Why Every Trucker Needs Cargo Insurance?

Hey guys, I'm Hunter with Nelson Insurance. I'm gonna talk about cargo insurance here today. A little bit about us, we're based out of Sioux Falls, South Dakota. We write in 42 states. Uh, all I do is trucking. My father owned a trucking company, and so I love, love, love trucking insurance. Uh, so I'm gonna talk about cargo insurance, what you guys need to know about it. Most of you guys already know the basics. I need a limit. $100K is what most of brokers care about. Should be good as long as it says that on my COI, right? I'm going to explain a little more in depth because this is one of the most important coverages that varies quite a bit depending on the insurance company with. And if you do not know what's on your policy, follow those guidelines and make sure everything's sitting good. You don't want $100K coming out of pocket. So let's get into it. Cargo insurance, one of the biggest deals in my opinion, because it varies so much company to company. You could have one insurance company like Crum Forrester, Northland, etc., etc. Who have almost no exclusions. Uh, as long as you're hauling what you say you're gonna haul, if you tell them you're gonna haul oversized, you're gonna be good for oversized. Uh, their policy is fantastic. They're not going to have all these sub-limits and all sorts of stuff that's jargon right now. I'm going to get into it here in a second, but their policy does not exclude much at all, so you can be covered for a lot. They don't nickel and dime you on the little things. They'll cover reloading costs, all sorts of stuff because it sounds like small minimal little coverages and insurance sucks, it's expensive anyway, why go pay more, right? But the problem is when you guys don't pay for the insurance, you just retain that risk. You're saying, I'm fine saving $20 a month, I'm going to retain the risk. And then when $10,000 comes out of pocket because you got a garbage insurance company, I— it sucks. So it's all a math problem. Yes, there is some things that are worth retaining. There are things, some things that are worth transferring for risk to the insurance company and paying a couple extra bucks for it because a lot of money coming out of pocket is not ideal for anybody. So let's get into some things here quickly, uh, that you want to look out for and make sure you're not getting screwed on claims time when you guys have a cargo claim. First thing is there are policies that have what's called sublimits. It might show $100K on your certificate of insurance, your COI, your policy, whatever the heck you're looking at, but that doesn't mean it's going to cover $100K for everything. They will have certain commodities that can pay out $5,000 for the total load, for $10,000 total load, $15,000, whatever the case is. And it's very misleading. I think it's incredibly stupid. It makes it super confusing. You guys see a $100,000 limit and you have to go read a 100-page policy to go see the fact that they insure $5,000 electronics and you haul electronics all the time. That can put you guys out of business. That can screw a broker relationship. It can cost you thousands and thousands, if not hundreds of thousands of dollars in lost revenue. Sub-limits are important. Do not go with some insurance company you've absolutely never heard of that's the absolute cheapest. Insurance, to an extent, you get a little bit of what you pay for, right? Now, it doesn't mean if somebody's coming in $10,000 less that they're a bad insurance company. Most of the times there's better insurance companies offering cheaper, cheaper limits. But if something is almost too good to be true, or you've never heard of the insurance company, they're all of a sudden really, really cheap. You might want to raise an eyebrow and say, hey, can you tell me if there's any sublimits? Can you tell me that all this stuff I haul is actually covered? And one thing I want to point out is a lot of people think that they say I haul more than just general freight, it's going to automatically increase you guys' insurance premium. If you say you haul general freight,, and I've had some people get confused and think that bulldozers are gonna fall under general freight. It might affect your rates, but it's gonna be very minor. It might be $1,000 a truck per year versus $1,300 for hauling oversized versus, versus general freight. So you might have saved yourself $300, but when you go haul the bulldozer worth $80,000 and it's no, there's no coverage on it because you told them you're hauling general freight, $300 a year makes complete sense to save yourself $80,000 on the time of a claim. So when you guys are given examples of what you're hauling to your insurance agent, give specific examples. Say exactly what you're hauling. Insurance companies do not even accept general freight as the option most of the time, unless it's like Progressive or GEICO. But you guys need to give examples because what the insurance company is, where you're hauling, what the policy says, and what you're actually hauling all need to line up so that way, um, when claims time happens, you guys can actually get that check. The stuff that you're doing is you're stepping over pennies to pick— or you're stepping over dollars to pick up a penny, right? So it doesn't just— it doesn't make sense there. I highly recommend just being aware of that stuff. Cargo policies, like I was saying, have a huge difference on what's excluded on the policy. Some have got lists 2 pages long where the alphabet doesn't even— if it's A, B, C, and D, the alphabet doesn't even contain enough letters to go through all the exclusions of the policy. That's a big deal because if you say, hey, I'm hauling general freight, and you get some things mixed in there that are excluded on the policy, well then you can Your