A Broker has as many, if not more, exposures than a Motor Carrier. These exposures are also much more difficult to define than those of a Motor Carrier. Therefore, policies are very flimsy most of the time and even the best ones are far from perfect.
Here are some of the current coverages available to a Broker in today’s marketplace.
This is a normal coverage that any business will usually have in place to protect itself in case another gets hurt while on the business’ property. Policies vary and may be extended to provide more coverage, depending on the insurance policy form it’s written on and who it’s written by.
Workers’ Compensation & Employers’ Liability
A Broker will want to have these two coverages in force to defend its operation in the event an employee is injured or falls ill as a result of his or her job.
Freight Broker Auto Liability
Also known as Third Party Legal Liability or Contingent Auto Liability, this coverage protects the Shipper and the Broker if a Motor Carrier’s policy fails to provide coverage in the event of a claim.
Freight Broker Cargo Legal Liability Defense
Again, in the event a Motor Carrier’s policy fails to provide coverage in the event of a claim, this coverage will protect the Broker’s exposures. This type of coverage is also available in Broad Form, meaning it has the potential to extend coverage to the Shipper.
Freight Broker Excess Liability
This Umbrella coverage will further protect the Broker above its underlying Liability coverage. It’s important to note that this coverage will not cover the Shipper or Motor Carrier.
Errors & Omissions coverage will protect the Broker from a claim that results from its own negligence.
The Bottom Line
Many of the above coverages have been created by insurance companies to satisfy shippers’ contract requirements.
Until a standard is created for Brokerage coverages, every unique Brokerage should develop its own process of due diligence in working with Shippers, Motor Carriers, Attorneys and Insurance Agents.
A Broker who understands its industry, exposures, and available coverage options can certainly minimize its risks.
Kevin Kearney, Agent – Blaine, MN office
Kevin has been an agent at Truck Writers for over 25 years. Kevin specializes in providing trucking insurance solutions to medium and mid-sized fleets.
“Things are always changing. It’s important to not only keep up with the industry’s available insurance markets and potential coverage exposures, but also the trucking and logistics industry as a whole.”