Image Image Image Image Image Image Image Image Image


15 Dec


Cargo Coverage Varies Drastically from One Policy to the Next

December 15, 2011 | By |

Reading cargo policies does not normally top our clients list of “things to do”.  They trust me or another one of our agents to provide them with the details they need in order to select the proper cargo policy to meet their business’ needs.  But are you aware of just how much coverage can vary from policy to policy?  Having some familiarity with common coverage exclusions and enhancements can be very helpful, since the needs of your operation can and will change throughout the lifetime of a policy.


It may be helpful first to know that each insurance company has the opportunity to file their own version of a cargo policy.  Each of these policies can contain any number of unique exclusions and/or enhancements.  Following are just a few examples of unique commodity exclusions that might exist in any number of cargo policies: furs, garments, electronics, eggs, fresh flowers, seafood, silk, jewelry, pharmaceuticals, cotton ginned within 72 hours, alcohol and tobacco.

Policies may also exclude coverage for certain types of losses, such as those arising from mechanical breakdown of the refrigeration unit (including or excluding driver error) or dampness, rust or wetness.  And many will not provide coverage for niche cargo exposures such as autos, yachts, boats, household goods, motor homes and RVs, livestock and operations as a freight brokers or freight forwarders.


Some other common coverage differences include a co-insurance clause (where you are penalized if you under value your cargo), no coverage for newly acquired or substitution vehicles unless they are immediately reported to the insurance company and no cargo coverage if the cargo is loaded on a trailer that is not attached to a tractor at the time of the loss.


Further consideration should be given to those additional expenses some insurance companies will provide payment for, above and beyond the policy limits.  Examples include the costs to clean up debris, pollutant clean up and removal, payments to help reduce the loss, coverage for extra expenses to get the freight reloaded and earned freight reimbursement (i.e. reimbursement for the miles you would have invoiced from pick-up to the point of loss that your client likely will not be paying you for.)


With so much to consider it’s no wonder we often labor the details of your cargo needs and spend so much time reviewing the details of our proposed cargo coverage.  Do you have questions about your current cargo policy and whether any of the above referenced exclusions or enhancements apply?  Call our office today at (800) 596-TRUCK (8782) to request a policy review.  All of us at the Navigator Truck Insurance Agency work hard at being accessible, helpful and result oriented. 

28 Jan


The Unexpected Burn of Co-Insurance

January 28, 2009 | By |

I have recently been encountering more instances where prospective clients have been burned by a Co-Insurance clause on their Physical Damage or Cargo policies.  Co-Insurance can be a confusing thing to navigate and requires special attention to policy limits and the actual cash values of equipment and cargo than policies without Co-Insurance. 


What is Co-Insurance?

It should first be explained exactly what Co-Insurance is.  Co-Insurance is a device used by insurance companies to encourage policyholders to insure their property (i.e. tractor, trailer, cargo, building or contents) for amounts which are close or equal to the actual cash value of the property.  In essence you are penalized if you do not carry “adequate limits.”  Normally, an “adequate limit” is defined by the insurance company as somewhere between 80% and 100% of the actual cash value of the property (depending upon the policy verbiage.)  If you do not carry the “adequate limit,” the insurance carrier will reduce your claim settlement in the event of a partial loss.  Co-insurance does not apply to total losses.


How does it work?

Let’s use an example where a Physical Damage policy has an 80% Co-Insurance requirement.  The actual cash value of the tractor in question is $100,000.  The insured has it listed as $75,000 on his policy.  Under the Co-Insurance clause, he would have needed to schedule it for a minimum of $80,000 in order for the Co-Insurance clause not to apply.


The tractor is involved in a covered loss that causes damage, but doesn’t total the tractor, and now the claims adjustor is determining how much to pay the insured.  In this case he would take the amount of insurance the insured DID carry ($75,000) and divide it by what he SHOULD have carried ($80,000.)  This factor (.9375) is now applied to the amount to be paid to he insured.  Let’s assume that the damage totaled $50,000.  This means that the amount paid would be $50,000 x .9375 less the deductible.  So in this case, instead of receiving $50,000 less the deductible, the insured will receive $46,875 less the deductible.  And there’s the burn.  The client ends up “self-insuring” an additional $3,125.

Do your Physical Damage or Cargo policies carry a Co-Insurance clause?  Not sure where to look to find out?  Give us a call at (800) 596-TRUCK (8782.)  Often times we can tell you without even looking at the policy verbiage if the insurance carrier has a Co-Insurance clause.  In those cases where we can’t, a quick review of your policy will tell us for certain.  Don’t get caught off guard.


Until next month,


Jeffery A. Moss, ARM