A pallet of freight gets crushed. The broker says they have contingent cargo coverage. The carrier assumes that settles it. It does not, and the misunderstanding costs small carriers real money every week.
What motor truck cargo actually covers
Your cargo policy covers the freight while it is in your care, custody and control – loaded on your trailer, in transit, and usually for a short period in storage. It responds to fire, collision, theft, water damage and load shift, subject to the exclusions in your policy.
What broker contingent cargo covers
A contingent policy protects the broker, not you. It responds only when the motor carrier policy fails to – because the carrier had no coverage, the policy lapsed, or the claim was denied. And when it does respond, the broker insurer will usually pursue you for the money afterwards. Contingent coverage is a backstop for the broker balance sheet; it is not a substitute for your own policy.
Who pays in practice
Under the Carmack Amendment, the motor carrier is generally liable for loss or damage to freight in interstate transport. The broker will deduct the claim from your settlement or invoice you for it. Your cargo policy is what stands between that claim and your bank account.
The exclusions that catch people out
- Unattended vehicle theft. Many policies require the trailer to be locked and parked in a secured lot; a truck stop lot may not qualify.
- Reefer breakdown. Often a separate endorsement, and typically conditional on a working temperature download.
- Commodity exclusions. Electronics, tobacco, alcohol, pharmaceuticals and copper are commonly excluded or sub-limited.
- Employee dishonesty and driver theft.
- Freight that was never actually in your custody – misdelivered by a third party, for example.
How much cargo coverage to buy
The $100,000 limit written into most broker agreements is a contractual minimum, not an assessment of your exposure. If you regularly haul loads worth $250,000, a $100,000 limit means you self-insure the difference. Look at the value of what you actually move, not what the paperwork requires.
Double-brokering and cargo claims
If you accept a load and hand it to another carrier without authorisation, most cargo policies will not pay. Double-brokering voids coverage under the majority of policy forms and is one of the fastest ways a small carrier ends up personally liable for a six-figure loss.
If a load is damaged
- Photograph everything before anything is moved.
- Get the delivery receipt annotated with the damage, signed by the receiver.
- Report it to us the same day – late reporting is a common reason claims are contested.
- Do not agree to a deduction from your rate until the claim is assessed.
Bottom line
Carry your own cargo policy at a limit that matches what you haul, read the exclusions before you bind, and do not treat the broker contingent policy as coverage. If you are not sure what your current policy excludes, send it over and we will read it with you.