Here’s the Deal
Cargo insurance covers the freight you are hauling. Not your truck, not the other driver’s car — the stuff on your trailer. When a load of electronics gets stolen at a truck stop, when a reefer unit fails and $200,000 in pharmaceuticals goes bad, when cargo shifts and gets destroyed because it was not secured properly — cargo insurance is what pays for it.
The FMCSA requires a bare minimum of $5,000 per vehicle and $10,000 per occurrence. That is laughably low. A single pallet of consumer goods can be worth more than $5,000. In practice, almost every broker and shipper requires at least $100,000 in cargo coverage, and many require $250,000 or more.
If you are hauling freight for other people, you need cargo insurance that matches the value of what you carry. No exceptions.
Per-Load vs Blanket Coverage
There are two main ways cargo insurance is structured:
Blanket coverage provides a set limit that applies to every load you haul, regardless of commodity. You carry $100,000 blanket cargo coverage, and every load you pick up is covered up to that amount. This is the most common structure for general freight carriers.
Per-load or trip-specific coverage is purchased for individual high-value loads that exceed your blanket limit. Say your blanket covers $100,000 but you pick up a load of medical equipment worth $350,000. You would buy a per-load policy for that specific shipment.
Most owner-operators and small carriers carry blanket coverage between $100,000 and $250,000. If you regularly haul high-value freight, you either need a higher blanket limit or a reliable source for per-load coverage when you need it.
The Reefer Breakdown Scenario
If you run a refrigerated trailer, listen carefully. Standard cargo insurance covers your freight if it is damaged in an accident, stolen, or destroyed by fire. But what happens when your reefer unit breaks down on a July afternoon in Florida and your $200,000 load of pharmaceuticals hits 80 degrees?
That is a reefer breakdown claim, and it is not automatically covered under every cargo policy. You need specific reefer breakdown coverage (sometimes called mechanical breakdown of refrigeration equipment) added to your cargo policy.
Here is a real scenario. You pick up a load of temperature-sensitive medication in New Jersey headed for a hospital system in Miami. The load must stay between 35 and 46 degrees. Somewhere in South Carolina, your reefer compressor fails. By the time you notice the temperature alarm, the load has been above 50 degrees for three hours. The entire shipment is rejected. Total loss: $215,000.
Without reefer breakdown coverage, your standard cargo policy may deny the claim because the loss was caused by mechanical failure, not an accident or external peril. With reefer breakdown coverage, the claim is covered.
If you haul temperature-controlled freight, this coverage is not optional. The cost is relatively small compared to a single rejected load.
Hazmat Cargo
Hauling hazardous materials requires higher cargo limits because the stakes are higher. A hazmat spill does not just destroy the cargo — it creates environmental cleanup liability, road closures, and potential injury to bystanders.
Your cargo insurance for hazmat loads should reflect the full cost of a loss scenario, including cleanup. Talk to your agent about endorsements specific to hazmat cargo, because standard cargo policies often have exclusions or sub-limits for hazardous materials.
Double Brokered Loads and the Liability Question
Double brokering is when a broker gives a load to another broker (or a carrier acts as a broker and re-tenders the load) without the shipper’s knowledge. It is against the law in most cases, and it creates an insurance nightmare.
If a load is double brokered and something goes wrong, the question becomes: whose cargo insurance pays? The original broker’s carrier? The second broker’s carrier? The answer is often “nobody wants to pay,” and the claim gets disputed while the shipper is out their freight.
As a carrier, protect yourself by verifying load sources. If the rate seems too good and the broker is unfamiliar, be cautious. If a claim arises on a double brokered load, your cargo insurance may still cover it — but the claim process will be significantly more complicated, and there may be disputes about coverage.
Common Cargo Claims and How They Happen
Theft at truck stops. Thieves target trucks at unsecured lots and truck stops — especially the I-35 corridor in Texas, I-10 in California, and I-95 in the Northeast. Park at secured facilities, use king pin locks, and never leave a loaded trailer unattended. Your insurer may offer better terms if you use GPS tracking.
Temperature deviation. For reefer loads, equipment failure, fuel running out, or incorrect settings can destroy a load. Temperature logs are your best friend in a claim.
Shifting loads. Improperly secured cargo that shifts during transit. If your insurer finds the load was not secured to DOT standards, they may deny the claim.
Water damage. Leaking trailer roofs, rain through unsealed doors. A $200 roof repair beats a $50,000 cargo claim.
How to Document a Cargo Claim
Documentation is the difference between a claim that gets paid and one that gets denied.
Before loading: Photograph the cargo. Note freight condition on the bill of lading. Record seal numbers. For reefer loads, document pre-cool temperature and required range.
During transit: Keep continuous temperature logs for reefer loads. Note any incidents — hard braking, detours, delays, reefer alarms.
At delivery: Photograph cargo condition. Have the receiver note any damage on the delivery receipt before you leave. If the load is refused, get written documentation of why.
Filing the claim: Report immediately. Provide all documentation — photos, logs, receipts, everything. Cooperate with the adjuster. Keep copies of everything you submit.
The carriers who get claims paid are the ones who can prove they did everything right.
State-Specific Considerations
California has strict food safety requirements. Chain-of-custody documentation for food shipments is detailed, and cargo claims involving food safety violations escalate quickly.
Texas is the cargo theft capital of the US. The I-35 corridor from Laredo to Dallas is the highest-risk zone. Invest in trailer tracking and secure parking.
Florida summer heat means reefer units work overtime and mechanical failures spike. Reefer breakdown coverage between May and October is not negotiable.
New Jersey port drayage has specific cargo requirements for containerized freight. Talk to your agent about intermodal coverage.
The Bottom Line
Cargo insurance protects you from having to pay for someone else’s freight out of your own pocket. The federal minimum is a joke — carry enough to cover the loads you actually haul. Add reefer breakdown if you run temperature-controlled. Document everything as if you expect a claim on every load, because the one time you do not is the one time you will need it.
Your reputation as a carrier depends on freight arriving safely. Your financial survival depends on cargo insurance being there when it does not.