What You Need to Know About Auto Transport Insurance

by | Aug 27, 2021 | Transport Tips

When customers call us about our auto transportation services, the three most common questions they ask right out of the gate are:

  1. How much does it cost to ship a car?
  2. How long does it take to ship a car?
  3. How does auto transport insurance work?

This article will answer the last question on that list: insurance.

The first thing you’ll want to understand is that there are two types of auto transport companies you’ll deal with when shipping a car: brokers or carriers. If you’re not familiar with what the differences are, we recommend you read our article about brokers vs carriers.

To summarize, carriers are companies that have their own fleet of trucks. Your vehicle is shipped on their trucks. Brokers, on the other hand, do not have their own fleet of trucks so your vehicle isn’t shipped on their trucks because they don’t have any! They act as middlemen between customers and carriers. Through their networking, brokers find carriers for their customers to ship their vehicles.

It’s important to know what type of company you’re working with when asking about insurance coverage!

J&S Transportation is a carrier and also a licensed auto transport broker. We can act as both to ensure you get prompt transport of your vehicle.

Carriers and Auto Transport Insurance

You can expect carriers to be responsible for the cargo on the trailer. Cargo means your vehicle and all the others on the trailer.

The responsibility of the carrier is limited. For example, if there’s an accident, the insurance adjuster will determine the actual cash value (ACV) of your vehicle at the time of the incident. The vehicle’s value set during that investigation, and the cost to repair or replace it, will determine the responsibility of the carrier to reimburse you the vehicle owner.

Our carrier insurance does not cover what the insurance industry calls, “Acts of God.” These are typically nature-related events. Tornados and hurricanes are examples of “Acts of God.” Damage to vehicles from these rare events are evaluated on a case-by-case basis. Damage from “Acts of God” is so rare that we don’t have an example of one in our nearly 20 years of experience! Even though this type of damage is rare, you need to be aware of it because if it happens your vehicle won’t be covered unless you have your own auto insurance policy in place.

Damage from terrorism or civil unrest situations may be covered, or may not be under certain qualifications. This may understandably be a concern, but its so rare we don’t have any precedent to explain the details in an article like this one.

You may be wondering if you’re required to have your own auto insurance policy in place to ship a car. The answer is no. However, if there is damage to your vehicle that is not covered by the carrier’s insurance policy (i.e. damage due to an “Act of God”), then you will be responsible for that damage out-of-pocket. It is for this reason we highly recommend vehicle owners have their own auto insurance policy in place prior to shipping.

If your vehicle is damaged during transit that is covered by J&S’ cargo insurance, you will file a damage claim with us directly and our damage claims manager will process the claim. This is the general process with all carriers, but you’ll want to know for sure before booking.

As a carrier, we provide $350,000 of cargo insurance and $1,000,000 of liability insurance. This ‘carrier’ coverage is applicable when we ship cars on our own J&S trucks. You can see those coverages on our certificate of insurance.

A Side Note on Cargo Insurance
The cargo insurance coverage amount applies to the entire load of vehicles on a given trailer, not each vehicle individually. Let’s say you have an eight-car trailer and the cargo insurance amount is $350,000. In theory, the coverage per vehicle will be $43,750. You get that figure by dividing $350,000 by 8 (the number of vehicles on the trailer).

We say “in theory” for this example scenario because the coverage isn’t divided exactly equally among the vehicles on the trailer. There are many factors that come into play when insurance companies and their insurance adjusters figure out what the exact insurance coverage will be per vehicle.

The main thing you need to know is that the cargo insurance coverage amount is divided among all the vehicles. It is not the coverage provided for each vehicle.

Brokers and Auto Transport Insurance

If we can’t quickly get a customer’s vehicle shipped on our own J&S trucks, then expedite your transport by switching modes to broker. We then act as a licensed broker and find one of our trusted partner carriers to ship the vehicle. You benefit with a faster delivery.

When we act as a broker on an auto transport, we vet every carrier we work with to make sure their cargo insurance is adequate. We know the industry rules and what to ask. Just as you would want if arranging this yourself, so also do we want the carrier to insure against potential damage to our customer’s vehicle.

For example, if our customer’s vehicle is worth $65,000 and we estimate the carrier’s cargo insurance will only provide coverage up to $45,000, we’ll pass on the carrier. While it’s extremely rare, we always make sure the vehicle will be covered in the event of a total loss!

Most carriers have cargo insurance between $150,000 – $350,000 and liability insurance of $1,000,000 or more. When you’re vetting carriers you need to know more than just the coverage amounts. As mentioned earlier, cargo insurance is for the entire load of vehicles on a trailer so you also want to know what kind of trailers carries have to get an idea of how much coverage will apply to your vehicle. When we act as a broker, we are doing all of this vetting and research for you!

The insurance that carriers have will be similar to our policy: the carrier insurance will not cover “Acts of God”. Again, we recommend vehicle owners have their own insurance on their vehicles to cover the exceptional circumstance.

If there is a damage during transit that is covered by the carrier’s insurance, the customer will typically file a damage claim with the carrier – not the broker! This is extremely important to understand so you know who you’ll be dealing with in the event there is damage to your vehicle.

Unfortunately, if any damage occurs during shipping a lot of brokers will simply hand you off to the carrier and “wish you luck.” But that is NOT how J&S Transportation does business when it’s acting as a broker.

Unlike many brokers, we act as a liaison in processing the claim with the carrier. In fact if damage occurs when we’re acting as a broker, we ask that you tell us about the damage immediately so that we can contact the carrier on your behalf and help you file a damage claim with them. As your ally, we make sure the claim is filed properly and being handled by the carrier promptly. We stay involved until the damage claim is settled.

We also make sure that any carrier we work with not only has ample insurance coverage to begin with but is also reputable and has a solid track record of handling damage claims. We refuse to work with carriers that don’t have adequate insurance or have failed to process a damage claim properly in the past for any of our customers.

It’s also important to note that reputable brokers will have brokerage insurance. Because J&S Transportation is also a licensed broker, we have brokerage insurance. Think of it as “backup insurance” as it only comes into play in the event the carrier’s insurance isn’t sufficient or has expired. This insurance rarely comes into play for us because we are diligent in vetting the carriers we partner with. We verify that the carrier’s insurance is adequate for any vehicle we’re shipping. Then we verify that the insurance is current and won’t expire before the vehicle is delivered.

Key Takeaways Regarding Auto Transport Insurance

When customers ask about car shipping insurance, they are really asking about cargo insurance as this is the insurance that covers damage to the vehicle during transport. Whether you work with a broker or a carrier, you’ll want to know if the carrier’s cargo insurance is adequate to cover any potential damage to your vehicle during transport. You’ll also want to know how damage claims are handled.

You’ll have to get that information directly from the carrier. If you’re working with a broker, then you’ll want to make sure that the broker does a thorough job of selecting carriers with ample cargo insurance coverage and that they handle damage claims properly.

Whether you hire us to ship your vehicle as a carrier or a broker, we can assure you that the cargo insurance coverage will be adequate to cover any damage to your vehicle during transit. We can also assure you that if a damage claim occurs, we’ll be there to help you through the process and we’ll make sure your claim is handled properly and promptly!