Cargo Insurance: What's Actually Covered and How Claims Work
Your liability insurance protects other people. Cargo insurance protects the freight you're hauling. Here's everything you need to know — what it covers, what it doesn't, and what happens when a load goes wrong.
What Is Cargo Insurance?
Cargo insurance (also called motor truck cargo or MTC) covers the freight you're hauling in case it's damaged, destroyed, or stolen while in your care, custody, and control. It pays the shipper for the value of the goods — not for damage to your truck (that's physical damage insurance).
Cargo Insurance Pays For:
Damaged or lost freight you were hauling
Auto Liability Pays For:
Damage/injury you cause to other people and property
Physical Damage Pays For:
Damage to your own truck and trailer
Is Cargo Insurance Required?
It depends on who you ask.
Federal Law (FMCSA)
FMCSA requires cargo insurance for household goods carriers (BMC-32 endorsement, minimum $5,000 per vehicle / $10,000 per incident). For general freight carriers, there's no federal cargo insurance requirement — but most can't operate without it because of broker requirements.
Brokers & Shippers
Almost every freight broker requires cargo insurance before they'll give you loads. $100,000 is the standard minimum. Many require $250,000 or more. No cargo insurance = no loads from most brokers, period.
Load Boards
DAT, Truckstop, and most load boards display your cargo coverage on your carrier profile. Shippers filter for carriers with cargo insurance. Without it, you're invisible to most of the freight market.
What Does Cargo Insurance Cover?
Standard motor truck cargo policies cover loss or damage to freight while it's in your possession. The specifics depend on your policy type:
Broad Form (All-Risk)
Covers all causes of loss except what's specifically excluded. This is the standard for most trucking operations. If it's not listed as an exclusion, it's covered.
Typically covers:
- Collision/overturn of your vehicle
- Fire
- Theft (vehicle and cargo stolen together)
- Weather damage (rain, hail, wind)
- Loading/unloading damage
- Bridge/road collapse
Named Perils
Only covers causes of loss that are specifically listed in the policy. Cheaper, but gaps are common. If a cause of loss isn't named, it's not covered — even if it seems reasonable.
Typically covers:
- Fire
- Collision
- Theft (may have restrictions)
- Explosion
- Lightning
- Loading/unloading (sometimes)
What Cargo Insurance Does NOT Cover
This is where people get burned. Every cargo policy has exclusions. Here are the most common ones:
Unattended Vehicle Theft
If you leave your truck unattended and cargo is stolen from the trailer, most policies won't cover it — or they'll have strict conditions (locked trailer, secured lot, maximum time unattended). This is the single most common cargo claim denial.
Reefer Breakdown
If your refrigeration unit fails and temperature-sensitive cargo spoils, standard cargo policies usually exclude this. You need a reefer breakdown endorsement — it adds $200-$500/year but is essential if you haul produce, frozen goods, or pharmaceuticals.
Improper Loading/Securing
If freight shifts and gets damaged because you didn't secure it properly, the claim may be denied. Policies vary: some cover shifting cargo, others exclude it, and some cover it only if you can prove the securement was initially adequate.
Inherent Vice / Nature of Goods
Damage from the natural characteristics of the cargo — fruit that over-ripens, chemicals that react, live animals that die of natural causes. The cargo's own nature caused the loss, not anything you did.
War, Nuclear, Government Action
Standard exclusions in almost every insurance policy. Damage from war, nuclear events, government seizure, or confiscation. Unlikely to affect most truckers, but it's in the policy.
Contamination
If your previous load contaminated the trailer and damages the next load, that's usually excluded. Clean your trailer between loads — especially when switching from chemicals, fertilizers, or strong-smelling cargo to food products.
Delay
If you're late and the shipper suffers financial loss because of delay — that's not covered by cargo insurance. Cargo insurance covers physical loss or damage to the freight itself, not consequential damages from being late.
