Motor truck cargo insurance: how it works and where it stops

Motor truck cargo insurance pays for loss of or damage to freight you haul for others, on a legal liability basis: it responds to what the carrier owes the shipper, not to the shipper's own invoice. Federal law does not require cargo insurance for general freight carriers, but brokers and shippers do, and a carrier's liability for freight in its care comes close to strict liability under federal law. A carrier with no cargo coverage, or coverage with the wrong limit or the wrong exclusions, pays the difference.

Why a carrier is liable in the first place

The reason is the Carmack Amendment, 49 U.S.C. 14706, which governs interstate shipments by for-hire carriers; purely intrastate loads fall under state law. It makes the receiving carrier, the delivering carrier and any carrier on whose line the loss occurs liable for the "actual loss or injury to the property" it transports under a bill of lading. A shipper establishes a case by showing delivery in good condition, arrival in damaged condition and the amount of damages. The Supreme Court held in Missouri Pacific Railroad Co. v. Elmore & Stahl, 377 U.S. 134 (1964), that the burden then moves to the carrier, which escapes liability only by proving it was free from negligence and that the loss came from an act of God, the public enemy, the shipper's own act, public authority, or the inherent vice or nature of the goods. Careful driving and following the shipper's instructions are not enough by themselves (Cornell LII summary of the opinion).

In practical terms: if a load of produce arrives spoiled or a pallet disappears, the carrier is presumed to owe the shipper. Cargo insurance is how the carrier pays.

The claims clock

Federal rules set a procedure that carriers and insurers follow:

• Filing. A carrier cannot set a claim-filing period shorter than 9 months, or a suit period shorter than 2 years running from its written notice disallowing the claim (49 U.S.C. 14706(e)). A claim must be in writing, identify the shipment, assert liability and request a determinable amount (49 CFR 370.3).
• Acknowledgment. The carrier must acknowledge a proper claim in writing within 30 days (49 CFR 370.5).
• Decision. Within 120 days it must pay, decline or make a firm compromise offer, and if it cannot, it must send status notices at the end of each following 60-day period (49 CFR 370.9).

A cargo claim that sits in a dispatcher's inbox breaks these rules and hands the shipper leverage. Report every claim to the cargo insurer the day it arrives.

What the coverage does

Motor truck cargo is typically written as a legal liability form. It pays the amounts the carrier is legally obligated to pay for loss of or damage to covered property in its care while being transported, up to the policy limit and after the deductible. It is inland marine coverage (inland marine insurance for tools, equipment and goods in transit), usually issued as a separate form or as part of a trucking package with the auto liability. The ISO business auto liability coverage excludes property owned or transported by the insured or in its care, custody or control (CA 00 01 10 13, exclusion B.6), so the cargo policy is what fills that gap. See Care, custody and control: why the CGL won't pay for property you hold.

Key terms on the declarations:

Terms vary by carrier. These are the usual building blocks, so read the form that you actually have.

Where cargo policies cut back

Cargo claims fail more often on conditions than on coverage grants. Look for these in the policy:

• Unattended vehicle. Many forms exclude or limit theft from a truck left unattended, or require it to be locked, in a secured lot or within sight of the driver.
• Refrigeration breakdown. Spoilage from reefer failure needs the endorsement, and it often requires maintenance records and temperature monitoring.
• High-theft commodities. Electronics, pharmaceuticals, alcohol, tobacco, copper, food and similar goods are often excluded or sublimited, or require tighter conditions.
• Driver and employee dishonesty, and "voluntary parting," where a thief with forged paperwork talks the carrier into handing over the load.
• Improper loading or shipper packaging. The Carmack defenses overlap with these exclusions, but the policy wording governs the insurer's duty.
• Delay. Late delivery losses, such as a spoiled market window, are typically excluded.
• Property of others in your terminal. Freight on your dock or at a cross-dock may fall under a terminal or warehouse form instead; see warehouse legal liability insurance: covering customers' stored goods and bailee coverage: insuring customers' property in your care.
• Your own goods. Cargo the carrier owns is not a liability exposure.

