Before deciding on changing your current coverage or insuring your business, we strongly advise that you discuss it with your insurance agent, attorney, or accountant. Having said that, below are some do’s and don’ts that apply to the major products in freight broker insurance:
Do’s
When it comes to freight broker insurance, do consider these coverage options:
– Property and general liability
Consider buying property insurance if you own or lease property. It is advisable that you package it with general or freight broker liability insurance for your operations and premises. Your agent should advise you on recommendations for coverage and quotes.
– Vicarious auto liability
As a freight broker, you also need this type of insurance. Your insurer will be in a better position to defend you in case you are sued. The vicarious auto liability will cover you if you are found liable. But before you sign a contract with the insurer, make sure that you carefully review the terms and condition. This is because the policies offered for freight broker liability and vicarious auto liability vary widely. Also, consider buying an umbrella policy. This policy will allow you to increase your liability limits. This is very important for a freight broker.
Workers’ compensation
Another product you should consider getting for freight broker insurance is workers’ compensation. Every state requires that if you have two or more employees, you should cover them with this product. Also, ensure that the carrier you are doing business with has this insurance cover. This type of freight broker liability insurance will cover you in case you are sued for injury to your employees as he or she was on duty.
– Contingent cargo
This is another type of freight broker insurance that you should consider getting. This product is important because you do not know what your carrier’s policy covers and does not cover. Do remember that contingent cargo insurance is not all the same. Make sure you read and understand the terms and conditions of the cover before signing a contract with the insurer.
– Errors and omissions
Be advised that some claims are not covered under other policy. For instance, if your carrier gives you wrong information by mistake, the misinformation could be considered as negligence. In this case, you can file a claim and it will be covered by errors and omissions (E&O) insurance. Remember that E&O will not pay for property damage or bodily injury. However, in some circumstances, such as if error and omissions insurance is part of your contingent cargo policy, damage to cargo may be covered. Therefore, consider getting this product for your freight broker insurance.
Don’ts
Below are some products that you should not waste your time and money on:
– Excess auto liability
To bridge the gap between the shipper’s requirement and the carrier’s limits, freight brokers buy auto liability coverage. We advise against doing this. Do not buy insurance for the benefit of another party. You should only insure your liability exposure. Therefore, do not waste your time and money on this type of freight broker liability insurance.
Named as additional insured
Your carrier can name you as an additional insured. In this case, out of four carrier policies, you can be named as an additional insured in one policy. Here they are:
– Auto liability
You do not have to be an additional insured in this policy. This is because the omnibus insuring agreement and MCS-90 endorsement automatically include the shipper and the broker as insured. Therefore, no need for this type of freight broker liability insurance.
– General liability
You can bename as an additional insured in this type of carrier policy.
– Cargo insurance
This is a policy that you should not waste time and money on. You cargo is obviously covered by the shipper’s policy when in transit, so no need for you taking this policy.
– Workers’ compensation
It is not legal in most states for a company to be an additional insured in another company’s policy.
Shipping can be an area of concern for even the most experienced logistics professionals. In an ideal world, each player in the sector would handle their role so that everything proceeds smoothly. But due to the evolving nature of transportation, lines that were once distinct are rapidly blurring. However, you could secure the bottom line of your business by utilizing trucking brokers. These consultants will connect you with the best carriers who will in turn fulfill your shipping needs.
When To Use a Broker
As far as transportation is concerned, timing is everything. If you’re constantly struggling to locate the right carriers at the last minute, your ability to ship cheaply and on time will be badly affected. But when you have a freight broker handle all the legwork, your supply chain will keep moving due to the optimized shipping operations. Trucking brokers offer a wide range of services, from fulfilling urgent requests to covering particular shipping requirements. They could either complement your current shippers or step in as your primary solution.
Establishing a Working Relationship
You’re now well aware of the significant value that a trucking broker adds to your operations. Determining which trucking broker to use depends on various factors. However, the rapport you develop along with their customer service will be the most significant considerations.So whether you’re looking for emergency services or regular freight, a robust relationship between you and the consultant is utterly important. That said, it still matters to work with a quality consultant. There are a few notable benefits of working with experienced trucking brokers.
Insurance
A good broker will ensure that your freight is adequately insured and that the carrier also has sufficient coverage. The specific liability coverage will depend on things like commodity value and type et al. This could only be negated if your broker knows your products and their value as well. You can provide the right assurance by always supplying your broker with a precise valuation of the shipment so that they choose a carrier with the right liability coverage.
Save Time and Money
Freight brokers are well-versed in locating the exact shipping options that will optimize delivery time and costs. Basically, a transport broker will explore different possibilities in order to get you the best possible value. This is done by considering many different companies, some of which you don’t even know of or simply haven’t considered. The result is that you’ll be able to transport your products cheaply and quickly. And because the broker approaches each load with the required attention and diligence, you’ll get the best options on carrier services.
