Before you make any decisions about insuring your business or shifting to new coverage plan, it is highly recommended that you consult your insurance agent – preferably, an accountant or an attorney. In this post, we have covered some great tips that are applicable to most of the insurance plans offered to third party logistic companies and freight brokers.
Property Liability – If you have your own firm or taken property on lease for business, it is wise to buy property insurance. The ideal way is to package it with your general liability insurance for your firm and its business operations.
Vicarious Liability – If you buy vicarious auto liability insurance, your insurer can advocate for you while in a lawsuit. Whenever you are found liable, this liability coverage will protect your finances. However, you need to be very careful while buying it, and read all the terms and conditions by yourself. Liability policies available out there vary greatly; some offer very little coverage and some offer broad coverage. Not all are the same.
Umbrella Policy – This policy will help you extend your liability limits. Umbrella policies are available in million dollar increments.
Employee Compensation – If you have two or more persons in your staff, you are liable to buy insurance for workers’ compensation. It is also your responsibility to ensure that the carrier you work with has workers’ compensation insurance. If a carrier is claiming that they don’t require workers’ compensation insurance by the state, you must get this in writing and certified. This is applicable to truck freight shipping companies as well.
Contingent Cargo – If you have no idea what your carrier’s policy covers and what it doesn’t cover, contingent cargo is most recommended for you. It will fill any gap the carrier’s insurance might have. Remember, not all contingent cargo policies are the same. Thus, you need to focus on what is covered. Being a broker, you are not legally liable for damage and loss claims, but you should read all policies’ terms before you sign them.
E&O (Errors and Omissions) – Certain claims aren’t covered in any other policy. For instance, if you, as a freight broker, unintentionally provide the carrier with incorrect information, you could be claimed for negligence. But you can cover such claims with E&O insurance. However, please note that this E&O insurance will not pay for property damage and bodily injury. If the E&O is integrated in your contingent cargo policy, cargo damage might get covered.
Excess Auto Liability – Often, freight brokers come to us and ask if they should purchase auto liability coverage policy to fill the gap between shipper’s needs and the carrier’s limits. Say for example, the shipper requires auto liability coverage worth $2 million but the carrier offers coverage of only $1 million. In such a case, don’t even think of doing it. A broker has no right to buy insurance for shippers or carriers. The solution is to find a carrier that meets your shipper’s insurance needs.
Carrier-given Insurance Certificates: The carrier may send you an outdated certificate. Freight brokers should verify carrier-supplied certificates of insurance on their own, rather than blindly relying on them. Hence, we always recommend electronic certificates to our clients.
While there is a number of freight brokerage training courses available out there to choose from, working with a well-established logistics firm can give you more insights about the industry.