Third-Party Insurance

Safeguarding freight during transit, especially with LTL shipments, is a key concern. While most carriers offer limited liability coverage, that coverage is often limited and may not fully compensate for damage, loss, or theft. Third-party freight insurance offers a more comprehensive safeguard. 

What Is Third-Party Freight Insurance? 

Third-party freight insurance is a separate policy purchased from an independent insurer to cover the full declared value of a shipment. Unlike carrier liability, which is limited by tariff rules and freight class, third-party insurance provides broader protection and, often, faster claims processing. 

 ⚠️ Important: Third-party insurance must be purchased for the total value of the load, not just the difference between the load value and carrier liability. These two coverage types cannot be combined to offset one another. Customers must choose one or the other when filing a claim.  

 For example, if the declared value of a shipment is $10,000 and the carrier liability is up to $2,000, third-party insurance must be purchased in the full amount of $10,000 – not the “gap” amount of $8,000. 

Why Is It Important? 

Carrier liability typically covers only a fraction of the shipment’s value, often based on freight class and weight. For example, a carrier may offer $0.50 per pound for general freight, which may fall short of covering higher-value goods. 

 On the other hand, third-party insurance is more comprehensive and likely includes the following 

• Covers the full declared value of the shipment. 
• Offers protection against a wider range of risks. 
• Provides a more streamlined claims process. 
• Reduces financial exposure for shippers and consignees. 

If the declared value of the goods being shipped is higher than the maximum carrier liability shown with the rate, shippers should consider third-party insurance. 

Identifying Insurance in Cabo 

On the LTL Rates page, users can view the Carrier Liability New and Carrier Liability Used amounts for each rate returned by a carrier. 

⚠️ Coverage may vary significantly between new and used goods; confirm the item's condition if this is a concern. 

Users will have a second opportunity to review included coverage on the Items & Liability page of the booking process.  

⚠️ In the example above, $1,250 is the maximum amount the carrier will pay on a claim if the item is new. If the items are used, the maximum amount the carrier will pay in this example is $100. 

Purchasing Third-Party Insurance in Cabo 

When the carrier liability amount is not enough to cover the full value of the shipment, third-party freight insurance can be purchased directly in Cabo during step 2 of the booking process. The Freight Insurance section of step 2 is required. Users cannot move to step 3 of the booking process until freight insurance has been purchased or waived.  

Step-by-step Instructions for Purchasing Third-Party Insurance 

On the Items & Liability page of the booking process, locate the Freight Insurance information section. 

Enter the total value of the shipment into the “I want to purchase freight insurance in the amount of” field. Be sure to enter the total value, not the difference between the value and the carrier's liability. Insurance coverage cannot be combined when filing a claim. 

Cabo will automatically populate the Quote Amount and Uplifted Quote Amount.  

• Quote Amount cannot be edited. This is the cost to Priority1. 
• Uplifted Quote Amount is the amount that will be charged to the customer for insurance. This number can be edited by a Priority1 rep to increase or decrease margin on freight insurance. 

ℹ️The Uplifted Quote Amount is based on the insurance margin and insurance uplift minimum settings in customer preferences. For more information on insurance margin and uplift, click here. 

Deductible Rates for Third-Party Insurance 

When filing a claim through third-party insurance, customers are responsible for a deductible, which is subtracted from the total payout. In contrast, claims under carrier liability do not require a deductible. 

 Deductible rates are standard on all shipments covered by third-party freight insurance. These rates are listed in the Freight Insurance section on the Items & Liability page of the booking process. 

 Waiving Freight Insurance  

To waive freight insurance and rely on carrier liability, select “I am waiving freight insurance” at the bottom of the Freight Insurance form. 

⚠️Reminder: The Freight Insurance section is required. Users cannot move to the next page until Freight Insurance has been purchased or waived.  

Filing a Claim with Third-Party Insurance Vs. Carrier Liability 

Carrier liability and third-party insurance cannot be combined. If damage occurs, the customer must evaluate which coverage option offers a better payout. In the event of partial or minor damage, carrier liability may be more beneficial as the customer will not need to pay a deductible. Consider the examples below.