insurance agent should be able to go find another policy that'll cover everything you're hauling for pretty much the exact same price. But some of these cargo policies are littered with exclusions, and if it says it's excluded on the policy, you're not getting a penny at claims time. So it is very, very important to understand this stuff because general freight, or whatever the case is, does not just mean you're covered to haul pretty much anything that fits in a dry van. So those are, those are big things to know there. Some insurance companies have combined deductibles and per unit deductibles. What that means is if you have a combined deductible and you have a $2,500 deductible on your truck, your trailer, your cargo, and it's combined, you will pay $2,500 if all 3 of those are involved in a total loss. If it's a per unit deductible, you actually pay $7,500 because deductible for the truck, the trailer, and the cargo. And so it's 5K, it's be 15K. $3,000 will be for a $1,000 deductible, whatever the case is there. Um, so it's very important to be aware of that stuff as well when, when looking at your cargo. Cargo is actually one of the main reasons people get declined loads. This is not the case anymore for Progressive, but Progressive used to have a wetness, dampness, and dryness exclusion, and that's a big deal for flatbed guys. If anything was wrong with the tarp and, and it got wet, damp, or whatever the case was, Progressive used to not pay out claims there because they had an exclusion for, like I said, wetness, dampness, and dryness. And so that's why mass amounts of people were getting declined loads from Progressive. That is no longer the case, but there— I don't want to name any names, but there's still big names insurance companies out there who actually do exclude wetness, dampness, and dryness. Now, are you going to be able to get loads with them? Yeah, probably, because a lot of these brokers haven't figured that out yet looking at the policy language. But you could start losing loads. And really what does matter most is if you have a $100,000 load or $50,000 load get destroyed because your policy excludes wetness, dampness, and dryness, you're not going to get a penny claims time. So it's very important to understand that stuff and look at what that all does. So cargo is one of the main things that brokers are actually looking at. That's what they really care about. So having a good cargo policy, it's going to bring in more revenue, transfer more of that risk to the insurance company. So you guys are not retaining it, getting nailed at claims time, everything along those lines. And those policies vary like no tomorrow. You go look at physical damage, auto liability policy, the other lines of insurance coverages that are needed when you guys are trucking. Those really don't vary much company to company. Are they rated? Yes or no. What's your deductible? What's the truck worth? They're like what varies, right? That's the stuff you guys choose. You guys know the insurance company. But insurance policy would be 100 pages, they'd be 20 pages for cargo policies. Um, there's all sorts of different things that vary. It's also very important to understand what all cargo insurance actually covers, because you might just think, I'm a reefer guy, I need reefer breakdown, I'm gonna call her good there. That's not just the case there, because if you have a driver set the temperature of the reefer to the wrong temperature, car— normal cargo insurance will not cover that. Obviously, it will not cover reefer breakdown if there's no reefer breakdown endorsement on your policy. You would actually need driver error because it's in the name. The driver made an error on the reefer temp to cover errors in the reefer temperature. Um, one other big thing on the cargo policies is debris removal and pollution cleanup. Some will include $5,000, which is incredibly slim. Earned freight can also be mixed in there. Most of me, $25,000. And why does that matter? Well, your cargo is where a lot of your pollution exposure is gonna rise from. If you have, you're hauling milk or you're hauling any liquid or ice cream or anything on those lines, heavy machinery where it's got diesel, oil, antifreeze, all sorts of different liquids in it gets in the ground. Pollution cleanup claims can be very, very expensive. Couple hundred grand, couple million dollars, depending on what you're hauling. To get a couple million dollars, you're probably gonna need a tanker for it to cause damage like that. But, uh, we've had a $117,000 claim for debris removal on a trailer burning up full of meat. It gets just crazy. $117,000. You want to think that makes sense? But stuff does get to be a big deal. And so if you got $5,000 because you got some piece of garbage insurance company protecting you, holy crap, you're pretty much out of business. And so that minor stuff can be in a lot of policies. So you guys want to look at debris removal and everything on those lines. So I won't drag this out too much longer. That's kind of the basics of cargo insurance, what you guys really want to look at, It's very important. So if you guys have any questions, please feel free to reach out, call, email, text, whatever the case is. Uh, please like and subscribe so I can keep making videos like this, just educating you guys, because insurance sucks. It's super expensive. It's usually your guys' fourth or fifth largest expense in a trucking company, and rates fluctuate crazy. But at the end of the day, if you guys got a bad business partner, a crappy insurance company or agent or anything on those lines protecting you, insurance does come into play, and it's what's going to keep you guys in business or not. God forbid something bad does happen. So appreciate you guys watching and let me know if you have any questions. Thanks.