Commercial trucking insurance is a complex industry because there are so many risks inherent in the trucking business. There are two main types of trucking liability insurance: third-party liability coverage, which protects against injuries and damage the truck causes, and the type that protects the goods inside the truck against damage during transport. Contingent liability insurance typically refers to the latter.
Primary Cargo Coverage
Truckers are in the business of hauling other business' goods from one location to another. As such, they risk the financial loss of the goods themselves, as well as potential future business if the shipping company refuses to work with them again due to an uncompensated loss. Trucking insurance helps prevent these circumstances. Primary cargo insurance can be rather restrictive, depending on the way it's written. Generally, it provides coverage for the goods being transported up to a certain dollar amount per pound while the goods are in the custody of the trucker and is subject to certain exclusions.
A primary insurer can deny a claim if the trucker is not legally liable. An example of this scenario is a loss that was beyond the trucker's control. Also, the value of the trucker's inventory might exceed the coverage limit of the policy. For these and other reasons, trucking companies may want to have a contingency policy to help cover the loss.
Contingent Cargo Insurance
If the primary cargo insurance liability policy fails to provide coverage or isn't adequate enough to cover the entire loss, the contingent cargo liability policy takes over the claim and pays any remaining loss, subject to the conditions of the policy. Some contingent policies do not provide any broader coverage than the primary policy, so they would only be useful in the event that the primary policy is canceled or invalid. Other contingent policies may offer broader coverage; they either cover losses the primary policy excludes or a greater dollar amount.
Many cargo liability policies do not protect goods while in storage at a warehouse, either before or after the actual shipment. This can be problematic, since many shipping agreements hold the trucking companies liable for this period of time. Some insurers allow the insured to endorse the contingent liability policies to include warehouse coverage to provide compensation for losses.