Beware the High Deductible Motor Carrier Cargo Policy

Look twice; that cargo deductible could be higher than you thought.

One step to include when vetting a potential carrier partner is to verify the deductible amount on their cargo policy. We’re seeing an increased use of cargo policies which carry a significantly higher deductible than the standard $1,000 per occurrence. A deductible of $5,000 and even a $10,000 is not uncommon nowadays. This saves the motor carrier a hefty amount of premium dollars; however, the effect of this practice transfers a lot of the exposure to the broker and the broker’s customer. That’s not so good for that party! No broker wants to find this out after a loss has occurred. The added exposure may very well be forced downstream to the broker. Now the broker is faced with the situation of weighing the value of the relationship with their customer and taking a direct write-off on their profit and loss statement. Not so good either!

The motor carriers cargo deductible can be found on the Carrier Certificate of Insurance and in the policy itself. Typically, the figure is located on the bottom-most line of the section titled “Coverages.” Make sure to give the deductible more than a cursory glance because $10,000 can look an awful lot like $1,000. If you run across this situation and still want to hire the carrier, you may want to consider purchasing a primary policy to fully protect your interest. A shipper’s interest-type policy can be secured on a per load basis and can be quite affordable. This will put the broker and shipper in a primary position and will effectively cover the vast majority of the deductible.