Understanding Your Cargo Insurance

Not all cargo insurance are the same. The breadth of coverage, service, pricing, and loss prevention varies with each insurer. A low cost policy might save you money, but it could also mean you have less coverage. Because cargo insurance covers the legal liability of the carrier as the transporter of freight, carriers cannot afford to be cheap with cargo insurance. The carrier may have to do some research, but if the carrier knows what to look for, there are many cargo insurers that offer good policies at an affordable cost. It also helps if the insurance agent that understands the nature of your business.

Here’s what to look for when considering cargo insurance:

1. Description of Covered Property: This section of the policy informs you what is covered and what isn’t. For example, if you have a policy that covers only ferrous metals, it the cargo doesn’t contain iron, aluminum, or copper, it wouldn’t be covered. If the policy excludes garments, clothing wouldn’t be covered. Another example is that if the policy excludes electronics in which anything that can be plugged in or uses batteries wouldn’t be covered.
2. Insuring Agreement: There are two different types of insuring agreements. Be sure to know which insurance agreement you have. The Named Peril Policy covers only those perils that are listed, subject to exclusions. Perils include the overturn of a vehicle, collision bridge collapse, and so on. Theft is usually covered, but exclusions or endorsements may remove coverage for driver theft or theft from a vehicle which was left unattended. If the incident in question is not covered on the list then you will not be covered.
3. Exclusions: This is the section of the policy where you find that certain perils are not insured. Exclusions, as mentioned above, included theft by the drive (or any other employee), theft from an unattended vehicle (many policies will cover an unattended vehicle if it is completely locked and located in a secure place), and loss when the trailer is not attached to a power unit.
4. Scheduled Vehicle Policies: When the FMCSA removed the cargo insurance requirement, the BMC-32 endorsement was eliminated as well; therefore, the use of a truck that is not listed on policy will no longer be covered. No exceptions.
5. Endorsements: Endorsements covers modifications to the policy. This allows the insurer to expand, restrict, or eliminate coverage. One example is that some cargo policies exclude temperature damage, but with a endorsement coverage is provided if the damage is caused by damaged refrigeration unit. Pay close attention to endorsements since they can add to or limit your policy. Endorsements included removal of refrigeration breakdown coverage due to lack of maintenance records, providing limited theft coverage for unattended vehicles if certain security requirements are met, or removal of any theft coverage for an unattended vehicle. Carriers make a common mistake of looking only at the Exclusions section when analyzing a cargo policy. Be sure to read the full policy and understand its limits.

Do your research and find an insurance agent who has working knowledge of your industry and will answer your questions.  

FMCSA and Senator Charles Schummer Announce Steps to Reduce Bridge Strikes

200.  That's how many bridge strikes occur in NY state alone.  At least 2 trucks hit the Onondaga Parkway Bridge in upstate NY every year, despite 13 separate signs detailing the 10' 9" clearance, and a NYS Department of Transportation ban on truck traffic on that route.  In 2010, one of those strikes was responsible for 4 deaths and over 2 dozen injuries.  How does this keep happening?  One clear answer is the inappropriate use of GPS navigational devices by commercial vehicle operators.

In fact, 80% of bridge strikes by commercial vehicles in New York State have been attributed to the use of passenger vehicle-based GPS devices.  In an effort to alter this trend, the FMCSA (Federal Motor Carrier Safety Administration) and New York State Senator Charles Schumer have instituted a major campaign to increase driver education and understanding of the risks of using the wrong GPS devices to determine truck routes.

Senator Schumer, a long-time advocate of safe driving and sponsor of distracted driving legislation, has pushed hard for the Federal Department of Transportation to examine this issue and to determine methods to mitigate the damage to property as well as the safety risks involved. Although the originally focused on creating legislation limiting and carefully regulating the use of GPS navigation tools, he has now partnered with the FMCSA to develop recommendations and educational programs on the proper use of the technology.

As a result, the FMCSA has begun issuing official recommendations on the proper use of GPS devices in freight vehicle routing.  As part of the new CDL rules required by the Moving Ahead for Progress in the 21st Century Act (MAP-21), specific training in the appropriate use of GPS navigation tools has been proposed as a requirement for all new entry-level certification programs for commercial motor vehicle operators.  

Ongoing commercial driver education will also train and remind drivers to only use GPS systems designed specifically for the industry.  These specialized applications take into account the specifics of the truck they're in, including the height, weight and contents, and will route the trucks onto safe, appropriate roads. The GPS applications available to consumers focus on passenger vehicles only and frequently route trucks onto unsafe or restricted routes, causing them to crash into low overpasses and bridges.

Multiple education and awareness programs have also been developed, both by the industry and the FMCSA.  In partnership with Senator Schumer, a visor card has been designed and distributed reminding drivers of key items to keep in mind when using GPS navigation technology, including: a) use of commercial vehicle-specific technology only, and keeping any software up to date; b) avoiding distracted driving scenarios where the driver is more focused on the device than their driving, and c) ensuring that the driver has entered in all the relevant vehicle information into the system (height, weight) prior to travel so that the suggested routes are appropriate for that specific vehicle. The American Trucking Research Institute (ATRI) and the American Trucking Association (ATA) have also conducted major research studies on this issue as well as developing multiple education and outreach efforts to increase awareness of this issue.