Coverage Question- Cargo loss from a hole in the trailer

From Fireman's Fund

Wetness is a common exclusion under motor truck cargo. Note the attached question relative to insurance and the legal liability of the trucker.

If water enters a dry van trailer, due to a hole, would cargo coverage apply to damaged product as a result of the water? Would an insured be
legally liable for the damage sustained due to the hole in trailer? Or, would the claim be denied by application of the above "Causes of Loss Not Covered" item?


• Specifically, if water entered a dry van trailer, due to a hole, would cargo coverage apply to damaged product as a result of the water?
No. The policy specifically excludes damage caused by rain.
• Would an insured be legally liable for the damage sustained due to the hole in trailer.
Yes. The insured is legally liable for damages sustained to cargo while in their possession as a carrier for hire, unless there is a valid defense to liability.
• Or, would the claim be denied by application of the above "Causes of Loss Not Covered" item?
Yes. If water enters thru a hole in the trailer, the policy exclusion would apply and the claim would be denied.


The assured would be legally liable for ANY water damage to cargo sustained while in their possession, whether the water came in thru a hole in the container, or got on the cargo some other way. Motor carriers are responsible for prompt & safe delivery of all goods entrusted to them for shipment. If during the transit, there is a collision or impact or some other event or occurrence that causes physical damage to the container/trailer resulting in a hole in that container/trailer that lets in the water, the assured would be legally liable for the damages to cargo, and would also have coverage under the policy. An example of this would be driver hitting a low handling limb that rips a hole in the trailer, or collision with another vehicle or stationary object. These are examples of situations where there is both (1) legal liability on the part of the assured and (2) coverage under the motor truck cargo policy.

If an insured transports a load of goods in a trailer that has a hole in it, and there is no covered event that created the hole or opening, then there is no coverage under the motor truck cargo policy, but assured would very likely still be legally liable for the damages to cargo, unless the assured could show that the shipper was at fault for improper maintenance of a shipper-owned container. Proper maintenance of the trailers/containers is key to avoiding this type of exclusion being applied in a loss event.