Why A Shipper should consider moving freight through operation that has freight brokerage authority in place versus directly contracting a motor carrier:

 

  • Reduced exposures for shippers for allegations of negligent hire.

Background to above bullet point:

Shipper is one step removed from directly contracting a motor carrier, if a professional freight broker operation is used which includes use of technology that pulls real time data from DOT web-site SAFER confirming Motor Carrier authority is in place, valid Insurance is in place and Safety rating is not Unsatisfactory or Conditional plaintiffs will have difficult time proving negligent hire allegations.

 

  • Reduced exposures to allegation of vicarious liability

Background to above bullet point:

Shipper being one step removed from directly contracting a motor carrier won’t be position to exercise too much control of a driver, it would make it difficult for plaintiff’s to prove the driver had an employee/employer relationship where significant liability could be present for a shipper.

 

  • Reduced exposures and costs associated with litigation through contractual obligations to hold shipper’s harmless present in Broker Carrier contracts that extend to Broker’s customers.

 Background to above bullet point:

The Broker Carrier contract specifically can state the motor carrier must not only hold the freight broker harmless but the shipper as well. Further most commercial auto policies in place for a motor carrier under “who is insured” provision of the policy confirm the shipper would be one. This puts shipper’s in position to tender defense of litigation named against them to the motor carrier.

 

  • Shipper can obtain additional insured status under a freight broker’s own auto liability/third party liability policy. Often policy limits for freight broker are higher than most motor carrier’s own auto liability policy.

Background to above bullet point:

A majority of mid-size and smaller motor carrier operations will only have $1,000,000 of auto liability coverage in place. Working through a freight broker who has invested in freight broker auto provides and another layer of coverage beyond what is in place with a motor carrier. In many cases freight brokers are investing in excess auto liability limits expanding auto limit significantly. At a minimum a freight broker adds another layer of $1,000,000 in his primary policy. Currently Freight Broker Auto liability coverage is affordable putting many freight brokerage operations in the position to obtain excess auto limits significantly expanding overall coverage a shipper can take advantage of. 

 

  • Shipper’s moving freight through freight brokerage operations insured in Broker Shield program enjoy industry broadest form of auto coverage/third party liability coverage.
  • Highlights of Broker Shield Auto / Third Party policy include;
  1. Per occurrence limit Vs Annual Aggregate limit.
  2. Cover includes BI and PD claims not only in transit but also prior to transit during loading and after transit during unloading.
  3. Covers punitive damages in “those” states that allow them to be awarded.
  4. Provides pollution coverage; Liability, cost and expenses for actual, alleged discharge IF pollution is sudden and accidental unanticipated event occurring during policy period and reported in accordance policy terms.
  5. Primary for the Freight Broker with cover triggers related to simply being named in litigation where duty to defend clause kicks in.
  6. Does not contain elements of “contingency” present in some other policy format that ties coverage to motor carrier’s policy.
  7. Network of legal counsel transportation experts developed over the past 44 years throughout the entire U.S. are present to defend freight broker’s and their shipper clients.

 

  • Shipper can secure broader forms of cargo insurance through a freight brokerage operation filling gaps present in many motor carrier’s own cargo coverage

Background to above bullet point:

Broader forms of cargo coverage can be secured by freight broker operation extended to protect their shippers should motor carriers or their cargo underwriters fail to cover a legitimate cargo claim. Motor Truck Cargo policies can contain many exclusions and warranties typically not present in broader forms of cargo coverage a freight brokerage operation can purchase to benefit their shippers. 

 

  • Outsourcing the vetting, on boarding and contracting of motor carriers can significantly reduce a shipper’s internal employee expense.

Background to above bullet point:

Internal staff required to build up a data base of qualified motor carrier, contract them and monitor their performance won’t be required by out sourcing this work to qualified freight brokerage operation. Vetting of motor carrier to ensure they have valid motor carrier authority, valid insurance and the DOT Safety rating needs to diligent and in place for all shipment, this can be significant expense for a shipper.

 

  • Professional freight brokerage operation can provide required capacity to fill every lane required for a shipper.

Background to above bullet point:

Professional freight brokerage operation can provide the required capacity to move a shipping operation merchandise with access to majority of motor carrier operating in the market place.