured in transit.

Shipments Never Get Totally Destroyed Is a Common Misconception.

Carriers will provide statistics claiming that they transport 99% of their shipments “claim free”. Claim free shipments are defined by the carriers as those that are picked up in good condition and delivered in good condition, as evidenced by the bill of lading and delivery receipt.

In all too many cases, cargo is damaged in transit, yet carriers offer no liability because the delivery receipt does not indicate that the product was received either damaged, or with product missing.

Please keep in mind that carrier liability must be firmly established for both a trucking company, and a supplemental insurance provider to pay a claim in any denomination.

Cargo claims do happen, and unfortunately, many companies either have their claims short paid, or declined in full because carrier liability has not been clearly established.

We recommend that you review your shipping and receiving procedures so that your firm is utilizing the best practices. Links with more information about this subject is available on our web site, and we welcome you to contact our team with any questions that you may have about your shipments.

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