What is Non Trucking Liability Insurance Insurance. Just the word itself is enough to raise…
Contingent Auto Liability Freight Brokers
The federally mandated prerequisite of contingent auto liability freight brokers is to ensure that there is enough value and type of insurance. Brokers are often held liable for loss or damage to the shipper’s freight. Also, when accidents occur and property gets damaged, third parties claim that the brokers are responsible.
It is often alleged that responsibility was breached by the broker, citing that investigations on safety records were not carried out. Claimants also argue that the brokers and carriers had some hidden agendas.
Types of Freight Broker Insurance
Broker insurances are so complex, especially because there are multiple variations to choose from. It is, therefore, vital to learn and understand the difference. The first type is broker bond, requiring freight brokers to carry a surety bond.
The bond ensures carriers and shippers are paid when the broker is unable to meet the contract in full, failure to keep the contractual agreement, or delay payments. The other is the contingent auto liability. This protects brokers against third parties.
General liability addresses issues beyond driving. Brokers should consider coverage such as property and general liability, workers’ compensation, vicarious auto liability and umbrella, contingent cargo, and errors and omissions. Errors and omissions are particularly very important because there could be claims that are not covered by policies such as contingent cargo.
For instance, if a broker makes the mistake of giving incorrect information to a carrier, that would fall under errors and omissions and would be considered as negligence. The broker would, however, not pay for property damaged and bodily injury. Apart from workers’ compensation, which is required by law, all other policies are part of a broker’s decision.
The decision made will depend on the assessment of risks that could potentially touch on the operation of the shipment. Brokers are advised to avoid wasting money on excess auto liability, carrier-supplied insurance certificates, incomplete carrier qualification, and to quit relying on the FMCSA for insurance data.
Although contingent auto liability freight brokers do not find themselves directly negligent, they still need to protect themselves. If for instance, the insurance of the carrier is invalid at the time of the accident or their coverage have been exhausted, the broker’s coverage should offer a valuable legal defense.
Despite having bills of lading, history of doing business, contracts/written confirmations, and invoices, liability risks can still be passed on to them. Once the motor carrier that is selected by the broker is found to be negligent, questions may arise as to whether the latter had a particular motive by using that specific carrier.
Investigations may then be carried out to examine the safety ratings of the carrier and history of accidents caused, among other faults to determine if the broker actually had this information before selecting it to transport the load. If suspected to have this information beforehand, the court may decide to hold the broker responsible for the loss or the damages caused.
There have been cases where the broker was found liable based on the theory of vicarious liability. This is where the carrier is determined to have some connection with the broker. Before selecting a carrier, brokers are advised to check their safety status, verify their insurance, and get proper liability insurance coverage.
Brokers act as intermediaries between carriers and shippers. They do not take possession of goods being shipped but can be liable for damages and losses resulting from the transportation when claims are filed.
As such, contingent auto liability insurance is necessary to protect them against claims. The coverage is intended to protect the brokers when they are held responsible for the carrier’s actions especially in cases where accidents involve bodily injuries. All legal liabilities to a broker’s business must, therefore, remain protected.