Freight Insurance FAQs

Freight Insurance FAQs

Tons of freight moves around the globe daily, and unforeseen events can occur while it’s in transit, including natural disasters, wars, accidents and theft.

For peace of mind, you may want to invest in freight insurance, which offers coverage for physical loss or damage to your goods during international or domestic transportation by sea, air or land.

“Freight insurance can be broken into two categories: carrier freight insurance and third-party cargo insurance,” according to Texas-based shipper FreightPros. Carrier freight insurance is automatically included in your shipping rates and subject to each carrier’s insurance policy. On the other hand, insurance companies provide third-party cargo insurance. They file claims on your behalf and coordinate the payout of damages with the carrier’s insurance department.

Below, we’ve compiled some of the most common questions business owners have about freight insurance:
Do I need freight insurance?
It depends on the total value of the goods shipped, the shipping origin and destination, and the mode of transportation, says Maryland-based shipper Priority Worldwide. If you don’t purchase a distinct policy for your shipment, the coverage may be less than the value of your goods.

Where can I purchase freight insurance?
Talk to your current insurance provider about adding freight insurance to your policy. Your agent can offer valuable info about the specific coverage, if any, that you may need. Your carrier may also have a list partners that provide cargo insurance.

What type of coverage is available?
There are several types of coverage. Check with your carrier and/or insurance agent to determine which is best for you. They include:
Legal Liability — All freight shipments come with limited liability coverage, which is determined by the carrier and based on class, weight, and packaging of each shipment. Typical limits of liability for domestic shipments is $0.50 per pound, and $9.07 per pound ($20 per kilogram) for international shipments.
Insurance of Goods Only — This coverage is for the replacement value of goods, or commercial invoice value.
Insurance of Goods, plus Shipping Charges — This coverage includes shipping charges along with the value of your goods.
All-Risk — This coverage is comprehensive and covers any physical loss/damage from any external cause, no matter who was negligent or what event caused the damage.
Total Loss — This coverage is for total loss/catastrophe of entire shipments and does not cover partial losses.

What if my goods are damaged?
Notify your carrier immediately if your shipment is damaged — preferably at the time of delivery and on the Proof of Delivery paperwork. Otherwise, your claim may take longer to process, or it could be completely denied. If damage is not notated on the bill of lading at time of delivery (concealed damage), most carriers may require you to notify them within a certain timeframe, such as within 24 hours of delivery.