3 Things to Know About Freight Insurance

3 Things to Know About Freight Insurance

by Amernesa Kelmendi

Unfortunately, freight damage sometimes happens. In addition, there is a common misconception in the freight industry that the carrier covers your shipments through the carrier’s liability coverage. While carriers have liability coverage, it doesn’t always cover the value of the item you are shipping. So, what do you do if your shipment is damaged in transit? How do you ensure your business has the coverage and protection you need from unexpected or unforeseen losses or events? We’ve put together 3 things to know about freight shipping insurance to help you confidently ship.

Freight Insurance: What It Is, What It’s Not & What It Covers

Every freight shipment is legally required to come with limited liability coverage, which is a carrier’s default protection policy. This limited liability coverage provided by the carrier is either a flat rate policy or an amount that adjusts based on the weight and the freight class of the item you’re shipping. However, it’s very important to note that this carrier-provided coverage doesn’t necessarily reflect the actual value of the item that’s being shipped. So, suppose your item is worth more than the standard coverage amount. In that case, it’s worth adding an independent freight insurance policy to cover your shipment in the event an accident or damage occurs.

Freight insurance provides additional coverage above and beyond the carrier’s default protection policy. These independent policies can offer protection for the full value of your shipment and remove the need to prove liability if any damage or loss of shipment occurs.

If you need to file a liability claim because your shipment was damaged, the carrier must be at fault for the damaged or lost item. In addition, any damage must be noted on the delivery receipt, or else the carrier will deny liability instantly. If damages occur from inadequate packaging, loading errors, or weather-related instances, the carrier is not responsible or at fault for the damage.

Make sure your item is eligible for coverage. And remember, not all items are insurable. Some independent policies, for example, do not offer coverage for fresh foods, laptop and tablet computers, jewelry and precious stones, cell phones, boats, yachts, or household goods.

Understand Your Coverage Options

When you purchase your own freight insurance coverage, you will need to decide upon limits and deductibles. The verbiage and definition will vary from policy to policy, but generally, the limit refers to the maximum amount that the insurance provider will pay if your item is damaged.

The deductible refers to the amount you’ll have to pay out of pocket if your freight is damaged, and you must file a claim. Increasing your deductible can help to lower the price of your insurance. However, be mindful of what you’re saving versus how much you’ll have to pay out of pocket in the event of a claim. For example, check the premium amount for a $500 deductible versus a $1,000 deductible. If you’re only saving $5 on the premium of a $1,000 deductible policy, it’s not worth the savings. Explore all your options before deciding.

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