What Contingent Cargo Insurance Actually Is

We often get asked what contingent cargo insurance actually is. While we think it is pretty simple, it is not really easy for those that are not in that space every day.

As an underwriter of this coverage, I feel you get specificity and a better definition by actually looking at the insuring agreement and property covered by a specific policy.

Contingent Cargo is designed to cover property in vehicles for which the insured ( usually a truck broker) and their subcontractor ( usually a trucker/ carrier) are legally liable for direct physical loss or damage to property of others in the due course of transit. That is pretty simple.

Contingent Cargo coverage is triggered by the inability to collect from the subcontractor's insurer. That inability should be based on 3 reasons:
1) the subcontractor's insurance policy was canceled or non-renewed
2) the subcontractor's insurance policy limits were insufficient to cover the loss
3) the loss or damage is excluded under the terms of the subcontractor's insurance policy

That's pretty simple too.

It is typically a condition of coverage that the insured must obtain evidence of motor truck cargo legal liability insurance( MTC) AND that those MTC limits are equal to or greater than the subcontractor's legal liability.

We see a good many policies that have commodity exclusions or terms and conditions that invite agent error and omissions ( unattended vehicle warranty as an example). Most insurance policies do not cover 2) and 3) above. These are known as following form policies and we are surprised that they are allowed to be sold.

Fortunately we offer preferred contingent cargo products that do not have these limitations- if the insured is willing to be a "best practices" operation. The first place to start a review of a potential insured is to look at their broker carrier contract and make sure that they have the following:

* adequate insurance limits for the load
* indemnification of the insured
* waiver of subrogration

We hope this helps you and offers a matter-of-fact way of looking at this important coverage