Without freight companies in place, most of the goods you see in various stores wouldn’t be there. The cargo has to be distributed all over the country in many instances and this requires the services of operations that make it their business to take possession of goods for clients that require having this distribution chain in place. Fortunately, there are hundreds, if not thousands of freighting companies, ready to take on this responsibility.
But what happens when something goes wrong? Shoppers are sometimes told that a product is out of stock. This could be due to a delay, or merchandise may wind up lost or stolen and never make it to its intended destination. Claims and lawsuits relating to lost or damaged cargo may arise because the trucker’s motor truck cargo policy doesn’t respond to the claim. Insurers offer contingent cargo coverage insurance to address a freight broker’s unique situation and help deal with certain types of risks.
Important coverage for issues regarding freight
Brokers need to have coverage that responds to defense and/or damage payments associated with the freight broker being named a party to a lawsuit, including when the situation involves a third party motor carrier’s fatality or injury accident. Accidents represent one of the greatest financial risks to freight brokerage operations. Judgments can run in the millions against a freight brokerage operation depending on the severity of the incident.
A good freight broker liability policy comes with a duty to defend and will not only provide defense but pay defense costs and any attributable damages or settlement amounts up to policy limits. There is also coverage available that is required when a freight broker agrees to assume responsibility for cargo that becomes lost or damaged that a motor carrier fails to pay called a broad form policy.
Whenever a freight broker signs a contract with a client it should be reviewed to determine if it is expanding the freight broker’s liability assumed under their domestic freight broker authority as deemed by the Department of Transportation (DOT). Often these contracts contain indemnity clauses that require the freight broker to have contingent cargo insurance coverage for any claim they must pay for loss or damage associated with transporting the freight.