How Much Does $1M Cargo Insurance Cost? 

Thang Truong
Thang Truong
Updated on:

As a trucker, you must ensure that your truck and cargo are adequately insured. At the very least, you need to carry liability insurance on your truck. There are regulations governing the amount of insurance you need on your vehicle. 

What about your cargo, though? A large portion of your job is to ensure that the freight gets to its final destination safely. Damage or loss can happen, so you must maintain adequate cargo insurance as well. 

What is cargo insurance? 

Cargo insurance is protection against financial loss caused by lost or damaged cargo. The policy will pay the amount your policy indicates you’re insured for if you are affected by a vehicle accident, natural disaster, customs rejection, act of war, piracy, or cargo abandonment by one of your drivers. If something covered by your policy occurs while you’re on the road, your cargo will be covered. 

When do you need cargo insurance? 

Freight can be exposed to multiple risks. Traffic conditions, weather, and moving from port to port all cause significant risks. The longer the cargo is exposed to risk, the more likely it is that something will happen to it. Generally, getting cargo insurance is a good idea, even if it isn’t required by law. 

However, your brokers or shippers usually require you to have cargo insurance before allowing you to haul their goods. If you don’t have cargo insurance, if damage or loss happens to their goods, they will have a hard time recovering their cargo.

Legal limits for carriers are often far less than the value of the goods that are being shipped. You need to purchase additional cargo insurance if you want your cargo protected. Your brokers and shippers usually require truckers to have at least $1M in cargo insurance.

How much does $1M cargo insurance cost? 

When shippers and brokers require trucking companies or owner-operator truckers to have cargo insurance, they usually require a $1M cargo insurance coverage limit. It is quite expensive to have a $1M cargo coverage limit.

Based on our research, the average $1M cargo insurance policy costs $410 per month or $4,920 per year. Most owner-operator truckers pay between $350 and $620 per month for a $1M cargo insurance policy based on the cargo types that they haul.

Remember that this is just the average cost. Your rates will be different. Be sure to shop around with a few companies to compare several quotes to find the cheapest one for you. Comparing several quotes can be time-consuming. We recommend the following approach:

  • Getting online quotes from Progressive, biBERK, or THREE. These companies offer great online quote experience. It is fast and simple to obtain quotes from them within minutes.
  • Work with a good broker such as Simply Business, Smart Financial, or to get and compare several quotes in one place within minutes.

How much does cargo insurance cost in general? 

It is hard to have the average cost of a cargo insurance policy because it varies significantly based on several factors, especially the cargo types that you haul and the coverage limits.

Having said that, the average cargo insurance policy has a cost range of $400-$1,800 annually. A standalone cargo insurance policy could cost between $36 and $150 monthly. The actual cost is at least partially based on your coverage limits. For example, a 50k limit will range in cost from $400-$700, while a 250k limit will hit closer to $1,100-$1,800. 

Cargo insurance coverage limits Average cargo insurance costs
$50K $400-$700 per year
$250K $1,100 – $1,800 per year

Learn more how much does truck cargo insurance cost?

How is cargo insurance calculated?

The calculation for determining the cost of the cargo insurance isn’t necessarily a difficult one. It does rely on the proper valuation of the goods being transported. A single shipment cargo premium is usually calculated as the insured value of the merchandise multiplied by the policy rate. 

If you’ve selected too little cargo insurance based on value, coinsurance will become a consideration. Coinsurance is typically a percentage that won’t be paid by the insurance policy. It is usually covered by the cargo owner after they have paid the deductible for the incident. 

Factors that affect cargo insurance costs

The three most significant factors that determine the cost of your cargo insurance premium are: 

The goods being transported

For example, if you transport natural gas, that will cost more to insure than if you were carrying a load of hard plastic. If you transport cargo that is considered hazmat such as oil, some states even mandate a high cargo insurance limit. Shippers and brokers of valuable cargo also usually demand cargo insurance limit to ensure that the cargo insurance policy is sufficient to protect their cargo when damage or loss happens.

