June 2, 2023
Trailer liability coverage opens new doors for freight brokers
Reliance Partners’ custom solution provides leverage for brokers to acquire capacity through trailer leasing
Trailer leasing companies are wary of trusting their trailers to a freight broker who doesn’t have assets. Unlike asset-based motor carriers, freight brokers typically can’t get the needed insurance coverage to protect those trailers.
“There is a strict auto liability and physical damage insurance requirement at many leasing companies, and insurance markets haven’t been willing to take on this risk for an asset-less brokerage in the past,” said Graham Gonzales, vice president of strategic accounts at Reliance Partners. Reliance is the nation’s fastest-growing and most diverse insurance brokerage with a sole focus on the transportation space, specializing in annual policies and usage-based solutions. “Reliance Partners and one of our trusted insurance partners have created a product that can bridge that gap of liability.”
No contingent auto or primary freight broker auto policy is going to cover a fatality caused by a leased trailer, and neither will a motor carrier’s insurance. This is a gaping hole in coverage for a freight broker in possession of trailers that can’t be solved by traditional freight broker insurance packages.
Additionally, leased trailers need full physical damage coverage in case they are stolen or damaged. If 50 leased trailers, each worth $40,000, are parked in a lot and a tornado rolls through, a 3PL would be on the hook for $2 million to the lessor.
With Reliance Partners’ leased trailer liability product, that entire scenario is covered by an annual premium that is minuscule in comparison to the loss value.
Trailer pools also provide dependable capacity, and that can build trust with crucial shipper clients. This is especially true during peak season and in high-demand lanes when freight brokers face capacity scarcity. Without access to trailers when and where they need them, freight brokers leave business opportunities and revenue on the table.
“A company could be growing at a steady pace, but a constriction of capacity could put them in a position where they’re not as profitable in certain lanes,” said Gonzales.
Trailer liability coverage solves this problem. With it, freight brokers now have the ability to approach leasing companies and fulfill the insurance requirements necessary to lease trailers and build custom programs for their VIP shipper clients.
“It will change your entire business model, managing a fleet of trailers versus standard brokering of freight, which is already a complicated and intricate process. The fact that you would add assets on top of that further elaborates the process and it takes a dedicated team to be able to manage that. Not simple, but very rewarding,” Gonzales said.
However, freight brokers who need a way to provide a higher level of service to shipper clients could see significant benefits.
“While it can be tough to manage many trailers all over the U.S., it may give you a very targeted approach to the clients that you really want to work and grow with by being completely accessible to them,” Gonzales added.
When a shipper has more loads to give out in a certain season, project or time of year, it may consider the broker partner that already has physical assets at its facilities. It’s an obvious way to stay top of mind for shipper clients.
“Expanding capacity is enabling 3PLs to do business at a higher pace, especially as we’re in a bear trucking market. Things are competitive and it’s oftentimes a race to the bottom on rates. Our clients that are investing in this program and other diversified pieces of their business are likely going to see a really big return, especially when the economy is back on the upswing,” Gonzales said.