What Is Contingent Cargo Insurance?

People ship cargo out to different regions on trucks, ships, trains, planes and other vehicles. This lets them do business with different people and companies even if they are far away. However, shipments don’t always reach their destination. This is where contingent cargo insurance can prove itself a true asset to a broker.

Contingent cargo insurance is a type of insurance that freight brokerages carry. It is a secondary insurance that covers some or all of the cost of handling, storing, getting rid of or replacing cargo that’s refused, damaged or lost. It pays only if primary insurance doesn’t pay out. It is called contingent cargo insurance because it covers unexpected expenses that aren’t covered in a primary insurance policy.


There is no law that requires a broker to cover contingent cargo insurance. However, carriers usually won’t work with brokers who don’t have this insurance. Brokers usually forward claims to their carriers if something happens to a shipment, but if the carrier’s policy won’t pay out, someone still has to pay expenses. If you don’t have contingent cargo insurance as a broker, your shippers — the people who hired you to find someone to ship their goods — can blame you for the loss even if you can’t be held liable. Your relationship with your shippers consequently can suffer. Carriers understand this and prefer not to work with brokers who are willing to take such risks.


Coverage under a contingent cargo insurance policy will vary based on where you get the policy. However, some standard protections are for theft, vandalism and accidents.


Having contingent cargo insurance lets you compete with other brokers and establish good relationships with carriers without paying for losses out of your own pocket. It also aids the consumer; if anything happens to a shipment, you still can get goods to others without too much disruption.
When It’s Needed

There are two instances when having contingent cargo insurance is imperative. The first is if you sign an agreement with a carrier that transfers liability to you. The second is if the carrier you select doesn’t have proper carrier’s insurance. Ideally, this shouldn’t happen, but carriers sometimes neglect premiums unintentionally or simply don’t have a policy that covers as much as you’d like.