It’s a topic that we don’t always want to talk about – freight damage. But unfortunately, freight damage sometimes happens. In addition, there is a common misconception in the freight industry, and that misconception is that your shipments are covered by the carrier through the carrier’s liability coverage. While carriers do 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 cover all your bases and 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 that’ll help you ship with confidence.
3. Freight Insurance: What It Is, What It’s Not and 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, if your item is worth more than the standard coverage amount, 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 of proving 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. If damages occur from inadequate packaging, loading errors, or weather-related instances, the carrier is not responsible or at fault for the damage. In addition, any damage must be noted on the delivery receipt, or else the carrier will deny liability instantly.
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. Make sure your item is eligible for coverage.
2. 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 that you’ll have to pay out of pocket if your item is damaged, and you need to 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.
1. Packaging is Key
As previously mentioned, if your shipment suffers damages due to subpar packaging, that means the carrier is not liable, and you won’t be protected by any independent insurance. It’s not uncommon for a driver to arrive at the pickup location for your freight and refuse to pick it up because of improper packaging! Make sure you follow the best practices towards packaging your freight. There are plenty of easy ways to avoid freight damage and loss claims, and the most important is how you package.
Here are three packaging tips to get you started:
- All freight needs to be able to be lifted by a forklift.
- Freight needs to be boxed (wrapped in cardboard), strapped to the pallet and stretch-wrapped.
- Crating is best!
- Carriers will not accept many loose boxes or loose freight. Pallets are your supply chain’s best friends.
For more tips be sure to download our Guide to Freight Packaging. It is full of packaging tips and tricks and includes information regarding types of packaging methods to protect your freight and more to give you peace of mind when shipping off your cargo.
Where or How to Purchase
While we all have a basic understanding of insurance in general, it’s important that you know your options and that your business has the coverage and protection you need from unexpected or unforeseen losses or events. Freight insurance helps you lower the risk associated with loss that could adversely affect your business.
Talk to one of our experts for suggestions on how to find cargo insurance companies that’ll fit your needs. With over 20 years of helping shippers everywhere, rely on FreightCenter to help find the solutions to ensure your business is protected from unexpected loss.