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Concerning your freight Broker clients, your primary task as an insurance agent is to help freight Brokers find the best fit insurance policies. Enabling your clients to identify their business liability risks, prepares them to make informed decisions on the type and amount of freight Broker insurance they need to adequately protect their bottom line, and is essential to providing superior service to your customers.
In addition to helping your freight Broker clients protect their bottom line, you can also help grow your clients’ business income by identifying and recommending insurance products that have the ability to offer expanded business opportunities and open up new areas of potential revenue. In other words, you can expand your freight Broker clients’ top line while protecting their bottom line.
In order to do this, you need to become familiar with the different types of freight Broker coverage available, and how such coverage can potentially benefit your clients.
Two Main Categories of Freight Broker Insurance
The insurance products that come into play most often for freight Brokers are Freight Broker Auto liability insurance and Freight Broker Cargo insurance. Insurance agents must therefore be knowledgeable of these types of insurance to ensure best protection of freight Broker clients.
This is especially true given the fact that freight Brokers may often overlook the Freight Broker Third Party Auto Liability insurance and Freight Broker Cargo insurance, and wrongfully assume that such insurance is covered by a General Liability insurance policy. Freight Brokers may often fail to realize that General Liability insurance is typically designed to cover incidents that occur on a freight Broker’s premises. General Liability insurance does not typically cover accidents that occur when cargo is under tender to a motor carrier and/or in the course of carriage; and therefore does not cover liability arising from loss or damage to cargo or from bodily injury or fatalities arising from carriage; the most common types of claims of concern to the freight Broker.
As such, insurance agents need to ensure that their freight Broker clients are adequately covered by Freight Broker Auto Liability insurance and Freight Broker Cargo insurance.
Freight Broker Auto/Third Party Legal Liability
According to FMCSA Data for 2021 there were 169,562 crash accidents, 79,558 injuries and 5,375 fatalities involving trucks. This is an average of 465 crashes and 233 injuries or fatalities per day. Litigation can be extremely costly, particularly when serious bodily injury or fatality is involved. Furthermore, there is no cap on economic damages in any state and only 8 states have currently capped damages on bodily injury and disability awards. There is otherwise no limit to the amount of damages a plaintiff can pursue in bodily injury/fatality tort claims. The average verdict size for a lawsuit above $1 million involving a truck crash has increased nearly 1,000% from 2010 to 2018, rising from $2.3 million to $22.3 million. Nonetheless, it is important to note that over 90% of motor carriers purchase only a $1,000,000 limit of Business Auto Liability insurance. It is well known that almost as a matter of protocol, plaintiff attorneys Sue all parties to an accident; the motor carrier, Broker, Shipper and depending on accident facts, the equipment provider/manufacturer and even the cargo supplier. This is a blatant attempt by plaintiff attorneys to increase the pool of potential contributors to a settlement. Unfortunately, there is very little that the parties to the carriage transaction can do to prevent this from happening without first incurring substantial litigation Defense costs.
This is why your clients need the best fit Freight Broker Auto liability insurance and Freight Broker Cargo insurance. This specific type of coverage was designed to insure the freight Broker for costs of legal defense and the potential cost of any settlement or adjudicated damages arising from an accident under tender in which a third party was injured or killed.
Freight Broker Cargo Insurance
Cargo Insurance, which may also include shipper’s interest insurance, is what companies purchase to protect the cargo in course of transport. It can be critical insurance for those situations when cargo is damaged or lost in transit. These events include natural disasters, vehicle accidents, theft and cargo abandonment.
LogistIQ’s Broker Shield program offers a wide range of options for freight Broker cargo coverage. As mentioned above, the current trend in litigation is for the defendant to involve everyone, with any role in the transaction. Freight Broker Cargo Legal Liability coverage is designed to respond to all of the costs associated with litigation of this kind, as required.
Further, a separate insurance Policy, Freight Broker Contingent Cargo Broad Form coverage, is designed to provide a more sensitive coverage trigger, intending to cover the physical loss of or damage to cargo that is under the care, custody, or control of the carrier, when the carrier’s insurance fails to respond. Unlike the Cargo Legal Liability policy, Freight Broker Contingent Cargo Broad Form coverage does not require that anyone is liable, but instead, the coverage is triggered by the loss or damage to the cargo. Freight Broker Contingent Cargo Broad Form is an important and more customer service-friendly form of cargo coverage.
In addition, another form of insurance Policy, All Risk Shipper’s Interest cargo insurance, is designed to cover cargo claims with the intent of covering the cargo and the Shipper directly, without a claim first having to be pursued against the Carrier or Broker.
The wide range of options available open up opportunities for cargo coverage to all sizes of freight Brokers and all business models.
Business Opportunities Opened Up Through Expanded Coverage
As made clear herein, the benefits of exploring different types of insurance can make the difference between saving a freight Broker’s business in a critical time of need versus the Broker having to close down. Additionally, a freight Broker can leverage these different types of insurance to grow their business.
The current litigation trend to include Shippers has also resulted in many larger businesses now requiring their freight Brokers to carry broader coverage and higher limits with the intent to protect against injury damages/fatalities and cargo losses. While this is an additional burden and expense, it also presents an opportunity for freight Brokers to leverage their increased coverage to not only meet requirements to obtain larger and more profitable loads, but also as a tool for investment in Shipper/Customer goodwill.
While many freight Brokers may restrict themselves to the basic General Liability insurance, savvy Brokers know that third-party liability and cargo insurance policies can be the key to growing higher revenue. Freight Brokers are excluded from consideration of the more lucrative deals if they hold only a General Liability insurance policy. Third-party liability insurance and cargo insurance can help freight Brokers win higher revenue deals by providing them with the coverage that larger volume shipping arrangements require.
Additional insurance can be used as a marketing tool for the freight Broker to build their business. Motor Carriers may have to operate with the lower policy limits as described in order to manage their expenses. However, freight Brokers can offer Freight Broker third-party liability insurance at a Shippers preferred limit level and designate the Shipper as an Additional Insured party under their Policy. This creates a unique value that freight Brokers are able to offer their clients.
LogistIQ Broker Shield
Through its unique Broker Shield insurance program, LogistIQ helps freight Brokers reduce their liability risk exposure while at the same time maximizing potential business opportunities. LogistIQ’s team of experts, sophisticated processes, and elite insurance products are specifically designed to identify and feature everything a freight Broker needs to protect and grow their business. Visit our Broker Shield page to learn more about how LogistIQ’s insurance protects freight brokers while also providing opportunity to grow.
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