Understanding Auto Transport Insurance Coverage

Insurance is the safety net that makes auto transport work. Every legitimate carrier is legally required to carry it. But the details of that coverage—what is included, what is excluded, how much protection you actually have, and what happens when you need to use it—are poorly understood by most people who ship vehicles.

This guide explains auto transport insurance from the ground up. Not in legal jargon, but in practical terms that help you make informed decisions about protecting your vehicle.

The Legal Foundation of Carrier Insurance

The Federal Motor Carrier Safety Administration (FMCSA) mandates that all registered auto transport carriers maintain specific insurance coverage as a condition of their operating authority. This is federal law, not a suggestion. A carrier without valid insurance cannot legally operate.

Required Coverage Types

FMCSA requires carriers to maintain two primary types of insurance:

Liability insurance covers bodily injury and property damage to third parties. The minimum requirement is $750,000 for general freight carriers. This protects other motorists if the carrier truck causes an accident—it does not directly protect the vehicles on the trailer.

Cargo insurance protects the goods being transported—in this case, your vehicle. There is no single federal minimum for cargo coverage; requirements vary by carrier type and operating authority. However, most auto transport carriers carry between $100,000 and $1,000,000 in cargo coverage.

Surety bonds (BMC-84 or BMC-85) are required for brokers and provide a financial guarantee. The current requirement is $75,000 for freight brokers.

Understanding this distinction matters: liability insurance protects the public from the carrier, while cargo insurance protects the cargo (your vehicle) from damage during transport.

What Carrier Cargo Insurance Covers

Cargo insurance activates when damage to your vehicle results from the carrier's actions, negligence, or the transport process itself. Here is what falls under standard coverage.

Covered Events

Loading and unloading accidents. If the driver damages your vehicle while driving it onto or off the trailer—scraping the undercarriage on the ramp, hitting a support beam, over-revving the engine—the carrier's insurance covers the repair.

Securement failures. Vehicles are held in place with straps, chains, or tire nets. If these fail and your vehicle shifts, slides, or contacts another vehicle on the trailer, resulting damage is covered.

Carrier-caused collisions. If the truck is involved in an accident due to the driver's actions, damage to your vehicle is covered under cargo insurance.

Fire and explosion. If the carrier truck or another vehicle on the trailer catches fire and damages your car, coverage applies.

Theft during custody. If your vehicle is stolen while in the carrier's physical custody—from their lot, from a rest stop, during transit—cargo insurance covers the loss.

Overturned trailer. If the carrier truck tips or the trailer overturns, damage to vehicles on board is covered.

Coverage Limits by Carrier Type

Different carriers carry different levels of coverage. Here is what to expect:

Per-vehicle coverage is the critical number. If your vehicle is worth $80,000 and the carrier's per-vehicle limit is $100,000, you have adequate coverage. If your vehicle is worth $150,000 and the limit is $100,000, you have a $50,000 gap.

Specialty carriers handling exotics and high-value vehicles typically carry significantly higher limits. This is one reason enclosed transport from specialty carriers costs more—the insurance premiums are substantially higher.

What Carrier Insurance Does NOT Cover

Understanding exclusions is as important as understanding coverage. These gaps catch vehicle owners off guard and create the most frustrating disputes.

Personal Property

Items inside your vehicle are not covered by carrier cargo insurance. This is universal across the industry. Carriers specifically exclude personal belongings because:

• They cannot verify what was in the vehicle at pickup
• Items can shift during transport and cause damage to the vehicle interior
• Liability for unverified personal property creates unmanageable risk

If you leave a laptop, clothing, tools, or anything else in the car, and it is stolen or damaged, the carrier has zero financial responsibility. Remove everything before shipping.

Pre-Existing Conditions

Damage or mechanical issues that existed before transport are the vehicle owner's responsibility. The carrier is only liable for new damage that occurs during their custody of the vehicle.

This is why the Bill of Lading inspection at pickup is critically important. Every existing scratch, dent, and imperfection must be documented. If it is not on the BOL and the carrier claims it was pre-existing, proving otherwise is extremely difficult.

