Contingent cargo liability insurance is the second level of defense meant to protect the shipper. In the unfortunate circumstance that a shipper’s cargo is lost during transportation, there has to be a way to make up the lost money. Sometimes, the transporter will be asked to pay the costs, but equally, there are times where they may refuse. This is why it’s important to have a liability insurance to help.
How it’s Used
Generally, a freight broker will invest in this kind of insurance. This will help both parties if any of the cargo is missing or damaged while it’s being transported. For instance, if any cargo is damaged while making the trip, the shipper will normally hold the freight broker responsible. However, the carrier doesn’t always want to pay. In some cases, they may even have every right not to. This is where contingent insurance would pay the loss.
Requirements Behind Insurance
Currently, there are no laws stating that you must have contingent cargo liability insurance. However, there is a lot of pressure on freight brokers to carry it. In fact, there are a lot of carriers that will refuse to work with a company if they aren’t properly insured. If you’re without, getting into a situation where you did need it can be extremely expensive.
When it comes down to it contingent liability insurance is imperative to any business that involves cargo shipping.