Red Tape will No Longer be a Problem
Transporting shipments across state boundaries involves adhering to a multitude of regulations. An experienced broker will not only know what these regulations are, but they’ll also help you with compliance and the paperwork involved. In fact, some firms even use freight brokers as part of their transport department by granting them control over logistics.
Experienced Troubleshooters
Freight brokers are excellent problem solvers. Due to their vast experience, they’re well acquainted with how to deal with shipping situations of varying complexity. They’re thus excellent for firms who constantly have to ensure their shipments adhere to size, weight or specific measurement issues. Because they’re well-connected within the transport industry, they’ll know whom to contact and what to do.
Though some firms opt to use their own resources in place of trucking brokers, they’ll still seek specialist help from time to time. This is due to the need to ensure that shipments arrive at their destinations in time. Additionally, freight brokers will always use their expertise to help you access the best transport options available.
Broadly speaking, freight insurance protects a shipping company from the risks associated with shipping freight, especially physical loss or damage to cargo on transit. As such, it is vital to select the right insurance broker when shopping for freight insurance. Some of the key considerations when choosing a freight brokerage insurance firm include:
Registration
The Federal Motor Carrier Safety Administration (FMCSA) regulates all freight brokerage insurance firms operating in the US. To register with the FMCSA, brokers have to submit their registration applications via the Unified Registration System (URS). In essence, the FMCSA ensures that freight brokers complete the required training and are competent to work in the insurance industry. As such, you should choose an freight brokerage that is registered with the FMCSA.
Bonded
Federal law requires all insurance brokers to be bonded to the tune of $75,000. In fact, it is illegal to sell insurance products without a surety bond or a Trust Fund Agreement, according to the FMCSA. As such, ensure your broker can provide documentary bonding evidence, not just verbal assurances. Besides being bonded, freight insurance brokers must have liability insurance ranging anywhere from $750,000 to $5,000,000. The actual amount of coverage required depends on the type of freight being shipped. For instance, companies that ship non-hazardous freight must have liability insurance worth $300,000.
Premiums
Policy premiums are an important factor to consider because brokers typically act as intermediaries between shippers and carriers. Moreover, freight insurance premiums vary from one carrier to the next depending on the policy specifications, nature of goods being insured, and carrier pricing model. As such, you should shop around and compare the cost of insurance products from different brokers. It is also worth noting that brokers may earn a commission from the freight insurance products that they sell to consumers. This has often raised concerns that brokers may be biased towards coverage products that offer high commissions and thereby press consumers to purchase insurance policies that do not necessarily suit their needs. Finally, you should evaluate all freight coverage costs such as deductibles to determine whether you can afford to make monthly payments. Deductibles for freight insurance products in the US range from 1 to 5% of the total insured value.
Insurance Certificate
Purchase cargo insurance from a brokerage that can provide you with a valid insurance certificate. The standard practice across the US is for consumers to retain the original certificate of insurance. This ensures policy buyers can provide proof of insurance coverage when submitting compensation claims. With this in mind, ensure the insurance certificates given to policy buyers are unaltered (similar to certificates acquired directly from insurance companies). One way of accomplishing this task is by requesting insurers to verify the authenticity of certificates acquired from freight brokers.
Experience
It is advisable to purchase freight insurance from experienced brokers that have been operating preferably for several years. Such brokers can provide reliable on freight insurance industry trends, available coverage products, and help you select a policy that suits your coverage needs.
Reputation
A broker with a good reputation is likely to be a true professional. Thanks to the Internet, you can learn a lot about a broker’s reputation by running a simple Internet search. However, since unscrupulous brokers may suppress negative content by setting up sites that largely publish positive content, your search should extend beyond the information presented on the first search engine results page. Overall, you can utilize online resources including insurance blogs, forums, and websites to learn more about an insurance brokerage. Alternatively, you can visit the Better Business Bureau (BBB) website and check the rating of every broker you are evaluating. The higher a broker scores on a scale of A to F, the better the reputation of the freight brokerage insurance firm.
Wide Range Of Insurance Coverage Products
In general, freight insurance policies can be broken down into two main categories: basic and all-risk. Policies that fall under the basic category only cover a limited number of risks related to shipping goods. Some of the risks covered include collision, flooding, hurricanes, fire, lightning, cyclones, stranding, sinking, as well as overturning of delivery train, ship, truck, or bike. On the other hand, policies under the all-risk category cover almost every conceivable freight industry risk. This includes rare events such as radioactive contamination, nuclear weapon detonation, improper packaging, and delivery delays related to cosmic occurrences. Policies in each of these categories can still be broken down into multiple sub-categories. For these reasons, select an insurance broker that sells a wide range of freight insurance policies because so that you can choose policies that suit your shipping company’s coverage needs. For example, the insurance needs of a business that ships luxurious and fragile goods are quite different from the needs of a company that ships household furniture.
Conclusion
Some of the key considerations when choosing a freight brokerage insurance firm include the policy premiums, reputation, insurance certificate, experience, registration and bond.
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