It is not a surprise that reading an insurance policy is not most people’s favorite thing to do. (It usually doesn’t even scratch the top 10.) In most cases, if you do read your policy it will be confusing, frustrating, and full of legal language that few people understand. However, it would be a wise use of 15 minutes of time to read your motor truck cargo form. Those 15 minutes may help you understand your coverage, which could save thousands of dollars in uncovered freight claims.
Motor truck cargo is different from other insurance coverages in that it can be written on a manuscript form. This manuscript form allows insurance carriers to custom craft the policy exclusions in both commodities and perils covered. For example, some commodity exclusions that we see are meat, seafood, electronics, tires, and alcohol. Coverage may be denied for perils such as theft of an unlocked/unattended vehicle or a trailer sitting in any one location for greater than 72 hours. Driver error is also an exclusion that could bite you if you have drivers operating reefer units (driver mistakenly sets temperature at 32 degrees instead of the instructed -32).
A specific peril that is almost always excluded in a traditional cargo form is employee dishonesty. If cargo were stolen by an employee (an inside job), there is a high probability that the motor truck cargo policy would exclude coverage. Valuable commodities that can be liquidated fast (copper pipe, shingles, beer, retail goods) present higher risk of this kind of theft. In most cases ,the only way to close that gap in coverage is to purchase a separate crime policy that would provide coverage for employee dishonesty.
A motor carrier with a brokerage entity should be taking particular care when working with motor carriers that have unfamiliar cargo policies. Too often we see a brokerage shipment excluded from coverage, which can cause major heartburn for all parties involved.
A strong transportation risk advisor can provide many strategies and insights to help you understand and manage this seemingly daunting task.