I think this is probably one of the most overlooked topics when it comes to LTL shipping. Thankfully our technology gives you every piece of information that you would need to cover all of your basis. But, from what I have heard from a lot of our customers is that a lot of brokers do not disclose the included insurance coverage when they run quotes in their TMS (link info to carrierrate) which can lead to a future disaster.
Now when a carrier or broker does not disclose insurance coverage, it leads the customer to believe that there is full coverage. The customer should be asking questions like that, but our 10 years of experience has proven that most customers don’t realize they need to be asking these questions.
Insurance coverage will have a broad range depending on what has been negotiated with each carrier. Carriers usually assign a dollar amount per pound and then it can change based on the freight class. For example, you might get $1 per pound at class 55 and $10 per pound at class 150. Sometimes they will give you the same coverage no matter what class you are shipping at. One thing to pay attention to which most people don’t know and therefore don’t ask the questions, but when you are shipping something and it is moving as a Volume shipment, most carrier will only give you $1 per pound liability. This is a very common practice with LTL Volume shipments.
The great part about our company is that we are able to offer supplemental insurance coverage. We know a lot of brokers offer that as well, but our technology is very advanced, and each and every LTL shipment that you book in our system will always do two things; it will give you the standard coverage that is provided, and it will also give you the option to purchase supplemental insurance with the click of one button. The cost for the extra insurance is very minimal, only about .005 cents for every dollar of coverage that you need. On Truckload shipments the cost for insurance is significantly cheaper.
Now let me explain how the coverage works. Let’s pretend your order is 2,000 pounds and you get $1 per pound in coverage. This means you will be covered up to $2,000. But if you ever need to file a claim your claim is paid on a prorated basis, not necessarily on what exactly was damaged. To go into further detail, let assume you shipped 50 boxes of hardwood flooring and 2 boxes were lost. Let’s pretend the entire order value was $5,000 which means each box has a value of $100. If each box weighs 40 pounds that means 80 pounds was lost, that means you are covered up to $80 on this particular example, $40 per box, based on $1 per pound in coverage. If the entire order was lost, you would only be covered for $2,000 of the $5,000. It would have only cost an extra $35 or so to insure the entire order if you purchased our supplemental insurance.
As you have read, you can understand why this is such an important topic and why you need to make sure that your orders are covered. Now in our 10 years of experience, I have never had an entire order go missing (knock on wood), but from time to time portions can be misplaced or damaged and you don’t want to be on the losing end of an underpaid claim.
Once you have all your ducks in a row and make sure that you are covered, read our post on claims and what to make sure is done for every order to protect yourself.