Frequently Asked Questions

Revenue - the rating basis for most contingent cargo and truck broker liability policies is revenue.

Q- What revenue do they actually use to determine the revenue? Is it the gross or the net?
A- Like trucking, it is always on a gross basis.

Q- Why should the bill of lading never be in the name of the broker?
A- The insured asserts himself as an independent contractor and merely a facilitator of freight that assumes no legal liability. Since the bill of lading sets forth the legal liability during transit, it is very hard for a broker to maintain that they were an independent contractor, and thereby absolved from any liability when they are listed as the carrier for hire on the bill of lading. Then there is the representation issue. The FMCSA says the carrier shall issue the bill of lading. That does not mean might, ought to, or that the shipper should put the broker’s name on the bill of lading because he does not know who the carriers name is. Check out federal carrier compliance regulation 49 U.S.C. §80101. If the insured represents himself as the carrier for hire, you can bet it will be very hard to defend in a court of law.

Q- Why is double brokering a load bad?
A- Double Brokering lends itself to a lack of control in the supply chain. Part of our underwriting process is that we base our premiums and risk acceptability on an insured’s operations and carrier selection. When cargo is double brokered, neither we nor the broker have any idea with respect to the quality of the carrier, whether there is a written agreement in place, if the broker has insurance, if the carrier has adequate or comprehensive insurance, whether the carrier is upper tier by FMCSA standards, whether there is a unfavorable previous loss history, how long the other broker has known or done business with the other carrier, to name a few of many concerns… Not all double broker situations ( sometimes called co-broker) situations are bad. The broker may be very professional and have a tip-top operation and his own insurance.  Double brokering situations exist. Insurance companies don’t like it and some cases it can void coverage.

Is Hijacking terrorism? - While it could be, hijacking would be considered theft in most policies and covered.

Are Illegal Acts Covered? - while all cargo and contingent cargo policies are different, we do not see coverage either on a primary cargo or a contingent cargo basis for illegal acts

Q- Are double brokered loads covered with Hanover?
A- Hanover's intention is to cover most cases where a load would be double brokered unknowingly by the subcontractor originally intended to handle the shipment. Could there be caveats where a double brokered load is not covered? The answer is yes. If our insured brokers a load to a trucker that he/she has a broker contract with and the BOL/contract make them legally liable for the load and the load is re-brokered, then there is coverage. I do see other contingent cargo carriers deny losses if the carrier who was intended to haul the load never actually hauled the load- a very big problem. An example where there would not be coverage would be if the insured re-brokers a load to another truck broker who in turn has a trucker that has the BOL in the name of an unknown, non-contracted party. Then Hanover claims would have a problem. While I believe Hanover's coverage is the industry's broadest, I do not think other contingent cargo insurance carriers would handle this situation in a dissimilar fashion. What we see in the industry is that even companies like CH Robinson, the nation's largest truck broker,are in the rebrokering business. You can bet they think they have the "umbrella" of contingent cargo coverage and do not.




Truck Broker Liability and Contingent Auto Liability

Q- Does there need to be a separate entity for the trucking operation versus truck brokerage Operation?

A- The hardest part about underwriting brokerage operations in the same name as the trucking operation with their common and/or contract authority is the stacking of limits issue. One of the challenges is if the brokerage side is integrating the trucking operation into the equation. Typically there is an owned vehicle exclusion ( as owned vehicles are covered in the primary auto) so if the insured is spotting his own trailers in his brokerage operation, he may be thinking he is covered by his brokerage casualty policies- when in fact he is most probably only covered by his primary auto policies.

Just another reason to have the brokerage operation in another entity - which the commercial auto underwriters want anyway.....

Q- Does the truck broker liability cover losses where there is no written contract between the broker and the carrier?

A- No, a written agreement is required. While that may sound onerous, in my view it is fair as it establishes the basis for legal liability in the supply chain between a trucker and the truck broker. Food for thought...

Q- Is a written agreement always required for TBL coverage? A- Yes. Here's why: The fact of the matter is that all carriers both large and small do get in at-fault accidents and our broker insured can be exposed as co-defendants, which increases LAE, inclusive of adjustment and investigative expense and legal defense costs. Under CSA, there are big carriers that are deficient in 2-3 BASICs. So they are not immune from greater scrutiny and liability. Markel views it as imprudent to enter into these sorts of transactions without a written agreement. There’s a lot more to it other than just protecting the broker from liability.
Q-Is there a deductible for Contingent Auto and Truck Broker Liability?
A- No, not at this time. For larger accounts, there is an SIR program starting at $50,000

General Liability

Q- Why is General Liability even needed for a truck broker?

A- Trucking insurance does not mirror truck brokerage insurance in that the former involves the utilization of physical assets and the latter is non-asset based. Truckers buy Auto Liability, Physical Damage, Motor Truck Cargo, GL, Property and WC. Truck Brokers buy Truck Broker Liability, Professional Liability, Contingent Cargo, GL, Property and WC. They are also required to have a bond. Shippers often don’t distinguish between truckers and truck brokers. So they require GL in most cases. It’s valid to require same in that both truck broker liability and contingent auto do not provide premises coverage. GL provides that coverage amongst other coverages.