5 Tips For Finding The Right Long Haul Trucking Insurance
Posted on February 24, 2017
Posted on February 23, 2017
Cargo damage can occur at any time, so if you’re wondering what is motor truck cargo insurance and if you should buy a policy, keep in mind, accidents, even natural disasters happen every day and it’s too risky to gamble. According to the Federal Motor Carrier Association, a trucking accident can result in an average of $149,000 worth of loss revenue, and that doesn’t include the cargo. Yet, costs are controllable.
Without cargo insurance, any damage to transported goods could potentially put a company out of business. Even worse, a business could face a ruinous lawsuit resulting in judgments. Moreover, many drivers are not even sure if they require a separate policy, mistakenly assuming they can get by with their current liability insurance. If you’re transporting cargo, you need this coverage because it precludes damages to a vehicle.
Cargo carriers transport goods for delivery to third parties by means of trucks. In spite of the greatest care, an accident can occur at any time. There are also many other risks associated with transport. This can lead to damage during loading and unloading, or due to a poorly secured load. The risk of theft as well as damage due to vandalism is also very high. Natural forces such as hail or storm also repeatedly cause transport damage. It is also wise to remember, in many cases there is a legal liability limit. This is why a corresponding insurance policy for cargo is indispensable
Why Purchase Cargo Insurance?
No cargo is ever safeguarded against every type of risk. There are several benefits for cargo insurance, especially for goods that are transported over long distances.. Sellers or exporters can make the coverage to protect themselves from a number of unfortunate incidents such as accidents, hijacking of the cargo, or damages during the shipping process from heat or moisture. Depending on the scope of the coverage, cargo insurance can also cover losses resulting from simple negligence.
Bottom line, if you’re wondering what is motor truck cargo insurance really good for, well consider a scenario where the freight is vandalized. Since the underlying value of the goods are insured, any damage during transporting to the destination would result in a partial or total loss payment. Of course, this depends on the conditions of the policy. This approach also makes it easier to recoup any funds that have already been paid out. Seen from this perspective, truck cargo insurance covers the interests of both buyers and sellers, and helps minimize any future losses that can occur when goods are lost, stolen, or during transport damage.
Insuring Your Interests
Everyone understands that the fundamental concept of buying motor truck cargo insurance is to protect one’s own financial interests. What often is not understood are the coverages, conditions, and exclusions, and trying to decipher if a policy is the best fit. Various insurance policies can be complicated, depending on the commodity transported; therefore, it’s best to get a few quotes for comparison.
The trucking industry is the engine that powers the US economy with approximately 11 million trucks delivering 14,547 million tons of cargo in 2013. This is according to data published by the Federal Motor Carrier Safety Administration. In addition, road crashes involving trucks and buses increased by 22% in 2014 compared to the previous year. This raised the cost of large truck and bus crashes by 7% to $112 billion in 2014. Luckily, trucking companies can avoid these losses by purchasing long haul insurance. Here are five tips for finding the right long haul trucking insurance coverage:
Shop Around
It is wise to start by shopping around and gathering as much coverage information as you can. Leverage the power of the Internet and social media platforms to get information from diverse sources. Pay more attention to information published on reputable sites, in peer-reviewed publications, or authored by industry experts. This is important because anyone can publish content online and make unsubstantiated claims. Shopping around will also enable you to compare the cost of monthly premiums. Additionally, you should seek the opinion of an insurance broker or industry insider about insurance products that offer the best value for money.
Coverage Features
Most long haul trucking insurance policies incorporate features such as:
• Primary liability
• Auto liability
• Physical damage (auto)
• Non-trucking use liability
• GAP coverage
• Combined deductible
• Trailer interchange
• Rental reimbursement
• Earned freight charges
• No co-insurance penalties
• Family emergency travel coverage
• Towing expenses
• Removal of debris and pollutants
• Reload expenses
• Catastrophic losses
• Traffic and security expenses
However, take note that carriers may use different names/terms to define the features in their policies. What’s more, features could be defined using legalese that lay people do not understand. For this reason, it is advisable to go through coverage terms and conditions carefully. If you are unsure of certain clauses, consult a legal expert with in-depth knowledge of the insurance and trucking industries.
Exclusions
Although insurance policies come with exclusions, majority of consumers rarely investigate these exemptions. This is not wise for several reasons. Firstly, some carriers use exclusions to hide financially disadvantageous terms from policy buyers. In addition, some carriers use exemptions to avoid the responsibility of paying out compensation. With this in mind, unscrupulous carriers tend to hide exclusions in fine print. This means you should thoroughly read and understand the policy.
Financial Stability
Investigate the financial stability of a carrier exhaustively before signing up for coverage. For publicly traded carriers, find out if they comply with acceptable financial reporting standards and guidelines/standards instituted by regulatory authorities such as the Securities and Exchange Commission (SEC). The aim is to ensure that you select a carrier with a solid foundation that can honor its obligations and will be around for years. Do not believe the word of smooth talking executives or glitzy ads because the subprime mortgage crisis and the ensuing financial crisis showed that con artists can bamboozle Wall Street experts easily.
Monthly Premiums
When evaluating monthly premiums, pay special attention to deductibles and interest rates because they play a significant role in determining the amount you will be expected to pay monthly. This may necessitate wading through fine print and multiple price comparison engines. Cross check figures published by third parties with those published by carriers to avoid the risk of using outdated data. At the same time, do not base your choice solely on cost. Instead, you should choose a product that fully meets your coverage needs.
Conclusion
The US trucking industry is the backbone that supports supply chains across multiple industries including e-commerce, hospitality, and health. Unfortunately, cargo deliveries expose trucking companies and their drivers to billions of losses annually, which cannot be managed effectively without the right insurance coverage. Some of the main factors to consider when shopping for long haul trucking insurance include the financial stability of an insurer, policy features, monthly premiums and exclusions.