Freight Insurance Vs. Freight Liability: What’s the Difference?

freight insuranceWhen you ship out freight, you would be wise to insure the cargo in the event it incurs damage in transit. You ask: “Don’t carriers cover you automatically?” Well, yes and no. We’ll discuss freight insurance and freight liability and how they differ.

Freight Insurance and Freight Liability Explained

Insurance and liability coverage are similar but not exactly the same. Federal law requires all truck transports to have basic liability coverage. Depending on your freight and personal assessment, this may or may not be adequate.

Basic liability coverage differs from carrier to carrier. It covers a specific amount of damage, usually calculated by a dollar amount for every pound of freight. The maximum coverage amount may be less than the monetary worth of the freight.

Coverage is usually limited to incidents that are deemed negligent on the carrier’s end. The carrier’s failure to properly secure the pallet once inside the truck or trailer is one example. Liability coverage typically does not include other scenarios, such as theft or nature-induced damage.

What About Freight Insurance?

Insurance essentially covers most or all other scenarios that basic carrier liability does not cover. This is optional, so it’s up to clients whether they wish to purchase additional coverage for their freight. The insurance is in effect from the time the freight leaves your warehouse until it reaches the destination. Insurance may also cover the freight while it’s sitting in overnight storage.

In any case, look carefully at the policies for both the freight liability and freight insurance. Know what each one does and does not cover.

Coordinate with a Freight Broker

Contact Machine Transport to schedule your next outbound shipping. All of the carriers we work with follow federal laws regarding basic liability coverage. We can help you if you choose to apply for additional coverage. Freight liability and freight insurance protect your investment in the event of a devastating in-transit scenario.

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