Normal Wear from Open Transport

Open transport exposes vehicles to the same conditions they encounter while being driven: wind, rain, road spray, dust, and UV exposure. Minor accumulation of road film, dust, or bug residue during open transport is considered normal and expected—not damage.

You cannot file a claim because your car is dusty after riding on an open trailer for 10 days. That is the nature of open transport and the reason it costs less than enclosed.

However, actual damage from road debris—a rock chip, a significant scratch from a thrown object—is a different matter. Physical damage to the vehicle is covered; normal environmental exposure is not.

Acts of God

Many carrier policies limit or exclude coverage for acts of God: hail, tornados, earthquakes, floods, and other natural disasters. Some policies cover these events; others explicitly exclude them.

This exclusion varies significantly between carriers and policies. If you are shipping during severe weather season or through regions prone to natural disasters, ask about this specific exclusion and consider supplemental coverage.

Consequential and Indirect Damages

Carrier insurance covers the physical damage to your vehicle. It does not cover the downstream consequences of that damage:

• Rental car costs while your vehicle is being repaired
• Lost income if you cannot work without the vehicle
• Missed events, shows, or auctions
• Depreciation in vehicle value
• Emotional distress

These are real costs that damage can cause, but they fall outside the scope of cargo insurance. If these risks concern you, supplemental or specialty insurance may help.

Mechanical Damage Not Caused by the Carrier

If your vehicle develops a mechanical problem during transport that was not caused by the carrier's actions, it is not covered. An engine that overheats because of a pre-existing coolant leak, a transmission that fails due to age, or a battery that dies because it was already weak—these are owner issues, not carrier issues.

The exception: if the carrier caused the mechanical damage. Running the engine without coolant during loading, forcing a stuck transmission, or draining the battery by leaving lights on—these carrier-caused mechanical problems are covered.

Deductibles and How They Affect You

Every insurance policy has a deductible—the amount of loss the policyholder absorbs before insurance pays. Carrier cargo insurance deductibles typically range from $500 to $1,500, with most falling in the $750–$1,000 range.

The Practical Impact

Here is what deductibles mean in real terms:

For minor damage—a small dent, a paint scratch, a cracked trim piece—the repair cost often falls below the deductible. You absorb the entire cost. The insurance exists but does not activate.

This is the gap that frustrates vehicle owners the most. Your car arrives with a new scratch that costs $400 to fix. The carrier's insurance has a $1,000 deductible. You file a claim and receive nothing. The carrier is technically liable, but their insurance structure means you pay.

How to Mitigate Deductible Gaps

Several approaches address this gap:

Negotiate with the carrier. Some carriers will cover minor damage below the deductible as a goodwill gesture to preserve their reputation and avoid negative reviews. This is not guaranteed but worth asking.

Use your personal auto insurance. If your comprehensive coverage applies during transport, it may cover damage below the carrier's deductible—though you will pay your own deductible and risk a premium increase.

Purchase supplemental insurance. Third-party transport insurance policies often offer zero-deductible or low-deductible options specifically designed to fill this gap.

Choose carriers with lower deductibles. Some premium carriers offer $250 or $500 deductibles. The transport cost may be slightly higher, but the reduced financial exposure may be worth it.

Supplemental Insurance: Filling the Gaps

Third-party auto transport insurance provides additional protection beyond what the carrier's policy covers. Several companies specialize in this niche.

What Supplemental Policies Typically Cover

• Zero or reduced deductible — The most common reason people buy supplemental coverage
• Higher per-vehicle limits — Protecting vehicles that exceed the carrier's coverage
• Broader event coverage — Including acts of God, hail, and weather events
• Interior damage — Some policies cover interior damage not always included in carrier policies
• Stuck-in-transit coverage — Protection if the carrier goes out of business mid-transport
• Extended filing periods — More time to discover and report damage

Cost of Supplemental Insurance

Supplemental transport insurance pricing depends on vehicle value, coverage level, and transport distance:

Basic coverage typically provides reduced deductibles and standard event coverage. Comprehensive coverage adds broader exclusion elimination, higher limits, and additional protections.

