Cargo insurance is required if you haul and deliver goods for a living. How it works is lost or damaged shipments will be compensated for but only up to your policy’s limit. As you can imagine, cargo insurance can get pretty expensive since many shipments are worth hundreds of thousands of dollars, if not more.
In fact, shippers are very strict when it comes to truckers having the required cargo limit. If you fail to meet the requirements you’ll be denied the load. As you can see, cargo insurance is no joke, and businesses are prioritizing the protection of their goods during transportation.
As you can expect, there’s no one size fits all when it comes to cargo insurance. Every business is unique and your coverage will be tailored to meet your specific needs. So, without further ado, here’s the cost of cargo insurance and factors that can affect your rates.
Cargo Insurance Cost
Typically, the cost of cargo insurance ranges between $400 and $1,800 annually. It’s important to keep in mind that rates vary from one insurer to another. So, to get the most affordable insurance, it’s wise to shop around and gather multiple quotes from several companies.
Here’s a breakdown of the typical cost of cargo insurance depending on the limit chosen:
|Policy Limit||Standard Cost Per Year|
|50k||$400 to $700|
|100k||$800 to $1,400|
|250k||$1,100 to $1,800|
How Do Insurance Companies Calculate Cargo Insurance Rates?
Trucking insurance is not cheap by any means. In fact, cargo insurance is one of the most expensive behind liability coverage. Cargo theft is a growing pain and becoming a big problem around the country. In fact, Texas reports some of the highest numbers of cargo thefts along with Florida and California.
Here are some factors that an insurer will take into account when determining your rates:
- The type of goods you’re hauling (oil, gas, and hazardous materials will cost more)
- Your location
- The limit you’ve chosen (the most common are 100k, however, some need 250k-300k or even a million)
- Your loss history
- How long you’ve been in business (experience and age)
What Are Some of the Common Coverages Included in a Cargo Insurance Policy?
As mentioned earlier, one of the factors affecting the cost of your cargo insurance is the other various coverages you’ve opted for. We understand low-cost insurance policies may sound tempting; however, they could be missing some key coverages. Therefore, you need to assess the risks and be proactive when it comes to choosing a policy.
Here’s a rundown of the common coverages that may be included in your cargo insurance policy:
- Pollution Liability– covers the cost to clean up spilled goods like oil and gas
- Theft– this compensates for stolen goods
- Hijackings– this compensates for goods that’ve been hijacked
- Debris Removal– covers the costs to clean up cargo scattered along roadways
- Dishonesty Coverage– this protects you if one of your drivers steals from you
- Earned Freight Coverage– this covers lost income due to damaged cargo that can’t be delivered
- Loading and Unloading Coverage– if cargo is damaged during the loading/unloading process this protects you
- Water Damage– covers leaks and other water damage in your trailer
- Reefer Breakdown– this covers you if your refrigeration unit on your truck breaks down
All in all, the cost of cargo insurance depends on many factors. If you run a trucking fleet, make sure you have a good understanding of the various factors that affect your rates. Thus, the article explains everything you need to know about the cost of cargo insurance.