Freight insurance, as the name suggests, is an insurance policy that covers the loss or damage of cargo during transport. However, there are limitations and some gray areas you should know about. Regretfully, things are not as straight forward as they should be. Shipping freight across the US or elsewhere is generally safe. Albeit, damage, loss of freight in transit, or theft does occur. Read on and educate yourself more on whether insured cargo is right for you.
How Freight Insurance Works
Freight insurance provides compensation to the owner of the goods in the event of damage or loss. However, did you know that it is based on replacement cost? Yes, replacement cost is what you will be reimbursed since, market value or sale price is not acceptable. Therefore, you must keep diligent records of your purchases. Especially, purchase orders and proof of deliveries. These important documents are required in order to process a claim.
Should I Purchase Insurance For My Shipment?
Freight insurance is not mandatory, but it’s a wise investment. If your business involves shipping high-value or delicate goods, you may want to consider freight insurance. Specifically, less than truckload shipments have a higher degree of damage, due to extra handling. While shipping freight companies are liable for cargo loss or damage to a certain extent, their liability is often limited or waived in certain circumstances. Thus, freight insurance offers coverage that goes beyond the carrier’s liability.
Insured Cargo For LTL Shipments
Insured cargo for LTL shipments is loosely based on the freight class. For example, the amount LTL carriers are willing to insure is higher on freight class 100 than freight class 60. Additionally, LTL carriers sometimes deem items to be release value type commodity. This is important to know in advance.
Conclusion On The Subject Of Insurance For Your Freight
Insuring your freight offers you an added layer of protection. You can rest easier during the transit of your shipment. But, as we mentioned earlier it is not mandatory and completely up to the shipper of the goods. Sometimes the cost of the insurance is not feasible. We understand that keeping freight cost down is important, but so is protecting your investment in a fast paced industry like freight shipping.