Motor Truck Cargo Legal Liability Coverage AAIS Forms

LEGAL LIABILITY COVERAGE

IM 7450 01 07 — This coverage form provides broad coverage for MTC risks and is designed to cover all shipments of described cargo by truck. The form provides coverage for property at a scheduled terminal and includes several built-in additional coverages. IM 7455 is the schedule of coverages designed to be used with IM 7450.
IM 7451 01 07 — This coverage form provides limited coverage for MTC risks and is designed to cover all shipments of described cargo by truck. The form provides coverage for property at a scheduled terminal and includes some built-in additional coverages. IM 7456 is the schedule of coverages designed to be used with IM 7451.

Coverage

The Coverage section states that property is only covered under the policy on a legal liability basis. Legal liability coverage means that the policy only provides coverage in due course of transit to the extent of the insured’s legal responsibility for property being shipped and for the amount of liability for a loss.

Coverage Extensions

The limit provided under a coverage extension is part of and not in addition to the limit provided under Property Covered.
Debris Removal — Coverage for debris removal is limited to 25% of the amount paid for a loss. An additional limit of $10,000 is available when the expense exceeds 25% of the paid amount or when the combined loss to property and debris removal expense exceeds the limit for the damaged property.
Defense Costs — The MTC forms provide coverage for a trucker’s liability for property of others in transit. Because of the liability exposure, defense costs are included in MTC forms. Under defense costs, the insurer has the option to defend any suit brought against the insured. A defense does not have to be provided once the limit is paid as a result of judgment or settlement. Covered expenses relating to a suit that the insurer is defending are listed under defense costs.
Fraud And Deceit (IM 7450 only) — Coverage is provided up to $1,000 for theft of covered property as a result of fraud.

Supplemental Coverages

The limit provided under a supplemental coverage is separate from, and not part of, the limit provided under Property Covered.
Pollutant Cleanup And Removal — Coverage is provided up to $10,000 for the expense to extract pollutants from land or water; the limit is an aggregate limit.
Freight Charges — If there is loss or damage to cargo, it will be difficult for a carrier to go back to the shipper and ask for payment. Freight charge coverage will reimburse truckers for freight charges that are due but uncollectable due to a covered loss. Under IM 7450, a limit of $5,000 is provided, and under IM 7451, a limit of $2,500 is provided.
Newly Acquired Terminals — Coverage is provided for covered property at a terminal that the insured acquires during the policy period. The insured must report the newly acquired warehouse within 60 days. Under IM 7450, a limit of $100,000 is provided, and under IM 7451, a limit of $50,000 is provided.
Contract Penalty (IM 7450 only) — Coverage is provided up to $5,000 in any one loss and $50,000 annual aggregate for the cost of contractual penalties that the insured has to pay as a result of a delay in the delivery of a shipment. The delay must be the result of a loss by a covered peril.
Expediting Expenses (IM 7450 only) — Coverage is provided up to $5,000 for additional expenses that are necessary to complete delivery of a shipment on time after a loss by a covered peril has occurred. Additional expenses include overtime, transportation costs, storage fees, and equipment rentals.
Moving Equipment (IM 7450 only) — Coverage is provided up to $5,000 for equipment that is used in the transportation of a shipment. Moving equipment includes items used to protect and secure a shipment such as tarps, pallets and pads. Moving equipment also includes equipment used to load and unload a shipment such as hand trucks and small forklifts that are mounted and hauled on a flat bed trailer.
Off-Board Electronics (IM 7450 only) — Coverage is provided up to $5,000 for off-board electronic equipment that the insured uses to communicate with vehicles (e.g., CB-radios) or to keep track of the location of vehicles.
On-Board Electronics (IM 7450 only) — Coverage is provided up to $5,000 for on-board electronic equipment that is permanently installed in the insured’s vehicles. On-board electronic equipment includes equipment that the driver uses to communicate with the insured’s office (e.g., CB-radios), monitor a vehicle’s refrigeration equipment, and navigate. On-board electronic equipment also includes transponders installed in a vehicle so that the insured’s office can know the location of the vehicle.
On-Board Expendable Supplies (IM 7450 only) — Coverage is provided up to $5,000 for on-board expendable supplies. On-board expendable supplies include fuel and oil for the vehicle.
Rewards (IM 7450 only) — This coverage provides a reward limit of $1,000 for information that leads to a conviction for a covered arson, theft, or vandalism loss.

Reporting Conditions (IM 7450 only)

IM 7450 has built-in flexible reporting conditions that can be used to determine the premium based on the insured’s trucking operations. The reporting conditions allow an insured to report either earned receipts, total sales, or mileage per vehicle.