What is Earned Freight Coverage, and Why is it Important?

Earned freight is the money paid for carriage of goods by a transportation company, by land, sea or air. When a truck driver departs with a trailer full of cargo, their client or clients expect that the items being transported will arrive to their destination in the same condition they were in before they were loaded into the truck. Unless there is a different agreed-upon deal, earned freight is paid on completion of the trip, once the cargo has been delivered in merchantable condition. This places a significant amount of financial risk on the transportation company that needs to be addressed before the job begins.

One question to ask your transportation clients is who carries the risk of losing income in loss of freight during transport; the owner or the transporter? The owner of the cargo has likely taken out insurance on their property, so they will be reimbursed for the cost of the freight loss. However, the carrier risks forfeiting the earned freight if the cargo is not delivered to the owner in the agreed-upon condition or at all.

Earned freight coverage is a type of motor truck cargo insurance coverage that replaces income lost when a load cannot be delivered due to a covered cargo loss. For smaller companies and independent drivers, this type of add-on is crucial to ensuring that a loss of cargo does not financially damage the business. A comprehensive motor truck cargo insurance program with earned freight coverage added on provides essential liability protection for drivers while they are transporting the property of others. While there are no legal requirements for obtaining cargo insurance, many truckers and trucking companies seek out coverage to reduce their risk of financial loss.

Motor truck cargo policies can vary greatly between insurance companies, and are often region-specific. Expertise in the transportation industry is crucial when insuring motor truck cargo. Agents, even if they are somewhat familiar with transportation coverage, can greatly benefit from having an experienced transportation wholesaler behind them. American Team Managers (ATM), an independently owned insurance wholesaler and managing general agent, provides comprehensive cargo insurance solutions for the transportation industry. Their Motor Truck Cargo Liability insurance product is available through A+15 carriers, can be written monoline and includes earned freight coverage up to $5,000. Partnering with a wholesaler that has a designated transportation department can provide agents with the knowledge, experience and product portfolio to give their clients the best motor truck cargo coverage possible.

About American Team Managers Insurance Services

Founded in 1998 by Chris C. Michaels, American Team Managers Insurance Services (ATM) has provided wholesale and MGA services to more than 5,000 independent insurance agents throughout the United States. Our goal is to establish close, long-term relationships with our agency partners and insurance carriers and provide competitive products for the Exclusive and Non-Exclusive markets that we serve. For more information on our products and services, give us a call at (877) 671-7503 to speak to a representative.