Car Shipping Insurance: What's Covered and What Isn't

Car shipping insurance is an essential step in securing your vehicle during its transportation. Depending on its value, it can range from $250.000 to over several million dollars. For most car transport companies, auto transport insurance is automatically included in the price of the service, simply because it's so widely required and demanded by clients. Depending on the level of protection, it can cover cosmetic damage or the total loss of the vehicle during transport.

How Auto Transport Insurance Works

By law, all professional auto carrier providers must carry a valid shipping insurance that covers liability and an additional cargo insurance. The insurance duration starts from the loading of the vehicle onto the trailer and ends once the vehicle is signed over to its owner during the delivery process. The basic coverage level covers each vehicle the carrier transports up to $250.000, with additional insurance for higher-value vehicles that exceed the maximum for the basic insurance coverage. In basic terms, the insurance provided to customers covers any damage that can occur during the transportation of the car. If the carrier has taken all reasonable measures to protect the car and it is still damaged, the car’s owner is entitled to compensation.

Who Provides the Insurance Coverage?

The insurance is provided by the professional carrier who is actually handling the vehicle; however, they work with insurance providers who are the ones backing the coverage with actual funds in cases where compensation for damages is in order. There are actually two types of insurance that simultaneously cover your car, liability insurance and motor truck cargo insurance, which cover your vehicle from damage or theft during transit. Both insurances are provided by the carrier and their insurance provider.

What Car Shipping Insurance Covers

Damage During Vehicle Transport

The main concern that customers have is any potential damage to their vehicle during transit. This is what the liability and cargo insurance of your carrier covers - damage to your vehicle during transit. It can be a little damage, just cosmetic scratches, or mechanical damage from transportation. Insurance also covers theft or loss of the vehicle during transit. The vehicle transport damage insurance commonly covers damage from fires, crashes, vandalism, damage during loading and unloading procedures, and theft. The basic insurance also covers total loss of the vehicle, meaning the damage is so great that the coverage covers the value of the vehicle. The basic car transport insurance coverage covers all common scenarios that are likely to happen on the road.

Covered Risks and Common Scenarios

If you are wondering, “Does car shipping insurance cover damage?”, yes, it does. It, in fact, covers most types of damage, from natural causes to vandalism, fire, and even theft. The most common scenarios that require the use of this insurance are cosmetic damage caused to the car by road debris. This is most likely to occur to vehicles loaded on the lowest level of a carrier’s trailer. That is why we at SGT Auto Transport regularly provide upgrade options for open trailer transport customers who can top load their vehicles to avoid this type of damage.

Another common issue that requires vehicle shipping insurance is damage during the loading or unloading process. It most commonly occurs in modified or lowered sports cars, which do not have high ground clearance.

What Car Shipping Insurance Doesn't Cover

Personal Belongings Inside the Vehicle

There are some exclusions to the coverage, which is why it's so important to understand how car shipping insurance works. One of the biggest exclusions to the coverage is personal belongings inside the car. Each respectable car transport company will let you know about this exclusion and give you the option to remove your personal items from the car. In case you need to transport something with the car, it is advisable to place these items inside an enclosed and secured box placed inside the trunk of the car.

Pre-Existing Damage and Other Exclusions

If your car has any pre-existing damage that is not related to the transportation of the car during this particular trip, then you will not be covered for that pre-existing damage. This applies both to mechanical and cosmetic damage to the car, like scratches to the paint, chips on the windshield, dents, etc. For mechanical issues, your vehicle will not be covered if they are pre-existing, which means you need to document your vehicle’s current, pre-trip state to be as clear and precise as possible if it comes to filing an insurance claim.

How to Protect Yourself Before Shipping a Car

Inspecting and Documenting Your Vehicle

One of the most major steps to protecting yourself is to thoroughly document your vehicle’s condition. This is especially important if your vehicle is brand new, high-value, or has existing damage. Documenting your vehicle's condition will help you fill out a car shipping damage claim and provide clear feedback. We at SGT Auto Transport frequently suggest that customers who are about to ship do the following:

• Wash their car and clean it on the inside; 
• Take clear photos and video of the car once it's dry;
• Take photos of the front and rear bumpers; 
• Take photos of the car’s windshield; 
• Document the condition of the doors; 
• Take photos of the front and rear, right, and underneath the bumpers.

You will be using these photos for comparison purposes, but also in case of filling and insurance claim with your insurance provider and that of the carrier.

Understanding the Bill of Lading

The Bill of Lading is a very important document that details the contract you’ve signed with the service provider; it details the service, and it is an inspection report that is filled out upon delivery of the cargo. SGT recommends not signing the Bill of Lading until you’ve had the chance to thoroughly inspect the car for damage. Doing so and then finding new damage will make it more difficult to successfully claim damages on your car. Even if you’ve documented the damage, signing the bill of lading is a binding document that states that you have no claims against the carrier.

How to File a Car Shipping Insurance Claim

Steps to Take After Delivery

Regardless of whether you are filing an enclosed transport insurance claim or an open transport insurance claim, it's important first to fill out the Bill of Lading correctly. The document will be presented to you upon delivery of the car, but before it's unloaded from the trailer. Take note of any damage and detail it in the document, explaining where the new damage is. Take detailed photos of the new damage and contact your insurance provider and the carrier.

It's important to take your time and inspect the car in broad daylight, detail all of the damage with the carrier present, and make sure that your writing is represented on the carrier’s copy as well. After documenting the damage, contact the carrier within 24 or 72 hours. Most carriers have a deadline that you need to meet, so don’t delay and contact them. Ask what sort of claims forms they require and get clear instructions on how to fill out the forms.

Required Documentation and Deadlines

Filling a car shipping insurance claim is not difficult at all. For a successful car shipping damage claim, you need to meet the requirements and deadlines as set by the carrier’s insurance provider. Usually, carriers will have a deadline ranging from 24 hours to 72 hours after the car is delivered for you to file an insurance claim. You will be required to submit a form provided by the company, the Bill of Lading, and the timestamped photos of the car’s pre-transport state and its current damage. That is why the photos you are taking are so important, because they are the actual proof that will require action on the part of the carrier’ insurance provider.

How Much Does Auto Transport Insurance Cost?

Is Insurance Included in the Shipping Price?

For most reputable carriers, the auto transport insurance cost is included in the final price of their services. Since they are obliged to be insured and provide both liability and cargo insurance, they cannot omit the cost of the insurance. To get to use a reputable carrier, go for a reputable car transport company like SGT Auto Transport. We make sure that all of our service providers have valid carrier insurance for car transport.

When Additional Coverage May Be Worth It

As we mentioned above, there are multiple levels of insurance coverage that you may be eligible for. The basic level covers you if your vehicle is in the $250.000 range; however, if your car costs more than that, you might need to use additional service, as is the case with our luxury and classic car transport service. With it, we ensure that you are covered for the full value of your vehicle.

Final Tips for Shipping Your Car with Confidence

The first and most important thing to consider when booking car shipping services anywhere in the U.S. is to go for a reliable carrier. They will automatically include the price of their auto transport liability insurance and make sure to assist you if there’s any damage to the car. Second, it's important to document your vehicle’s pre-travel state, take time-stamped photos of each panel and each side, and be sure to take them in broad daylight and that the car is clean so the details are more clearly seen. If there’s any damage once the car arrives, be sure to document it as well as to note it in the Bill of Lading before signing - never sign over the Bill of Lading before inspecting the car. Afterwards, follow up with the carrier immediately, ascertain any deadlines that you need to meet for the insurance claim, get the right forms, ask for assistance and guidance on how to fill them, and submit your claim within the deadline.