As freight brokers and shippers, ensuring that carriers meet insurance requirements is a vital step in managing risk. The trucking industry carries a variety of risks, and understanding the key insurance policies involved can make the difference between successful freight operations and costly liabilities. Whether you’re new to carrier selection or looking to refine your process, there are a few important types of trucking company insurance that every broker should review when vetting carriers. The TIA Carrier Selection Framework is a guiding light for the exact types of things you should always be reviewing.
Auto Liability Insurance
Auto liability insurance is arguably the most critical coverage for any trucking company. This policy covers damages caused by a truck driver during the course of their operations, including bodily injury and property damage (BIPD). The Federal Motor Carrier Safety Administration regulates BIPD for interstate trucking companies. Checking for a valid DOT authority ensures a carrier has proper liability coverage prior to hiring. This is essential for protecting your freight and legal standing. Without it, both brokers and shippers are exposed to significant risk.
General Liability Insurance
Another key policy that freight brokers and shippers must review is general liability insurance. This policy covers the trucking company’s legal responsibilities for bodily injuries or property damage that occur during non-trucking activities. The Federal Motor Carrier Safety Administration does not regulate general liability insurance. While auto liability is focused on trucking operations, general liability offers broader protection and acts as a safety net in case of accidents that occur off the road but are still related to the carrier’s business activities.
Cargo Insurance
For brokers and shippers, verifying a carrier’s cargo insurance is crucial. This insurance ensures that your freight is covered in the event of damage or loss during transit. With the value of goods often being substantial, relying on a carrier that lacks appropriate cargo insurance could lead to costly claims or disputes. Cargo insurance is regulated by the FMCSA only for household goods carriers where the minimum amount required is $5000. The Federal Licensing and Insurance Systems (L&I) database can provide some insight into whether a cargo policy is in place and who the underwriter is, but only for a carrier authorized for the transport of household goods. Side note, only 8% of active authorities are licensed for household goods and have cargo policies on file with L&I. Verifying cargo-specific coverage is essential in the vetting process for added protection.
Workers’ Compensation Insurance
Workers’ compensation insurance protects trucking companies and their employees by covering medical expenses and lost wages for drivers injured on the job. Brokers should also be aware of this insurance, as hiring a carrier without workers’ compensation coverage might lead to liability issues in case of accidents involving drivers. However, this type of insurance may require checking other sources for insurance, such as local or state-specific insurance exchanges.
For example, imagine a situation where a driver sustains a back injury while lifting heavy freight. If the carrier lacks workers’ compensation, the broker could become entangled in legal claims over who is responsible for the driver’s medical bills. Similarly, a driver injured in a trucking accident could face long-term rehabilitation, and workers’ compensation insurance would cover their medical expenses and lost wages during recovery. Without this coverage, you risk dealing with substantial legal and financial fallout.
In another scenario, a driver slips and falls while refueling their truck at a rest stop. Though the injury may seem minor, the medical bills can add up quickly, and workers’ compensation would handle these costs. Failing to verify that a carrier has this insurance opens up liability for unforeseen incidents like these, which could impact your business reputation and finances.
Streamline Trucking Company Insurance Verification With Carrier Details
Managing and verifying insurance policies can be a time-consuming process, but tools like Carrier Details simplify the task. Carrier Details’ trucking authority verification and digital Evidence of Insurance solutions enable brokers and shippers to automate the verification of both trucking company reputation with the FMCSA and critical insurance documents, saving time and reducing errors. Automated checks can ensure that carriers meet the required insurance standards without the need for manual review.
Download a sample dataset from Carrier Details to see how our solutions can streamline your carrier selection process and improve your insurance verification workflow.