The limits on your cargo insurance policy

The most commonly held limits for a cargo policy are $100,000 unless you’re hauling cars. Then the minimum limit amounts will be more like $250,000-$300,000. 

As you can see in the cost table above, the higher the insurance coverage limit, the higher the cargo insurance cost is. $1M cargo insurance is quite expensive, but if shippers or brokers demand it, you must have it to be able to transport their cargo. In most cases, they pay well enough for you to compensate for such a policy, though.

The history of loss on your record

Similar to any insurance policy, if you’ve had losses before, your premium will likely reflect that when you purchase your policy. 

Similarly, if you have never bought a cargo insurance policy, your first policy will be more expensive. However, keeping your cargo insurance policy steady and in good standing will get you lower rates over time.

Coverages to include in a trucker’s cargo policy

Cargo insurance costs also depend on what you are hauling. Low-cost coverage can be a temptation, but it might not offer enough protection. Enlist your agents to help in finding the best insurance policy to cover your level of risk. The most common coverages that can be included in a cargo policy include: 

  • Pollution liability: covers the cost of cleaning up spills such as gasoline or other pollutants
  • Debris removal: covers the cost of removing cargo that was dropped on roadways and waterways
  • Theft: covers losses due to burglary
  • Hijacking: covers losses from cargo being hijacked
  • Sue and labor coverage: covers further loss from damaged goods after an incident happens
  • Earned freight coverage: covers losses due to cargo that can’t be delivered due to damage
  • Infidelity/dishonesty coverage: covers losses due to theft the driver commits
  • Water damage: covers losses due to wetness and trailer leaks
  • Loading and unloading coverage: covers losses that happen during the loading and unloading process
  • Reefer breakdown coverage: covers loss associated with a refrigeration equipment malfunction

Learn more at Motor truck cargo insurance: Everything you need to know

Insurance limits drive the cost

Most of the coverages we’ve mentioned have their own limits. Speak to your agent about the limits of each type of coverage and then determine if you should purchase specific coverage. Usually, you can raise or lower limits as needed. 

Cargo insurance coverageTypical limit
General cargo insurance$100,000-$300,000
Pollution liability$10,000 and up
Debris removal$10,000-$25,000
Earned freight$1,000-$25,000

Best motor truck cargo insurance companies

Hundreds of insurance companies offer motor truck cargo insurance, which can make it overwhelming for you to sho around to find the best policy for you. We have done the research and here are our recommendations for the top motor truck cargo insurance companies for your consideration.

  • Progressive: Best Overall
  • biBERK: Best for low-cost coverage
  • Simply Business: Best for comparing several quotes
  • THREE: Best for affordable comprehensive coverage
  • Smart Financial: Best for finding cheap minimum coverage

How much does $1 million liability insurance cost?

If you are running a trucking business, you know that in addition to cargo insurance, you may need other insurance coverage to protect your business. They are usually liability insurance, such as general liability, trucking primary liability, non-trucking liability insurance, trucking umbrella insurance, etc. For these policies, the common coverage limit is $1 million.

The most common liability insurance policy for small businesses is general liability. The equivalent policy for trucking businesses is trucking general liability. The average cost of a $1M trucking general liability insurance policy is $125 per month. Learn more at the best trucking general liability insurance companies.

On average, business owners spend between $20 to $300 a month, or $240 to $3,600 a year, for a $1M general liability insurance policy. This is a wide range since general liability insurance costs vary based on several factors.

Learn more at how much does $1 million business liability insurance cost?

The takeaway

Cargo insurance is like most other insurance products. The cost is determined by various factors, including the type of coverage you require. Speak with your own insurance agent today to find out what you can expect to pay for cargo insurance.

Thang Truong
Thang Truong

Thang Truong covers small business insurance and small business success at BravoPolicy. He is a licensed P&C insurance agent. Previously, he held product leadership positions at, Capital One, NerdWallet, and Mulberry Technology. He holds a MBA degree from UC Berkeley - Haas School of Business.

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