What Contingent Cargo Insurance Actually Is

Updated  Spring 2016

We often get asked what contingent cargo insurance actually is. While we think it is a relatively simple concept, I hear confusion to agents and their insureds that are not in the space every day.

As an underwriter of this coverage, I feel you get specificity and a better definition by actually looking at the insuring agreement and property covered by a specific policy.

Contingent Cargo is designed to cover property in vehicles for which the insured / truck broker and their subcontractor/ trucker are legally liable for direct physical loss or damage to property of others in the due course of transit. That is pretty simple. It is important to understand though what  the coverage trigger is. It is the failure of both the negligent trucker or the negligent trucker's insurance policy to pay a valid and substantiated claim.

I have reviewed many forms through the years and candidly I think Lloyd's Beazley has defined it better than any other insurer.

Contingent Cargo coverage is triggered by the inability to collect from the subcontractor's/ truckers insurer. That inability should be based on 5 reasons:
1) Coverage was non-existent owing to avoidance, termination or expiration
2) Coverage was invalid
3) Coverage was insufficient in amount ( the need for more limits/ excess)
4) Coverage was inapplicable because the the carrier's motor truck cargo policy does not cover or excludes the loss ( difference in conditions)
5) Coverage is inapplicable due to the insolvency of the insurance company writing the motor truck cargo policy

That's pretty simple and succinct too.

It is typically a condition of coverage that the insured must obtain evidence of motor truck cargo legal liability insurance( MTC) AND that those MTC limits are equal to or greater than the subcontractor's legal liability.

We see a good many policies that have commodity exclusions or terms and conditions that invite agent error and omissions ( unattended vehicle warranty as an example). Most insurance policies do not cover 3) and 4) above. These are known as following form policies and we are surprised that they are allowed to be sold.

Fortunately we offer preferred contingent cargo products that do not have these limitations- if the insured is willing to be a "best practices" operation. The first place to start a review of a potential insured is to look at their broker carrier contract/agreement and make sure that they have the following:

* adequate insurance limits for the load and coverage terms spelled out
* indemnification to the insured

Note recent marketplace trends have afforded truck brokers coverage for items that are not covered by the trucker's motor truck cargo policy in the first place. These coverages include:

a) Identity Theft
b) Carrier Acts of Dishonesty
c) Earned Freight of the Broker
d) Errors and Omissions resulting in loss of cargo ( misdelivery).

Current coverage needs stem for the purchase of difference-in-conditions, excess, identity theft, and dishonest acts.

We are now offering the ability to write primary cargo coverage where some carriers are requiring same. The shipping world is trying to push more liability ( beyond Carmack liability) on the backs of truck brokers.


We hope this helps you and offers a matter-of-fact way of looking at this important coverage.