Commodities Not Listed
Your policy covers specific commodity types. If you haul something outside your listed commodities, the claim may be denied. Hauling electronics but your policy says "general freight"? Might be a problem. Always verify your commodity list matches what you actually haul.
How Much Cargo Insurance Do You Need?
| Operation Type | Typical Minimum | Recommended | Why |
|---|---|---|---|
| General freight / dry van | $100,000 | $100,000-$250,000 | Standard broker requirement; higher if hauling full truckloads of valuable goods |
| Flatbed / hotshot | $100,000 | $100,000-$250,000 | Equipment and construction materials can be expensive; some oil field loads are $200K+ |
| Refrigerated / reefer | $100,000 | $100,000-$250,000 | Add reefer breakdown endorsement; perishable cargo claims can be total losses |
| Auto hauler | $250,000 | $250,000-$500,000 | Hauling 8-10 vehicles at $30K-$60K each; total load value can hit $500K |
| Household goods | $5,000/vehicle | $50,000-$100,000 | Federal minimum is low; real household moves are worth far more |
| High-value freight | $250,000 | $500,000+ | Electronics, pharmaceuticals, alcohol, tobacco — high value, high theft risk |
The rule of thumb: Your cargo coverage should be at least equal to the maximum value of any single load you'll haul. If you regularly haul loads worth $150,000, carrying $100,000 in cargo coverage leaves you $50,000 short on every claim.
How Cargo Claims Work
When freight gets damaged or lost, here's what actually happens:
Document Everything at the Scene
Take photos of the damage, your securement, the trailer, and the scene. Note weather conditions, road conditions, and what happened. If there was an accident, get the police report number. If cargo was stolen, file a police report immediately.
Notify Your Insurance Company
Call your agent or the carrier's claim hotline. Most policies require notification within 24-72 hours. Don't wait a week — delayed notification can complicate or void your claim. Provide: date, location, type of loss, estimated value, and your documentation.
Shipper Files a Claim Against You
The shipper (or their insurance company) will file a formal claim for the value of the damaged/lost goods. Under the Carmack Amendment (49 USC 14706), motor carriers are strictly liable for cargo loss — meaning you're liable even if you did nothing wrong, with limited exceptions.
Adjuster Investigates
The insurance company assigns an adjuster to investigate the claim. They'll review your documentation, the shipper's claim, the bill of lading, delivery receipts, and any inspection notes. They may request additional information or photos.
Claim Decision
The adjuster either approves the claim (and pays the shipper up to your policy limit minus your deductible) or denies it (usually citing an exclusion or coverage gap). If approved, your insurance company pays the shipper directly. You pay your deductible.
The Carmack Amendment: Why It Matters
Under the Carmack Amendment (49 USC 14706), interstate motor carriers are strictly liable for loss or damage to cargo. This means:
- The shipper doesn't have to prove you were negligent
- They only have to prove: the cargo was in good condition when you picked it up, it was damaged when you delivered it, and the amount of damages
- You're liable even if you did everything right (bad road, other driver's fault, weather)
There are only five defenses: act of God, public enemy, act of shipper, public authority, or inherent nature of the goods. "I was driving carefully" is not a defense.
This is why you need cargo insurance. Without it, YOU pay for every damaged load out of pocket — even when it's not your fault.
Cargo Insurance Deductibles
Your deductible is what you pay out of pocket before insurance kicks in.
Higher premium, lower out-of-pocket on claims. Good for operators who haul frequently and want maximum protection on every load.
Balanced approach. Manageable out-of-pocket cost while keeping premiums reasonable. This is what most truckers carry.
Lower premium, higher out-of-pocket. Good for experienced operators with cash reserves and low claim history who want to save on premiums.
Consider this: If your deductible is $2,500 and you have a $3,000 claim, you're paying $2,500 and insurance pays $500. Small claims may not be worth filing because they count against your claim history and can raise your rates at renewal.
