State Farm Insurance License Practice Exam

What does a Motor Truck Cargo Policy cover?

1. Essentially protects household goods during relocation

2. Liability for domestic shipments in a carrier’s custody

3. Insurance for personal vehicles used in business

4. Coverage of damages during a construction project

The correct answer is: Liability for domestic shipments in a carrier’s custody

A Motor Truck Cargo Policy specifically covers liability for loss or damage to cargo while it is in transit and in the custody of a carrier. This policy is crucial for businesses that transport goods as it provides financial protection against various risks associated with shipping freight. It typically includes coverage for cargo that is damaged due to accidents, theft, or other unforeseen circumstances during transportation. While options describing protection for household goods during relocation, insurance for personal vehicles used in business, and coverage of damages during construction projects suggest various insurance applications, they do not accurately reflect the primary purpose of a Motor Truck Cargo Policy, which is focused on protecting the cargo being transported by motor carriers. Therefore, understanding the specific function of the Motor Truck Cargo Policy helps you recognize its importance in commercial transport and logistics insurance.