When Supplemental Insurance Makes Sense

Always consider it when:

• Vehicle value exceeds the carrier's per-vehicle coverage limit
• The carrier's deductible exceeds your comfort level
• You are shipping during severe weather season
• The vehicle is irreplaceable (classic, limited production, sentimental)

It may be unnecessary when:

• Your vehicle is a standard daily driver worth under $30,000
• The carrier has adequate coverage limits and a reasonable deductible
• Your personal auto insurance provides backup coverage during transport
• The cost of supplemental insurance approaches the deductible amount you are trying to avoid

Run the numbers for your specific situation. Supplemental insurance that costs $100 to avoid a $1,000 deductible gap is a sensible purchase. Supplemental insurance that costs $150 when the carrier's deductible is $500 requires more consideration.

Your Personal Auto Insurance During Transport

Your existing auto insurance policy may or may not provide coverage while your vehicle is on a carrier's trailer. This depends entirely on your policy language and your insurer's interpretation.

Common Policy Positions

Comprehensive coverage may apply. Some comprehensive auto insurance policies cover your vehicle against damage regardless of where it is—including on a commercial carrier. This can provide backup coverage above the carrier's deductible or beyond the carrier's limits.

Explicit transport exclusions. Some policies specifically exclude coverage when the vehicle is in the custody of a commercial carrier. The rationale is that the carrier's insurance is primary.

Notification requirements. Some policies require you to notify the insurer before transport. Failure to notify may void coverage for that period.

No coverage during commercial transport. Some policies simply do not extend to commercial transport situations, treating it as a gap until the vehicle is back in your personal custody.

The only way to know your coverage status is to call your insurer and ask explicitly. Do this before shipping, not after damage occurs.

Coordination of Benefits

When both the carrier's insurance and your personal insurance cover a loss, the carrier's policy is typically primary—it pays first. Your personal insurance may then cover amounts above the carrier's payment, below the carrier's deductible, or losses the carrier's policy excludes.

This coordination is not automatic. You may need to file claims with both insurers and provide documentation to each. The process takes longer but can result in more complete coverage.

How to Verify a Carrier's Insurance Before Booking

Verification takes 15 minutes and can save you thousands if something goes wrong.

Request the Certificate of Insurance

Ask the carrier for a current Certificate of Insurance (COI). This one-page document summarizes:

• Insurance company name and contact information
• Policy number
• Type of coverage (liability, cargo, etc.)
• Coverage limits
• Effective and expiration dates
• Named insured (the carrier's legal name)

Legitimate carriers provide this document promptly. If a carrier hesitates, deflects, or refuses, that tells you everything you need to know.

Verify Through FMCSA Records

Visit the FMCSA's SAFER System at safer.fmcsa.dot.gov and search for the carrier by MC number or USDOT number. The federal record shows:

• Operating authority status (should be "AUTHORIZED — For Hire")
• Insurance status
• Safety rating and inspection history
• Out-of-service orders or flags

FMCSA records may not show specific coverage limits but do confirm that the carrier has met minimum insurance requirements.

Contact the Insurance Company Directly

For high-value vehicles, take the additional step of calling the insurance company listed on the COI. Confirm:

• The policy is currently active
• The coverage limits match what the COI states
• The named insured matches the carrier
• No pending cancellations or modifications

Insurance certificates represent a point in time. A carrier could have had valid insurance when the COI was issued, then had it cancelled. Direct verification eliminates this risk.

The Claims Process: Step by Step

Despite everyone's best efforts, damage occasionally occurs during transport. When it does, the actions you take in the first hours determine whether your claim succeeds.

