If your business transports cargo within the state of Illinois, you are likely familiar with the regulations on general liability and auto insurance that the state requires. However, many business owners are unaware of how cargo insurance factors into their requirements or how they need to strategize their coverage based on their cargo and vehicle type to maintain sufficient protection.
We reviewed the FMCSA guidelines on cargo insurance in Illinois to provide you with this guide to buying and maintaining cargo insurance for your business. Generalized guidelines can help you prepare your insurance strategy for the coming year, but only experienced guidance from a professional consultant can personalize the strategy for your specific needs.
What is Cargo Insurance?
General liability coverage protects your drivers and property, and auto insurance protects your vehicles. On the other hand, Cargo insurance protects the cargo itself while in transit or during the loading and unloading process. Cargo insurance usually covers freight from a range of possible scenarios, including:
- Loss
- Damage
- Theft
- Natural disasters
- Accidents
- Abandonment
Cargo insurance policies protect businesses based on the value of the cargo. This differs from a carrier liability policy, which may offer inadequate protection that fails to cover the total value of the damaged goods.
Importantly, cargo insurance does not completely eliminate risk for the companies that transport it. Many insurance providers list exclusions or “named perils” that specialize their policies to exclude certain events.
For example, not all policies cover cargo that is lost, stolen, or damaged while docked in a company’s loading facility or during the act of loading. Poor packaging, low vehicle maintenance, and driver negligence can contribute to problems with insurance claims down the line.
However, as noted below, cargo insurance is not only advisable but also mandatory for many Illinois businesses. If you transport cargo in Illinois, you should be aware of the regulations in your industry concerning your cargo type, including any exclusions that may apply.
How Much Cargo Insurance is Required by Law?
The FMCSA expands on its cargo insurance requirements for businesses in this insurance filings chart. To summarize their regulations, businesses that transport freight must maintain $300,000 of coverage for non-hazardous cargo transported in vehicles weighing less than 10,001 pounds.
For other types of freight and vehicles, the coverage requirements extend to $750,000 and up to $5,000,000 in liability, depending on the type of cargo. Cargo deemed hazardous, such as oil and chemical products, require the highest coverage since accidents involving this cargo pose the greatest risks to drivers, other vehicles on the road, and the environment.
An experienced insurance firm can walk you through the details of your business’s liability requirements depending on your cargo and vehicle type. Businesses must maintain the coverage listed in the FMCSA’s guidelines or risk exposure to legal liabilities, including loss of license.
Who Should Buy Cargo Insurance?
Most trucking companies must follow industry requirements for cargo insurance to protect themselves, their drivers, and their assets. However, for-hire truck drivers in Illinois may wonder whether they need additional cargo insurance to operate their business.
Common trucking vehicles such as box trucks, flatbeds, haulers, tractor-trailers, mixers, and cargo vans need cargo insurance as a valuable safety net against liability. When cargo is lost, damaged, or stolen on the road or during the loading process, these policies protect drivers and their businesses from costly damages.
Consider a common example on the busy Illinois highways of a truck driver getting into an accident that was not their fault. Regardless of their fault status, which applies to auto insurance coverage limits, their cargo may be dispersed onto the highway and damaged or stolen.
In addition to the cost of replacing the cargo, the driver may be responsible for cleanup expenses, an often unexpected cost of recovering from an already costly accident.
Contact Pro Insurance Group for Comprehensive Cargo Insurance Options
Cargo insurance protects drivers from this scenario and many others, which can be more financially or even legally costly if the cargo is hazardous. Truck drivers owe it to themselves, their businesses, and the other drivers on the road to maintain sufficient insurance for any situation.
Contact our team at Pro Insurance Group to learn about cargo insurance requirements in Illinois, including the coverage limits you need to maintain safe and legal operations in the state. From for-hire truck drivers to commercial fleets, we help businesses get the coverage they need to protect their cargo from costly incidents. We match the policy to the business to make sure you have the protection you need no matter what comes your way.