Cargo Policy Update: Version 2.5

Policy term and cancellation

Your coverage now starts when you buy your first certificate, and notice periods are shorter on both sides.

Coverage that attached before a cancellation date is not affected by the cancellation.

Deductibles

The deductible shown on your certificate still applies to each claim, with three changes.

What the deductible does not apply to. Previously, items such as survey fees, General Average, salvage charges and certain named perils sat outside the deductible. Now only loss adjustment expenses sit outside it.

Non-standard deductible options. If you choose a deductible other than the Standard Deductible when buying a certificate:

• The deductible represents the motor carrier's limit of liability.

• Any amount you recover from the motor carrier, up to the deductible, is not taken off your claim payment.

• If the carrier's cargo insurance limit is higher than your deductible and you recover more than the deductible, the excess is taken off your claim payment.

• If you are a motor carrier buying under your own authority, this policy pays in excess of your Motor Truck Cargo legal liability policy, which must pay and be exhausted first.

• Additional exclusions apply to vessels and automobiles.

Carrier vetting warranty (Endorsement 7). If the vetting warranties on Full Truck Load and Dedicated Truck shipments are not met, the deductible rises to at least $50,000. For theft, pilferage and non-delivery, the deductible is now 50% of the insured value of the freight, with a $100,000 minimum (previously a flat $100,000). Loads tendered and accepted through Highway's Secure Rate Con Delivery, as described in the endorsement, remain exempt.

Covered goods and territories

• Restricted commodities list removed. The previous list of commodity groups that could require underwriter approval per shipment (for example alcohol, electronics, temperature-controlled food) no longer appears in the policy.

• New exclusion for vehicles and conveyances. Trailers, semitrailers, chassis, towable units and unattached equipment designed to be towed are excluded, whether road-licensed or not. Cargo, equipment or machinery permanently affixed to a trailer or chassis can be covered under the new Power Only, Affixed Cargo Endorsement (Endorsement 10).

• Used goods. Used goods and merchandise now fall under the commodity-specific terms in Endorsement 2.

• Territories. The list of excluded countries is unchanged. In addition, coverage for specific origin and destination countries may be restricted where deemed appropriate.

• Other exclusions (bulk commodities, cash and financial instruments, household goods, pharmaceuticals, life science materials, live animals) are unchanged in substance; only their formatting was cleaned up.

Valuation and underinsurance

Your claim payment can never exceed the Coverage Limit you declare on the certificate, so declare the full value of the goods.

• Invoiced goods. Valued at the invoice amount including freight, capped at the declared Coverage Limit. Previously, prepaid and payable freight could be added on top and no cap was stated.

• Goods not under invoice. Valued at fair market value at the time of loss, capped at the declared Coverage Limit.

• Underinsurance. If you declare less than the goods are worth, the claim payment is reduced in proportion. For example, goods worth $200,000 insured for $100,000 recover half of the loss.

• Unknown value. If you don't know the value when you buy the certificate, cover applies on a first-loss basis up to the declared Coverage Limit. Anything above that limit is not covered.

• Contractual limits (non-standard deductible only). If you know the value but declare a lower Coverage Limit equal to the cargo insurance your contract requires, first-loss cover applies up to that limit, provided the goods are worth USD 2,000,000 or less. Above USD 2,000,000, the claim is reduced in proportion as described above.

• Annual placements. The first-loss provision for annual policy placements has been removed.

Filing a claim

The biggest practical change: damage must be noted on the proof of delivery (POD), and claims must be reported within 30 days.

The exclusion for insolvency or financial default of the transport operator now covers road vehicles as well as vessels and aircraft. It still does not apply if reasonable steps were taken to check the operator's financial reliability before loading.

New endorsements

Three endorsements are added. The former Endorsements 8 and 9 (Several Liability and Service of Suit; Territory Specific, Canada) are now Endorsements 11 and 12, with no change in content.

Endorsement 8: Unattended Vehicle Exclusion. Theft, pilferage, non-delivery and shortage are not covered while goods are unattended, unless:

• a hired employee is assigned to guard them,

• an employee is in the tractor or trailer, or

• the vehicle is in a fully fenced and securely locked yard.

A driver may leave the vehicle for under 60 consecutive minutes to use the restroom or get a meal, call for breakdown help, or get support for sudden illness, provided the doors are locked, windows fully closed and keys not left in the vehicle.

Endorsement 9: Detached Trailer Exclusion. Theft, pilferage, non-delivery and shortage of goods in or on a detached trailer are not covered, unless the trailer is in a fully fenced and securely locked yard, or has a GPS tracker inside and a kingpin lock on.

Endorsement 10: Power Only, Affixed Cargo Coverage. Applies to cargo, equipment or machinery permanently affixed to a trailer or chassis. Excluded under this endorsement:

• electrical or mechanical derangement, unless caused by another covered peril

• rust, oxidation or discoloration of unpacked or unprotected property

• scratches, dents and marring, including repainting

• insolvency or financial default of the vehicle's owners or operators

• inherent vice, delay, and improper maintenance of the transporting vehicle

• motor, trailer and auto liability

• tire and wheel failure, and mechanical failure of axles, suspension, transmission, hydraulics, brakes or any mechanical or electrical component

What to do now

• Make sure drivers and receivers note any visible damage on the POD at delivery.

• Set an internal deadline to report losses well inside 30 days of delivery.

• Brief drivers on the unattended vehicle and detached trailer conditions (locked yards, GPS and kingpin locks, the 60-minute stop rule).

• If you ship trailers, chassis or towable equipment, check whether the affixed cargo endorsement fits your shipments.

• If you use a non-standard deductible, confirm the carrier's cargo insurance limit before tendering.

• Diary any cancellation or non-renewal decisions using the new 30-day notice period.

• Declare the full value of the goods as the Coverage Limit on each certificate; an underinsured shipment gets a reduced claim payment.

This is a summary only. Your policy wording and certificate of insurance set out the full terms and govern if anything here differs. Contact your Loadsure representative or broker with questions.