Trucking is a nationwide powerhouse of an industry. Transporting freight both within states and across state lines, truckers make sure that people have access to all the products and items that they need throughout their lives. However, trucking and freight brokers are some of the unsung heroes of this industry, helping carriers and shippers to liaise and develop beneficial relationships.
Freight brokers are their own separate industry, but they too can benefit from trucking insurance. That being said, not all types of coverage will apply to them, and it can be difficult to understand what is useful versus what is an unnecessary expense.
Does Insurance Impact Trucking Brokers?
First and foremost, it’s important to be aware that brokers can and should have their own insurance to cover their work. While the carriers and shippers with whom they build relationships will have insurance of their own, brokers can benefit from coverage that is specific to them.
However, not all types of insurance are applicable to brokers, and it is not always possible to bridge the gap between what a carrier already has and what a shipper requests or what the broker is comfortable with. Failing to understand this aspect can lead brokers to spend money on policies that, in the end, will fail to cover them as they anticipated.
Coverages Brokers Can Benefit From
Freight brokers would be wise to purchase a couple individual insurance policies (or bundle them with a reputable insurer) to cover their most critical assets. These types of coverages include:
- Vicarious auto liability – It’s true that the truckers with whom you work are generally required to carry auto liability (and general liability) insurance. However, these policies are usually specific to them, and the brokerage firm itself will not be protected in the event of liability. Vicarious liability insurance shields brokers if they are named in legal actions and can provide a legal team as well.
- Contingent cargo – A broker’s job is to line up work between shippers and truckers. However, each carrier may opt for different types and levels of cargo coverage. While brokers are not legally liable for lost or damaged cargo, they can empower carriers to get the job done well and cover harm to the freight along the way.
- Errors & omissions – This type of policy is critical for brokers, because they are the ones navigating and aligning all of the moving pieces of contracts between parties. For example, imagine that a broker miscommunicated the details of a sensitive shipment, and as a result, that cargo is delayed or ruined. The broker would be liable for these damages without E&O insurance.
Coverages That Don’t Usually Work
Insurance policies tailored specifically to brokers can help them to confidently do business. However, not all types of insurance can be used by brokers, and spending money on them produces no benefit. These include:
- Auto liability – Brokers can be put in a tough spot where the carrier’s insurance does not meet the shipper’s requirements. However, brokers cannot purchase insurance for another party, so buying excess auto liability in the hopes of bridging the gap will not work.
- Additional insured – In some industries, it is both possible and critical for middlemen like brokers to be named as an additional insured on certain policies. This helps to make sure that everyone involved in the contract is protected. In freight brokerage, however, being named as an additional insured on a general liability policy is cumbersome and challenging. It’s best to seek that coverage independently. Additionally, brokers cannot be named as an additional insured on auto liability, cargo insurance, or workers’ compensation policies.
Of course, the type of work that each broker does will be unique, and there may be other types of insurance that are critical for them specifically. These policies might include their own independent workers’ comp protection, property insurance, and more.
It’s important to work with a reputable insurer who specializes in trucking and freight brokerage insurance to ensure that you receive the coverage that you need. Do not rely on the coverage of the truckers or shippers, and understand that your own ability to bridge the gaps between those coverages is limited. This calls for a strategic approach.
Trust a Professional Trucking Insurer to Help You Bridge the Gap
Whether you are just getting started with brokerage or have identified a vulnerability in your brokerage’s liability, do not leave yourself exposed to financial damages. The experts at Burton & Company can help you to select the right types of protection for your brokerage without spending money on coverage that doesn’t apply to brokers. Reach out to learn more or to schedule an appointment to get started.