8 Ways to Protect Yourself
Inspect freight at pickup
Note any pre-existing damage on the bill of lading. Take photos BEFORE loading. If the shipper says "don't open it" — note that on the BOL too. This is your proof that damage existed before you touched it.
Document at delivery
Take photos during unloading. If the receiver notes damage, get it in writing. Have the receiver sign the delivery receipt with specific damage noted — not just "damage."
Keep your trailer clean
Contamination claims are avoidable. Clean between loads, especially when switching commodity types. A load of onions followed by a load of chocolate is a contamination claim waiting to happen.
Secure loads properly
Follow FMCSA securement rules (49 CFR 393). Use the right number of tie-downs for the weight and length. Improper securement is both a safety violation AND a reason for claim denial.
Don't leave freight unattended
If you must stop, use a secured lot with lighting and cameras. Lock your trailer. Don't park overnight at rest stops with a high-value load. Theft from unattended vehicles is the most commonly denied cargo claim.
Verify your commodity list
Call your agent if you're hauling something new. Your policy has a commodity list — hauling something not on it can void your coverage for that load. Adding a commodity usually takes one phone call.
Read your bill of lading
The BOL is a contract. It lists what you're hauling, its value, and conditions. If something looks wrong — wrong count, wrong description, pre-existing damage — note it on the BOL before you sign it.
Report claims immediately
Don't wait to "see if it's a big deal." Notify your insurance company within 24 hours. Late reporting is a reason for claim denial in many policies.
What Does Cargo Insurance Cost?
What affects your rate:
- Commodity type — General freight is cheap. Electronics and pharmaceuticals cost more. Hazmat costs the most.
- Coverage amount — $100K is the baseline. Each increase adds to the premium.
- Deductible — Higher deductible = lower premium.
- Claims history — Zero claims = best rates. Multiple claims = significantly higher premiums or non-renewal.
- Operating radius — Local/regional is cheaper than long-haul (less exposure per trip).
- Carrier (insurer) — Progressive, Canal, National Indemnity all price cargo differently.
Put it in perspective: Cargo insurance at $100K coverage typically costs $400-$2,500 per year. That's $1-$7 per day. One cargo claim without insurance could cost you $50,000-$100,000+ out of pocket. This is one of the cheapest insurances you'll carry relative to the exposure it covers.
Common Questions
Can I haul without cargo insurance?
Legally, in most cases, yes (except household goods carriers). Practically, no. Most brokers and shippers require it. And under the Carmack Amendment, you're strictly liable for cargo damage — so without insurance, YOU pay every claim out of pocket.
Does the shipper's insurance cover my load?
No. The shipper may have their own cargo/marine insurance, but that's their policy for their protection. As the carrier, you're still liable under the Carmack Amendment. If the shipper's insurance pays the claim, they'll subrogate (come after you) to recover their costs.
What if I'm hauling for Amazon, FedEx, or a large shipper?
Large shippers often self-insure their freight and may not require you to carry cargo insurance — BUT they'll deduct the value of damaged goods from your settlement. Read your carrier agreement carefully. Most owner-operators still carry cargo insurance for loads from other customers.
Does my cargo insurance cover someone else's trailer?
Typically, cargo insurance follows the freight, not the trailer. If you're pulling a shipper's loaded trailer (drop-and-hook), the cargo should still be covered under your policy while in your care, custody, and control. Verify with your agent for your specific policy.
What's the difference between cargo insurance and a cargo bond?
A cargo bond (BMC-84) is a surety bond that freight brokers must file with FMCSA — it's $75,000 and protects shippers from broker fraud. It's NOT the same as cargo insurance. Carriers need cargo insurance; brokers need cargo bonds. Don't confuse them.
Get the Right Cargo Coverage
We'll match your cargo insurance to your actual operation — the right commodity types, the right coverage amount, and the right deductible. No gaps, no overpaying.