After our last few blog posts, hopefully shippers better understand the nuances of cargo insurance, and realize they need to request cargo insurance to protect their business before errors occur. Cargo insurance protects shipper’s freight from loss, damage, or theft when transported by a carrier. These past articles covered the what, when, and why of cargo insurance. We also saw a need to write about how insurance works in the trucking world. So how do shippers actually go about making sure their cargo is protected during transport? Shippers can request certificates of insurance from their carriers to ensure they have the proper coverage for the job at hand.
What Are Certificates Of Insurance?
Certificates of insurance are legal documents that verify the existence, amount, and type of insurance coverage carriers have in place for shipments. The certificate will also clarify the conditions in which the insurance is applicable. Generally, all insurance certificates will include this basic information:
- The name of the insurance company
- The name, address, and telephone number of the insurance agent
- The insurance agent’s signature and the date the certificate was prepared
- The policy number
- The type of insurance coverage and the dollar amount of liability
- The start and end date of the insurance policy
Make sure your insurance certificates contain this information, and that you have a detailed understanding of your carrier’s policy before shipping your goods.
Why Do Shippers Need To Request Certificates Of Insurance?
Shippers request certificates of insurance from their carriers, assuring them insurance is provided to cover lost or damaged cargo. As we’ve discussed in the past, accidents happen; therefore, shippers need to request cargo insurance to protect their business when errors occur. For example, what would happen to your company if an entire shipment were lost? What if your shipment is being transported via container vessel and the ship sinks? Your company is responsible for a share of the losses. How would that affect your bottom line?
While these situations may seem far-fetched if they’ve never happened to you when shipping cargo, it is not worth it to for-go cargo insurance. Overall, requesting certificates of insurance in order to understand and verify your carrier’s policy is the best method of protecting your freight and business from future errors.
How Often Should Shippers Request New Insurance Certificates?
There are a few different situations when shippers would want to request new insurance certificates from their carriers. First, if you are about to start working on a high value project with a big client, it’s crucial to be organized and have all proper documentation before the project starts. This includes requesting new insurance certificates to ensure your carriers are valid and your cargo is protected.
It is also important to request new insurance certificates from your carriers with the general passage of time. This ensures you’re up-to-date on any policy changes such as areas of coverage or dollar amount of liability. It also helps you make sure the coverage is current, and won’t expire before the completion of the project. Simply check the expiration date on the most current insurance certificate you’ve requested, and if it will expire in less than a year, request a new certificate. This way, you’re business understands the carrier’s coverage and has the proper documentation for at least another year.
Finally, it’s not always possible, but shippers can request that carriers alert them to any changes in their policy. This means the carrier will notify you of any changes in coverage, amount of liability, or approaching expiration. If a change has occurred, shippers need to make sure the new policy has adequate coverage for the job at hand. If not, it’s time to use a different carrier, restructure your deal with the carrier, or purchase umbrella insurance.
Overall, the transportation and logistics industry has inherent risks. And while errors do happen, your company can be protected with the proper insurance policies. Certificates of insurance will verify and explain your carrier’s insurance coverage, and how it relates to your business. Therefore, it is important to request new insurance certificates from your carriers in given situations, ensuring the protection of your business.