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Cargo Insurance: What It Is & Why It’s Necessary

Did you know that full truckload thefts have increased by 25% since 2020? Despite this, 60% to 90% of cargo remains uninsured or underinsured. Now more than ever, cargo insurance is crucial to protect your commodities and prevent your business from paying out-of-pocket costs from lack of coverage. 

Learn how insurance for cargo works, the different types, and why it’s imperative to get the exact coverage you need when transporting goods.

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What is Cargo Insurance? Understanding Coverage, Benefits & Risks for Businesses

Cargo insurance is a policy you pay for with an insurance provider to protect your goods during shipment by air, land, or sea. Businesses invest in cargo insurance to prevent replacement or repair costs from related risks that may occur during transport, such as theft and damage. 

Providers typically determine your cargo insurance requirements based on your commodity’s total insured value (TIV). TIV sums the total value of your goods, additional expenses, and policy coverage limits to calculate the maximum coverage you need. That way, you can better understand how to evaluate your cargo liability risks. 

Benefits of commercial cargo insurance coverage include:

  • Commodity Coverage: Depending on your provider, insurance policies cover most commodities. Exclusions typically include ammunition, money, blood plasma, tobacco, and explosives.
  • Protected Reputation: It helps you maintain a positive professional reputation with those in your network by demonstrating your due diligence in protecting their goods during transport.
  • Reduced Costly Risks: The cost of cargo losses from theft alone is between $30-50 billion annually. Insurance reduces costly risks of damage, loss, theft, and delays from supply chain disruptions.

In some instances, the seller or supplier may purchase a cargo insurance policy themselves. If this is the case, request information on what the policy covers to ensure you’re protected from cargo liability. Ask which commodities are covered, and excluded, policy limits, and how claims are paid.

Types of Cargo Insurance Coverage

An image of a cargo ship in transit with a smaller boat preparing it for unloading

The cargo insurance policy you need depends on the mode of transport you’re using to ship goods. Some providers may only cover truck or marine cargo transports, so this must be the first step before contacting cargo insurance companies. 

The different types of commercial cargo insurance coverage are:

  • Air Cargo Insurance: Cargo shipped by air, with coverage typically including delay fees, lost commodities, and damages. 
  • All-Risk Cargo Insurance: Cargo shipped by all modes of transport, typically including more comprehensive coverage from losses, handling damages, and weather. Exclusions may apply.
  • Marine Cargo Insurance: Cargo shipped by sea, with coverage typically including, inclement weather, unloading/loading damages, and piracy. 
  • Motor Cargo Insurance: Cargo shipped by trucking transport, with coverage typically including missing goods during transit, unloading/loading damages, collisions, and fire. 
  • Rail Cargo Insurance: Cargo shipped by rail freight transport, with coverage typically including, collisions, derailments, loss, and damages. 
  • Warehouse to Warehouse Cargo Insurance: Cargo shipped between warehouses, with coverage typically including storage floods, transit theft, and shipment damage. 

After understanding the transport mode and type of cargo insurance coverage you need, next is knowing what to look for in a provider. 

What To Look For in a Cargo Insurance Company

An image of airport staff loading a cargo airplane with commodities for shipment

When searching for cargo insurance companies, there are a few factors to consider first before choosing a provider. You should always request multiple insurance policy quotes to ensure you’re getting a fair rate

Review the following when shopping for cargo and liability insurance: 

  • Minimal Deductibles: Aim to get a plan with minimal to no deductibles without sacrificing coverage. Calculate your insurance deductibles by comparing the plan costs with the amount, percentage, and type of deductibles covered.
  • Maximum Coverage: Find plans with maximum coverage without paying more for what you need. Do this by determining your total insurance value (TIV), as mentioned above. 
  • Flexible Policies: Check for flexible policies like basic to premium coverage price adjustments and all-risk protection details. 
  • Strong Policyholder Support: Read which customer support services they offer. They should help you choose the best plan (not always the most expensive), guide you on filing claims, and assist you with cargo risk assessments.
  • In-Network Cargo Transport Providers: Find in-network cargo transport companies with your insurance provider to ensure your goods are fully protected. If the transport company is self-insured, request their policy details to learn your cargo liability risks. Quality cargo transport providers even offer freight brokerage services to ensure your goods arrive on time by being a liaison between you and the logistics team. 

As a business, your network partners depend on you to ship cargo safely and timely. Cargo insurance ensures your commodities are covered for unexpected issues and continuously supports your bottom line.

Choose Cargo Confidence with Lone Star Logistics

Lone Star Logistics is not just a cargo transport company, but also a freight broker to provide your commodities the utmost protection during shipment. We’re proud to be federally licensed, self-insured, and a non-asset-based freight brokerage firm that can tailor your unique cargo coverage needs. 

Our team offers custom routes, specialty shipping, 24/7 customer support, and multiple transport modes at the highest standards. We also have the technology to track and trace your cargo in real-time with timely route updates so you know where your goods are.

Give your cargo the protection it deserves with a reliable logistics company. 

Fill out a shipper request form or learn more about our cargo transport services

Have questions? Lone Star’s 24/7 bilingual support team answers any questions you have for them! Call 833-562-3722 or email 

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