Before making decisions about purchasing contingent cargo insurance, here are a few dos and don’ts that generally apply to the major insurance products being offered to many freight brokers, which includes coverage options that should be considered:
- Property and general liability
It’s usually best to package this coverage with general liability insurance for the premises and operations. Ask an insurance agent for coverage recommendations and quotes.
- Auto liability and umbrella
Brokers need vicarious auto liability insurance. If ever named in a lawsuit, the insurer will then be in a position to provide defense. If the company is found liable, vicarious auto liability will provide the necessary coverage. Be very careful to review the terms and conditions because the policies offered vary widely. Some provide very little coverage, while others are very broad, and buying an umbrella policy will allow for an increase in liability limits. Umbrellas are available in $1 million dollar increments.
- Workers’ compensation (WC)
WC is for companies that have employees, since every state requires those businesses to have workers’ compensation insurance. You should also check to be sure the carrier has WC insurance. If the carrier is not required by the state to have workers’ comp, then the broker needs to get a written statement from the carrier to that effect, and keep it on file.
- Contingent cargo
Contingent cargo can fill some of the gaps that a carrier’s policy might have. Pay special attention to the basis of coverage because contingent cargo insurance policies are not all the same. Realize that a broker may not be legally liable for cargo loss or any damage claims. Check all the policy details with the agent and an attorney, as needed, before signing off on any documents.
- Errors and omissions (E&O)
If the E&O is a part of the contingent cargo policy, cargo damage may be covered. Some claims are not covered under any other policy. For example, if a broker gives the wrong information to a carrier by mistake, the broker could be considered negligent. That type of claim can be covered by E&O insurance. Note that E&O coverage will not pay for bodily injury or property damage.
Contingent cargo insurance, and several other policies, are vital to those moving freight from one place to another and require this protection in the event that something goes wrong. Speak to an agent today about questions and concerns.