Ask An Agent: How Much Cargo Insurance Do I Need?

Today’s question comes from an owner-operator with a new motor carrier number. He has a common question: How much cargo insurance do I need? As you’ll see, the answer depends on what type of freight you haul. However, talking about it with your insurance agent can provide clarity. Call our licensed insurance agents at 855-281-2924.

Question Of The Week:

“Will, how much cargo insurance coverage do I need to activate my MC number and get loads? Do I need $1,000,000 cargo insurance? What do I need to purchase to start rolling?”

First of all, congratulations on activating your motor carrier and opening your trucking company! With determination, professionalism, and safe driving, you can make good money and create jobs for your fellow truckers. I recommend reading the FMCSA’s Safety Audit Guide. You can thank me later.

Cargo insurance, also known as and Cargo Liability Insurance, provides coverage for damage to freight. Your insurance limit should cover the cost of the freight you haul. For example, if you have a dedicated lane hauling new furniture valued at $95,000, you should maintain at least $100,000 cargo. This limit provides enough coverage if all of the furniture is destroyed.

There are many misconceptions about cargo insurance. The most frequent question I am asked about cargo is, “How much cargo insurance do I need to haul freight?” Most owner-operators and small fleets need a cargo insurance limit of $100,000 to haul dry van goods, reefer goods, or intermodal. However, this is not the end-all-be-all limit. Some trucking operations such as auto hauling or flatbed trucking may require a higher cargo limit. Likewise, agricultural hauling, dump truck hauling for a fee, and clean frack sand hauling may allow for a lower cargo limit.

You also need to consider what cargo limit freight brokers require for loads. Many freight brokers require at least $100,000 cargo insurance even if the freight is not worth that much. You might ask, “Why do freight brokers require a minimum of $100,000 cargo for lower value loads?” It is to ensure that every trucking company in their network meets a certain insurance limit. Equally, It would be time consuming to verify every cargo limit. By doing this, they can broker loads with ease and with more efficiency.

So, do you need $1,000,000 cargo insurance? Most likely, no. Many people confuse cargo insurance requirements with auto liability insurance requirements which are $750,000 to activate your motor carrier number or $1,000,000 to meet broker requirements. Unless you are hauling freight valued at $1,000,000 such as luxury goods, high-end automobiles, or specialty items you do not need that much.

As the economy changes and the cost of goods increases, freight brokers may increase their cargo insurance requirements. I think in five to 10 years, most brokers will require $150,000 or $200,000 cargo as the new baseline. Indeed, I am already seeing auto haulers need more insurance than they did three years ago. In addition, many flatbed truckers need $125,000 cargo to cover large machinery and equipment.

Do you want an insurance quote from a truck insurance expert? Call our office at 855-281-2924 or submit your information online for a same-day quote.

This blog is for informational purposes only and does not amend, modify, or supplement any insurance policy. Read our informational disclaimer here.