Freight insurance usually costs 0.3–0.5% of your cargo's declared value — about $30–$50 to insure a $10,000 shipment — with minimum premiums around $25–$150. The reason shippers buy it anyway is the fine print on the alternative: the carrier's built-in liability pays by the pound, not by what your freight is worth, and on used goods it can be as little as $0.10/lb. Here's the math that tells you which side of that trade you're on.
What the carrier already covers (and the catch)
Every LTL shipment moves under carrier liability — the carrier's legal responsibility for loss or damage it causes. Three things make it thinner than it sounds:
- It's capped per pound. Limits run from $25/lb at the most generous national carriers (FedEx Freight, TForce), through $2–$25/lb scaled by freight class (ABF, R+L), down to $0.50/lb — usually with a $100,000 per-shipment ceiling.
- Used goods fall off a cliff. The common standard for used, refurbished or reconditioned freight is $0.10/lb, capped around $10,000 — a fraction of typical replacement cost.
- You must prove fault. Liability covers carrier negligence. Acts of God, riots, inherent vice, and — most disputed of all — "improper packaging" are excluded, and the claims process runs months, not days.
The value-per-pound test
Divide declared value by shipment weight. That one number decides the question:
| Shipment | Value / weight | Liability recovers (at $2/lb) | Verdict |
|---|---|---|---|
| 5,000 lb steel castings, $2,500 | $0.50/lb | Full value | Liability is enough |
| 2,000 lb packaged food, $6,000 | $3/lb | $4,000 of $6,000 | Borderline — check your carrier's limit |
| 500 lb electronics, $50,000 | $100/lb | $1,000 of $50,000 | Insure it, always |
| 1,200 lb used machinery, $30,000 | $25/lb | $120 (used rate $0.10/lb) | Insure it, always |
Rule of thumb: above roughly $2–5 per pound of value, carrier liability stops covering you — exactly where most consumer goods, electronics, and anything used already live.
What full cargo insurance costs, with the math
Third-party cargo insurance (bought per shipment through your broker/3PL, or annually for regular shippers) prices as a percentage of declared value:
| Scenario | Typical rate | Example premium |
|---|---|---|
| Domestic ground, general freight | 0.1–0.4% of value | $10,000 × 0.3% = $30 |
| Typical per-shipment programs | $0.65–$1.00 per $100 of value | $18,000 shipment ≈ $120–$180 |
| High-value / fragile (electronics) | 0.5–1% | $50,000 × 0.75% = $375 |
| Minimum premium (any small shipment) | — | $25–$150 floor |
The premium formula is simply declared value × rate, subject to the minimum. Compare that against your exposure — declared value minus what liability would actually pay — and the decision usually makes itself: insuring the $50,000 electronics shipment costs ~$375 to close a $49,000 gap.
Five ways shippers get burned
- Assuming "insured" was included. A freight quote includes liability, not insurance. If you didn't buy a policy or see "full value coverage" on the confirmation, you have the per-pound limit.
- Shipping used equipment bare. $0.10/lb is the industry's quietest gotcha — a $30,000 used CNC machine recovers about the price of dinner.
- Under-declaring value to save premium. Insurers settle at declared value; declare $5,000 on $20,000 freight and that's the payout.
- Packaging exclusions. Both liability and insurance claims die on "insufficiently packaged." Photograph the wrapped pallet at pickup — it's free claim evidence, and it pairs with the dims you already measured for the class calculation.
- Missing the claim window. Concealed-damage claims commonly must be filed within 5 days of delivery. Note damage on the delivery receipt before signing, every time.
How this ties back to freight class
Liability is one of the four characteristics the NMFC uses to classify freight (with density, handling and stowability) — fragile, high-value, theft-prone commodities carry higher classes partly because they're bigger liability risks. So the same properties that raise your freight class are the ones that make the per-pound liability cap most dangerous. If your freight classes high for liability reasons, that's the market telling you to price real insurance into every lane — and to make sure the rate you negotiated isn't quietly assuming risk you still hold.