Theft is a real part of the exposure. Verisk's CargoNet recorded 3,594 supply chain crime events across the United States and Canada in 2025, essentially unchanged from 3,607 in 2024 (CargoNet theft data). Cargo insurers know this, which is why their conditions around parking, locking and commodity are tight.

Released rates and contract limits

Carmack allows a carrier to limit its liability to a value stated in the shipper's written declaration or in a written agreement, if the value is reasonable under the circumstances (49 U.S.C. 14706(c)(1)(A)). That is why a broker-carrier agreement matters as much as the policy. If the agreement holds the carrier liable for full invoice value and the policy limit is $100,000, the carrier absorbs the shortfall. If the agreement properly limits liability per pound, the carrier's exposure is lower but the shipper may push back or the broker may refuse the term. Read the "cargo" clauses with the contract insurance requirements checker.

Household goods carriers are different. The federal filing for household goods carriers includes cargo insurance of at least $5,000 for loss or damage on any one vehicle and $10,000 at any one time and place (49 CFR 387.303(c)), and Carmack's rules on released rates generally do not apply to household goods unless the shipper waives full-value protection in writing. See Moving company insurance.

A hypothetical example

Say a carrier hauls a trailer of consumer electronics worth $180,000 under a broker agreement that makes the carrier liable for full value. The trailer is stolen overnight from an unfenced truck stop. The carrier's cargo policy has a $100,000 per-vehicle limit, a $2,500 deductible, and a condition that excludes theft from an unattended trailer or requires the trailer to be in a secured lot. The sequence:

1. The shipper files a written claim for $180,000, and the broker passes it to the carrier.
2. The carrier reports it to the cargo insurer within a day, because the 30-day acknowledgment clock is running.
3. The insurer checks the conditions. If the trailer was parked in compliance, the policy pays up to $100,000 less the deductible. If the condition was breached, the claim may be denied.
4. Either way, the carrier owes the shipper under Carmack. A $180,000 liability against a $97,500 payment leaves the carrier with $82,500, or the whole $180,000 if the exclusion applies.

The figures are illustrative. The lesson is to match the limit to the highest-value load, and to follow the parking conditions in the policy as strictly as the safety rules.

How to buy it

1. List the commodities you haul and the highest value you could have on one truck or at one terminal.
2. Compare the per-vehicle limit to your broker agreements, and ask for a catastrophe limit if trucks gather at terminals.
3. Add reefer breakdown if you haul temperature-controlled freight, and keep the maintenance and monitoring records the endorsement asks for.
4. Read the unattended-vehicle, theft and commodity conditions line by line. Ask the underwriter which ones the claims department actually enforces.
5. Make sure cancellation notices to certificate holders match what the broker requires. See certificates of insurance: what they prove and what they do not.
6. Confirm the cargo policy and your trucking insurance: the coverages motor carriers need auto liability policy list the same insured name and operations.

Note that the MCS-90 endorsement does not cover cargo, and the federal liability minimum covers injury and property damage to the public, not freight. See The MCS-90 endorsement explained: what it guarantees and what it doesn't and FMCSA insurance requirements and filings for motor carriers. For international and ocean shipments, the shipper side of cargo coverage is in ocean marine and cargo insurance: how shipment and vessel coverage works.

Key takeaways

• Motor truck cargo insurance covers a carrier's legal liability for freight in its care. It does not require a shipper to prove negligence, because Carmack makes the carrier liable unless a narrow defense applies.
• Federal law requires cargo insurance only for household goods carriers. Brokers and shippers require it for everyone else, and the contract sets the limit.
• Check the exclusions and conditions: unattended vehicles, refrigeration breakdown, high-theft commodities and fraud-based theft are where claims fail.
• Acknowledge and decide cargo claims within the federal timelines, and report to the insurer immediately.
• Match limits to your highest-value load and your terminal accumulations, not to the minimum a broker will accept.