Freight Broker insurance
Freight brokers are not required by law to carry motor truck cargo insurance coverage, but there is still risk involved.
Before you make any decisions about insuring your business or changing your current coverage, I urge you to speak with your own insurance agent – and possibly your accountant and attorney, as well.
DO consider these coverage options:
- Contingent Cargo: This type of coverage can fill some of the gaps that the carrier’s policy might have. Contingent cargo insurance protects the broker from a shipper’s claims of lost or damaged cargo when the carrier’s motor truck cargo policy won’t honor the claim. Contingent cargo insurance is only used when the carrier refuses to honor a claim, but offers much broader coverage with less exclusions.
- Vicarious Auto Liability: Similar to how a broker can be held liable for claims of lost or damaged cargo, they can also be found liable for claims of things like wrongful death, personal injuries or negligent hiring through vicarious liability. For example, In the case of Sperl v. C. H. Robinson Worldwide, Inc., the plaintiffs were awarded $23 million for wrongful death and personal injuries. The broker in this case was found vicariously liable because they had the ability to enforce their own rules in a carrier manual and could deny loads to carriers that didn’t comply with rules and professionalism requirements.
- Property and general liability: If you own or lease property, you can buy property insurance. It’s usually best to package it with general liability insurance for your premises and operations. Ask your insurance agent for coverage recommendations and quotes.
- Errors and Omissions: Not all freight brokerage risks involve vehicles or cargo. Errors and omissions (E&O) is an essential coverage for brokers of any kind, including freight brokers. For example, if a broker gives incorrect shipping information to a carrier due to a mistake or paperwork error, the broker could be considered negligent and liable for any financial damages. E&O coverage would cover the cost of defending this type of claim, as well as the legal fees and any resulting settlement amounts up to the policy limits.