Step 1: Document Everything at Delivery

Before signing the delivery receipt:

1. Inspect every panel, bumper corner, light, mirror, and visible surface
2. Compare against your pre-shipment photos
3. Check for new scratches, dents, chips, scuffs, and paint damage
4. Look at wheels and tires for curb damage or flat spots
5. Open doors and check edges where they could have contacted adjacent vehicles
6. Check the undercarriage if accessible (ramp scrapes are common)
7. Start the vehicle and check for new warning lights
8. Test the steering, brakes, and basic mechanical operation

Step 2: Note Damage on the Delivery Receipt

Every piece of new damage must be written on the delivery receipt before you sign. Be specific and detailed:

• "4-inch scratch on driver-side front fender, 12 inches above wheel well"
• "Quarter-sized dent on passenger-side rear door, center of panel"
• "Two stone chips on hood, right side, each approximately 2mm"

The driver should review and acknowledge each notation. Ask them to initial beside each damage note. If the driver refuses to acknowledge damage, note that refusal on the form and sign with a notation that you are signing under protest regarding the disputed items.

Step 3: Photograph All Damage Thoroughly

Photograph each damage point with:

• A wide shot showing the damage in context on the vehicle
• A close-up showing the damage detail
• A shot with the carrier truck visible in the background (proves timing)
• A shot of the delivery receipt with your damage notations visible

Step 4: File the Claim Immediately

Contact the carrier's claims department the same day or within 24 hours. Most carrier policies require damage claims within 5–15 days of delivery. Filing immediately:

• Establishes that damage was discovered at delivery
• Demonstrates the damage occurred during transport
• Starts the clock on the claims process
• Prevents the carrier from arguing that damage happened after delivery

Get a claim number, the name of your claims adjuster, and confirmation of next steps in writing (email).

Step 5: Obtain Repair Estimates

Get 2–3 written repair estimates from reputable body shops or mechanics. These establish the cost of damage and provide the insurance adjuster with professional assessments.

For high-value or specialty vehicles, use shops experienced with your vehicle type. A Ferrari scratch requires a different repair approach—and cost—than the same scratch on a Honda Accord.

Step 6: Submit Documentation

Provide the carrier's claims department with:

• Your pre-shipment photos and video
• The pickup Bill of Lading showing pre-existing condition
• The delivery receipt with new damage notations
• Your delivery photos documenting new damage
• Repair estimates
• Your contact information and preferred resolution

Step 7: Follow Up and Negotiate

Claims typically take 30–90 days to resolve. During this period:

• Follow up every 2 weeks if you have not heard anything
• Respond promptly to requests for additional information
• If the settlement offer seems low, negotiate with documentation supporting your position
• Consider whether the amount in dispute justifies the time and effort of further negotiation

When Claims Get Denied

Claims are denied for several common reasons:

• Damage was listed on the pickup BOL — The carrier argues it was pre-existing. This is why thorough pickup documentation matters.
• Damage was not noted on the delivery receipt — The carrier argues it happened after delivery. Always inspect and document before signing.
• Claim filed too late — Exceeding the policy's filing deadline results in automatic denial.
• Damage falls under an exclusion — Acts of God, normal wear, or excluded events.
• Damage is below the deductible — The claim is technically valid but pays nothing.

If your claim is wrongly denied, escalate through the carrier's management, file a complaint with the FMCSA, and consider consulting an attorney for significant amounts.

Building Your Protection Strategy

The best approach to auto transport insurance combines multiple layers:

1. Verify carrier insurance before booking — Confirm coverage levels and deductibles
2. Check your personal auto policy — Understand what backup coverage you have
3. Evaluate supplemental insurance — Purchase it when the math makes sense for your vehicle
4. Document your vehicle thoroughly — Photos, video, and written condition reports
5. Inspect carefully at delivery — Catch and document everything before signing
6. File claims immediately — Speed protects your rights

No single insurance layer provides perfect protection. But combining carrier coverage, personal insurance awareness, supplemental coverage when appropriate, and thorough documentation creates a comprehensive safety net.

The vast majority of vehicle shipments complete without any damage. But the minority that do experience issues demonstrate exactly why understanding insurance matters. Preparation costs nothing. Ignorance can cost thousands.

Ready to ship with fully insured, verified carriers? Get your free quote and our team will help you understand the insurance protection included with your transport.