Do You Need Insurance When Shipping a Car?
Last Updated on December 13, 2020
If you’re shipping a car, then you may be curious about insurance.
Do you need valid insurance when shipping a vehicle? Or does the shipping company have insurance for all transported vehicles?
Generally, you do not need insurance to ship a vehicle. In fact, auto shipping companies are legally responsible for carrying liability insurance based on the United States Department of Transportation guidelines.
Today, we’re explaining everything you need to know about insurance and shipping a car, including whether or not you need car insurance when shipping a vehicle.
Table of Contents:
- Car Transportation Companies Carry Minimum Liability Insurance
- Minimum Insurance Requirements for Shipping Companies
- Many Car Shipping Companies Carry Cargo Insurance
- Should You Exceed Minimum Insurance Requirements?
- Insurance When Shipping Vehicles Internationally
- Inspect the Vehicle Before and After Shipping
- How Much Will Insurance Cover?
Car Transportation Companies Carry Minimum Liability Insurance
Most states require drivers to have minimum liability insurance to legally drive. If you don’t have minimum liability insurance, then you cannot legally drive.
Vehicle shipping is different. When you ship a vehicle, you’re not personally driving your vehicle. Instead, your vehicle is placed on a truck, train, or ship, then carried to another location.
You do not need insurance to ship a car. The United States Department of Transportation requires auto transporters to carry liability insurance. This liability insurance protects your vehicle during transit – just like basic liability coverage covers your vehicle when you drive it on public roads.
This requirement only applies to the company that is physically shipping your vehicle. It does not apply to shipping brokers, who are not required to have insurance.
Fewer than 1 in 20 vehicles are damaged during shipping. However, auto transporters carry liability insurance to protect your vehicle during shipping. If you notice damage to your vehicle when it arrives at its final destination, then you may be able to make a claim through your transporter’s liability insurance
Minimum Insurance Requirements for Shipping Companies
Shipping companies are required to have certain types of insurance. If your shipping company does not have this certain minimum type of insurance, then it is not legally operating by the Department of Transportation standards.
Legally, any authorized transportation company must have liability insurance and a motor carrier (MC) number registered with the Department of Transportation.
Typically, this insurance covers common damage to your vehicle that could occur during transit, including fire damage, scratches, and theft.
This insurance will not cover personal items in your vehicle, which is why most shipping companies recommend emptying your vehicle before shipping it.
Inspect your vehicle before and after the shipping process to verify there is no damage. If you notice any damage to your vehicle, then you should be able to file a claim with the shipping company and receive compensation.
Many Car Shipping Companies Carry Cargo Insurance
Most shipping companies also carry cargo insurance that covers additional damage during the automobile shipping process.
However, shipping companies are not required to carry cargo insurance – so you should double-check to see if your carrier has cargo insurance.
You should also verify the terms of the cargo insurance. Different carriers have different types of cargo insurance.
A high-quality auto shipping company might have comprehensive cargo insurance that covers a range of damages and circumstances with high limits. A barebones auto shipping company might have basic cargo insurance that only covers certain disastrous situations with low limits.
For all of these reasons, it’s crucial to ask for a copy of your shipping company’s insurance certificate before you ship a vehicle. All companies are required to provide this certificate to you upon request. Read the insurance terms and conditions carefully to verify coverage.
Should You Exceed Minimum Insurance Requirements?
The insurance policies above, including liability insurance and cargo insurance, are the bare minimum insurance policies required when shipping a vehicle.
If you are comfortable with these insurance policies, then you can ship your car without adjusting coverage. Liability insurance and cargo insurance will provide basic protection for your vehicle.
However, if you need extra protection, or if you want more peace of mind, then consider exceeding the minimum coverage limits offered by your vehicle transportation company.
Here are all of the things you should consider before shipping a vehicle with a company:
- Types of Damage Covered: Different insurance policies cover different types of damage. Some policies cover environmental damage (like hailstorms) while others only cover damage resulting from accidents.
- Areas of Vehicle Covered: Some insurance policies cover the vehicle from bumper to bumper, including the entire exterior and interior of the vehicle. Other insurance policies only cover exterior damage.
- Deductibles: Sometimes, you need to pay a large deductible before making a claim through the auto shipping company’s policy. Other policies have no deductible or a low deductible.
- Limits: What is the limit of the auto shipping company’s coverage? Most auto shipping companies only reimburse you up to the value of your vehicle (based on Kelley Blue Book value).
- Optional Added Coverage: A car shipping company might offer basic insurance to all vehicles, with additional insurance available for an added cost. Ask about additional coverage for things that aren’t covered under the basic policy.
By verifying all of this information with the vehicle shipping company, you can ensure adequate coverage for your vehicle throughout the shipping process.
Insurance When Shipping Vehicles Internationally
When shipping a car internationally, insurance rules vary. You may want to purchase added coverage for better peace of mind.
Generally, the same rules apply when shipping vehicles internationally. Shipping companies still carry basic liability coverage. Most shipping companies cover fire damage, dents, theft, and other damage. Few shipping companies cover items inside your vehicle.
Talk to your shipping company about insurance coverage during international shipping. You may wish to purchase added coverage before the trip.
Inspect the Vehicle Before and After Shipping
You pay a vehicle shipping company to ship your vehicle safely from one location to another. When a shipping company fails to ship your vehicle safely, they may be liable for any damage.
That’s why it’s important to inspect your vehicle thoroughly before and after shipping it.
Do a complete scan of your vehicle before you sign it off to the shipping company. Then, inspect the vehicle once it arrives at your final destination.
If you notice any damage after the final drop-off, make sure to contact the auto shipping company immediately. If you wait to report the damage, then the shipping company could become suspicious that damage occurred after shipping.
Ideally, the shipping company proceeds to fix the problem in a fast and efficient way. Insurance covers the cost of repairing the damage or replacing your vehicle, and you can move forward.
Here is a complete checklist of everything you should do before you ship a vehicle.
How Much Will Insurance Cover?
Most shipping companies buy insurance that covers the value of your vehicle – no more or less.
Let’s say you drive a 5-year old Honda Accord worth $15,000 according to Kelley Blue Book. The shipping company’s truck burns down on the side of the highway, and your Honda Accord is inside. Your Honda Accord is a total loss. You file a claim, pay your deductible, and the insurance company pays you $15,000 for the value of your vehicle.
If you need added coverage, then consider buying extra insurance from the shipping company during transport.
If you are transporting a sports car, luxury vehicle, or classic car, for example, then ordinary car insurance may not be sufficient. The value of your vehicle (based on Kelley Blue Book) may not match the actual worth of the vehicle. In this situation, consider buying extra insurance.
Final Word on Insurance for Shipping a Car
You do not need insurance when shipping your car. All shipping companies are required to have basic insurance that covers the value of all vehicles being shipped.
If you need to drive your vehicle after it’s shipped, however, then you need valid car insurance coverage. And, if you want extra insurance beyond what is offered by your shipping company, then you may wish to buy that added coverage before shipping your vehicle.
Check with your shipping company to verify any insurance terms, coverage, and limits when shipping your car.