Reefer truck insurance

Why a reefer policy is mostly about cargo

Your liability policy protects other people: the MCS-90 endorsement required on for-hire policies says it does not apply to “property transported by the insured, designated as cargo.” A spoiled or rejected load is a cargo loss. Under the Carmack Amendment an interstate carrier is liable for “the actual loss or injury to the property” it carries, unless liability was limited to a value the shipper declared or the parties agreed in writing, if reasonable (49 U.S.C. 14706).

With food, a temperature problem can turn a load into a loss even when nothing looks damaged. Under FDA’s rule, once a shipper, loader, receiver or carrier becomes aware of a possible material failure of temperature control, the food may not be sold or otherwise distributed unless a qualified individual determines that the deviation did not make it unsafe (21 CFR 1.908(a)(6)).

The FDA sanitary transportation rule for carriers

FDA’s rule on sanitary transportation of human and animal food applies to shippers, receivers, loaders and carriers that move food by motor vehicle or rail in the United States — whether or not the food crosses a state line. Businesses with less than $500,000 in average annual revenue, adjusted for inflation, are not covered (21 CFR 1.900, 1.904).

When the carrier and the shipper agree in writing that the carrier is responsible, in whole or in part, for sanitary conditions, the carrier must, as the agreement provides:

• make sure the trailer and equipment meet the shipper’s specifications;
• pre-cool each mechanically refrigerated compartment as the shipper specifies before offering it for food that needs temperature control;
• on request, give the receiver the operating temperature the shipper specified, and show the shipper or receiver that it was maintained — for example with temperatures at loading and unloading or time/temperature data from the trip;
• keep written procedures for cleaning and inspecting its equipment and for temperature control;
• train its personnel when hired and as needed, and keep training records for 12 months after the person stops doing the work (21 CFR 1.908(e), 1.910, 1.912).

Keep those records in order: pre-cool notes and temperature data are also the evidence you will want if a load is ever rejected.

What to check on a reefer policy

• Refrigeration breakdown — ask whether spoilage caused by a breakdown of the reefer unit is covered, and read the conditions attached to it.
• Commodities — make sure every commodity you haul is covered and not excluded; ask about each one, especially high-value loads.
• The cargo limit — compare it with your most valuable load and with every contract’s cargo requirement.
• Primary auto liability — at least the federal minimum if you run your own authority.
• Physical damage — for the tractor and the trailer; ask how the reefer unit itself is covered and valued. A lender with a lien will require collision and comprehensive.

More on cargo coverage in the cargo insurance guide.

Quote checklist for reefer haulers

• USDOT and MC numbers (or your pending application).
• Tractor and trailer VINs, years and values — plus the reefer unit’s make, model and year.
• Commodities, typical and highest value per load, and the temperatures you run.
• Your shipper agreements — especially who is responsible for sanitary conditions and temperature records.
• Drivers’ license details and experience, and loss runs from recent insurers.