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Understanding Motor Truck Cargo Insurance Exclusions

May 10, 2023

Motor truck cargo (MTC) is a specialized insurance coverage that protects against loss or damage to goods transported by a truck. This insurance product is intended for businesses that haul cargo for others, such as freight forwarders, trucking companies, and shipping companies 鈥 including Amazon shipping fleets.聽

MTC coverage is a critical form of protection for businesses transporting goods and merchandise and it鈥檚 often required before a trucking or shipping company can accept a job.聽 However, the policy language can be very confusing and coverage terms vary significantly by carrier.聽 Rick Smith Jr., 麻豆放映免费 Transportation Lead explains, 鈥淲ith and the true explosion of Amazon deliveries over the past five years, it is more important than ever to know your motor truck cargo coverage, especially with respect to shipping commodities. As an agent, your clients rely on you to help them understand what鈥檚 covered and what鈥檚 not.鈥

Motor Truck Cargo Insurance Explained

Once a trucking company signs the for a shipment of goods, they become responsible for those goods. By signing, they agree that the items they鈥檙e being paid to transport will arrive at their intended destination safely. MTC protects the trucking company from having to pay out-of-pocket for damages or losses that may occur while on the road.聽

For instance, let鈥檚 say you鈥檙e a trucking company transporting a shipment of expensive items cross-country, and the truck gets broken into and stolen at a rest stop. Or, hail from a storm damages the truck and the contents inside. Or, slippery road conditions cause the truck driver to lose control of their vehicle, overturning the trailer and damaging or destroying the cargo.聽

In all these instances, MTC coverage would typically step in to protect both the owner of the goods and the company transporting them by covering the costs for repair or replacement of the cargo.聽

All Risk vs. Named Perils

There are two main types of cargo insurance 鈥 鈥渁ll risk鈥 and 鈥渘amed perils鈥 coverage.

  1. All Risk: As the name implies, all risk (also known as 鈥渂road form鈥) coverage provides protection for cargo against all types of risks, unless they are specifically excluded from the policy. They cover losses resulting from unexpected and unforeseeable events such as theft, damage, or loss due to an accident.
    All risk policies tend to be very comprehensive and typically offer a higher level of protection than named perils coverage. They also usually come at a higher premium.
  2. Named Perils: Sometimes referred to as 鈥渟pecified perils鈥 coverage, this type of coverage provides cargo protection only against risks that are specifically named in the policy. This might include:
    • Fire, lightning, or explosion
    • Collision
    • Overturn
    • Collapse of bridges, docks, wharves, culverts, overpasses, or ramps
    • The stranding, sinking, burning, or collision of any ferry while operating on inland waterways only
    • Floods
    • Windstorm, excluding loss caused by hail, rain, sleet, or snow, whether wind-driven or not
    • Theft of an entire shipping package

Any loss not caused by the specified perils is automatically excluded from coverage. This narrower scope of coverage tends to be less expensive than all risk.聽

The type of coverage a business needs depends largely on the type of cargo they鈥檙e transporting and the associated risks. Tracy Fisher, 麻豆放映免费 Vice President of Transportation Underwriting, explains, 鈥淣amed peril policies are more restrictive than all risk policies, but they鈥檙e commonly used for higher-risk cargo, such as livestock or mobile homes. They also tend to be more affordable than all risk coverage and can help manage the insured鈥檚 cost if the insured only needs coverage for specific perils.鈥

That said, some shipping businesses may prefer the additional coverage that an all risk policy provides. They may also be required by potential customers to show proof of all risk coverage before being hired.聽

Watch Out for MTC Coverage Exclusions聽

As with all insurance policies, it鈥檚 critical to carefully review the policy terms for exclusions. On the surface, a named perils policy might appear more straightforward, but they often have their own set of circumstances or situations that are excluded from coverage. And although an all risk policy may appear all-encompassing, they can also have surprising exclusions.

Regardless of policy type, it鈥檚 essential to understand what exactly is covered and what鈥檚 not.

According to Fisher, 鈥淎ll carriers have their specific exclusions, so you have to be very knowledgeable and vigilant about what you鈥檙e offering your client.鈥澛

When reviewing cargo policies, here are several important details to look out for:聽

  • Loading and unloading coverage (or exclusions).
  • Refrigeration breakdown coverage. (Pay attention to any maintenance requirements for the coverage to respond.)
  • Debris removal. (Consider what limit is included and whether it needs to be increased to fit the client鈥檚 needs.)
  • Earned freight charges, (If it鈥檚 not covered, it may need to be added as additional coverage.)聽

Negotiating MTC Coverage Terms

If a carrier鈥檚 standard policy includes restrictions that don鈥檛 fit a company鈥檚 needs, there is often room for negotiation, especially if you work with a knowledgeable broker. Smith states, 鈥淚t鈥檚 all about good detective underwriting work and full disclosure at quoting time. Just because coverage is excluded, most carriers have the ability to add coverage back in with restrictions. For instance, a carrier may sublimit theft and charge a higher rate.鈥

麻豆放映免费 specializes in all types of cargo policies and we have several Motor Truck Cargo carriers with flexible and competitive terms.聽 Secure the protection that your valued clients need by contacting us today.

The 麻豆放映免费 Transportation/Garage Insurance Team

The 麻豆放映免费 Transportation/Garage Insurance Team

If your risk has wheels, 麻豆放映免费鈥檚 transportation and garage team has a broad range of insurance solutions for you. Our industry-leading underwriters are always imagining what鈥檚 ahead of the curve in the transportation industry and ready to combat any current or future challenges that may exist in the marketplace.
All-Risk vs Named Perils | Motor Truck Cargo Insurance

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