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High Value Cargo Insurance: Protecting Lucrative Goods

January 10, 2023
 By Natalie Kienzle
High Value Cargo Insurance: Protecting Lucrative Goods
Last Modified: October 5, 2023
Insurance is there for when things don’t go as planned. When the goods being shipped are especially valuable, having the right insurance can save your business from financial disaster.
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High value cargo insurance is something you never want to need but should always make sure you have. Shipping valuable and pricey goods comes with risk. Whether the value of the cargo is obvious or not, it represents a significant investment worth protecting. Part of being a responsible carrier and shipper is knowing the best way to manage certain risks. 

The exact value threshold of a shipment that makes it need high value cargo insurance is up to the individual carrier. In general, most cargo appraised at $100,000 or more, regardless of transport mode, needs additional coverage. High value cargo represents more risk for insurance companies, so rates are higher as a result. 

Getting insurance coverage for your high value cargo means understanding what factors raise rates and how far policy limits can stretch. 

High Value Cargo Insurance For High Risk Freight

In the shipping industry, high value cargo is frequently associated with high risk freight. Moving any commodity comes with some danger. The level and likelihood of danger are what insurance companies look at most when preparing their quotes

Some dangers are the same regardless of the value of the cargo. Any truck, ship, or even aircraft can experience events that result in the loss of cargo

A truck hauling $10,000 worth of scrap metal and another hauling $100,000 of new cars can slip on the same patch of icy road. However, the insurance company will end up looking more closely at the details involved in the loss of $100K worth of cars. 

Insurance companies covering high value cargo may request additional information related to an accident such as:

  • The number of hours the driver was working
  • Which methods were used to secure the cargo
  • Vehicle maintenance records
  • Trailer maintenance records
  • Carrier accident history
  • Driver accident history

The truth is that insurance companies lose money on every claim they must pay out. The bigger the payout, the more exclusions and exceptions an insurer is likely to add to the policy contract

When it comes to high value cargo, there are also a number of non-accident factors to take into account. 

Theft is actually a big problem for many trucking companies and it isn’t always the gold and jewels that go missing. Any high-demand product that can be sold easily and quickly is at risk.

Business cargo insurance is essential when you’re dealing with high value goods. Check out our article for more. 

high value cargo insurance view of a dock worker speaking into a walkie while a crane lifts a container

What is High Value Cargo?

In the cargo shipping industry, high value cargo is anything valued at $100,000 or more. The amount has become the universal standard in the U.S. because of the Federal Motor Carrier Safety Administration (FMCSA). 

The FMCSA requires all commercial vehicles registered in the U.S. to carry liability insurance and $100K has become the most standard limit of liability plan offered by insurance companies. It’s actually the minimum that most insurance companies offer to carriers. 

Liability limits for carriers organizing shipments on vessels and aircraft are similar enough for the term 100K cargo insurance to apply to most major transport modes, including rail. 

Merchandise commonly considered high value includes:

  • Art work
  • Precious metals
  • Electronics
  • Cosmetics
  • Firearms & ammunition
  • New cars
  • Yachts
  • Construction vehicles & equipment
  • Medications

Many items above are thought of as luxury items. When shipped in bulk, the commercial value easily exceeds $100K. However, someone shipping smaller amounts through Less than Truckload (LTL) or a similar arrangement doesn’t always qualify. 

However, a shipment whose total value is calculated as less than $100K, whether as a full truckload or LTL, may still need high value cargo insurance based solely on risk factors.  

High Value Vs High Risk

A shipment is labeled as high risk if there is a greater than average possibility of damage or theft. 

Common high risk factors of products include:

  • Fragile or abnormally sized cargo that is difficult to package
  • Refrigerated and temperature-sensitive products 
  • Frequently stolen or high re-sale value items

Anything made of glass, porcelain, or ceramic usually qualifies. Cut and polished stone slabs like those used for tables and countertops are also prone to cracking if improperly handled. 

High value stones, like certain marbles, easily fall into high value and high risk classifications when shipped in bulk. 

Cargo traveling in reefer trailers and containers is often excluded from standard policies for fear of equipment breakdowns resulting in product spoilage. 

Any electronics, high-end or not, are at risk because of how frequently they are stolen. The same can be said for cosmetic products. Individually they aren’t very valuable, but because so many are boxed together, their worth easily adds up. 

U.S. Thefts of Cargo By Product Type – 2020

Type of CargoPercentage of Reported Incidents
Home & Garden19%
Food & Beverage15%
Building & Industrial7%
Auto Parts6%
Personal Care5%
Clothing & Shoes4%
Source: Commercial Carrier Journal

These statistics are specific to the U.S. trucking industry, so you may get different numbers in other parts of the world. However, it does serve as a general guide for why some commodities will receive higher rates for insurance coverage. 

Practicing standard risk management as a shipper is important for not only mitigating risks associated with theft, but also with damage. If you do need to make a claim, insurance companies may ask which precautions you have in place.

Other factors that qualify a shipment for high risk status include:

  • Travel route
  • Weather conditions
  • Client history

Routes and timing don’t always work in your favor. You may not have a choice but to send shipments through roads with dangerous turns or put items on a ship during hurricane season. However, if you’ve managed to earn a bad reputation with insurance companies and carriers for poor packaging and safety practices, you are considered the risk factor

Frequent issues with your shipments could raise your cargo insurance premiums into high-risk/high-value range no matter what the actual worth is.  

mega-sized yachts anchored in a marina

How to Calculate 100K Cargo Insurance Costs

Unlike rates for lower-value items that may vary depending on transport mode, high value cargo rates tend to be the same across the board. 

More information on these differences can be found in our article, “How to Calculate Cargo Insurance”.

The general average for high-value/high-risk cargo insurance with a $100K policy limit is $800 to $1,400 a year

Your final price quote depends somewhat on:

  • Insurance company ratings 
  • Shipment frequency
  • Specific risk factors 

As mentioned earlier, the more valuable or high risk a commodity is, the more exclusions a policy is likely to have. Calculating a 100K cargo insurance price then has to do more with how completely you want to cover losses. 

Also recall, a $100K limit is only a starting point. High value shipments can easily exceed that number. As the limit goes up, so does the price range for truck cargo insurance or other transport-specific coverage plans

When speaking with your insurance agent, they are likely to ask you about the nature and frequency of your cargo shipments. Depending on your answers, they may offer some different coverage options. 

Common add-ons to high value cargo insurance include:

  1. Debris Removal: Cargo that may scatter in an accident needs to be picked up. This add-on will help cover the clean-up if solid debris gets spread out on roadways or waterways.
  1. Loading & Unloading Coverage: Losses that occur specifically during loading and unloading are covered. Fragile and abnormal freight may benefit from this option. 
  1. Reefer Breakdown Coverage: Mechanical failure resulting in loss of refrigerated cargo is covered. However, this may not cover loss due to other factors, such as shipping delays. 
  1. Earned Freight Coverage: Damage that makes freight undeliverable, even if it isn’t a total loss, can still cost you the profit you would have made. Earned freight coverage can pay you back for the loss of the profit, but not necessarily the full cost of the product.
  1. Sue & Labor Coverage: In the event your cargo results in damage to other shipments or even personnel, this coverage can assist with related legal costs. A successful claim is likely to require proof that negligent packaging was not a factor in an incident.
  1. Pollution Liability: Spilled liquid commodities such as gasoline or chlorine, are environmentally damaging and require in-depth cleanup. This coverage can help with some clean-up costs up to a set limit. 
  1. Spoilage Coverage: Frozen or temperature-regulated cargo that is lost due to spoilage caused by factors other than mechanical failure is covered. This option is often combined with reefer breakdown coverage for more comprehensive investment protection. 

Beyond these specific options, there are other specialty policies. Shipments through certain parts of the country or world benefit from theft and hijacking coverage options. If you are forced to work with a carrier you aren’t familiar with, perhaps under emergency circumstances, you can ask about dishonesty coverage, which applies specifically to covering loss and damage due to driver actions. 

At the end of the day, the cost of cargo insurance depends on how comprehensive it is. The more exclusions you want to avoid or the more specific the coverage list is, the higher your annual premium payments are. 

These add-ons are also not exclusive to high value cargo – any shipment can benefit from these protections. View insurance as an investment protection service, and it makes sense for greater investments to need more protection. 

Does Hotshot Freight Need 100K Cargo Insurance?

Hotshot trucking services have become more popular as people find new and creative ways to fill supply chain gaps. 

Hotshot trucking service is generally an individual or small company dedicated to moving LTL shipments on very tight schedules

Many of these services run with standard heavy-duty pickup trucks and trailers rather than big rigs. Although it seems informal, drivers of hotshot loads still need to comply with the FMCSA insurance requirements. 

Therefore, their liability limits are the same and $100K or more worth of cargo is considered high-value/high-risk. Arranging 100k cargo insurance coverage is still the best way to protect your investments when using hotshot trucking services. 

Container ship docked next to crane lifts at the port

Is There a Limit To High Value Cargo Insurance?

Despite every effort you or the carrier make to ensure safe delivery, accidents happen. Insurance rejection and denial also remain possible every time you submit a claim.  

The biggest limit of every insurance policy, high value cargo or otherwise, is the need for exact details and procedures during the claims process. 

The most frequent causes of cargo insurance claim rejection or denial include:

  • Shipper at Fault: Faulty packaging or a lack of evidence that items were packaged according to best practices. If there isn’t proof, there is no way to really show fault or a lack thereof. 
  • Inherent Vice: A product prone to damage because of its own nature/design. This frequently happens with reefer cargo which is why there are policies that are specifically tailored to these shipments. 
  • Insufficient Documentation: Any missing paperwork, whether it’s a bill of lading or a freight invoice, can cause a denial. This is especially true for high value items worth a few hundred thousand dollars. 
  • Lack of Mitigation: When claims for the same kind of damaged cargo keep showing up, an insurer may refuse future claims if it appears you aren’t trying new ways to minimize or prevent damage. 
  • Unpaid Bills: Although you may get angry with a carrier when products are damaged, accidental or not, an unpaid bill sends a bad message to an insurance provider.
  • A Signed Proof of Delivery (POD): If the person receiving the cargo signed a POD, and they did not list any damage, you’ve pretty much waived any right to claim damage found after the fact. 

Some of these reasons might seem trivial. For example, it isn’t unheard of for damage to go unnoticed until products are unboxed or otherwise assembled. 

Marine, air, and motor truck cargo insurance provide financial protection, but only under specified circumstances. The more specific your understanding, the more likely you are to elect coverage plans that work for your business needs. 

Keep Your Valuable Cargo Safe With Freight Insurance Coverage

Whether you are moving $5,000 or $500,000 worth of cargo, you want your business interests protected. High value cargo insurance is more necessary than you realize. With inflation on the rise worldwide, the average value of cargo shipped in bulk has never been higher. 

Freight Insurance Coverage is here to help you get the financial protection you need and help you in arranging the quality shipping services you deserve

Call us today at (866) 975-0749 to speak with a representative directly. Need protection now? Request an online quote today! 

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