February 1, 2024

Avoiding Cargo Coverage ‘Gotchas’


The trucking industry has been abuzz with insurance discussions, often focusing on motor carriers and truck drivers. However, the conversation tends to overlook an equally crucial player: the freight broker. Recent legal cases have highlighted the often-ambiguous nature of broker liability, especially concerning lost or damaged cargo, and even more serious issues such as bodily harm.

This complex liability landscape underscores the importance for brokers and 3PLs to comprehensively understand their cargo insurance’s scope, particularly its limitations and exclusions. Unpleasant surprises, such as coverage gaps, are not uncommon and can be particularly distressing when they pertain to costly issues like reefer breakdowns and theft.

Reliance Partners emphasizes the significance of diligently reviewing insurance quotes, particularly endorsements. Our Executive Vice President of Sales, Jessie Merritt, warns that endorsements can be a double-edged sword, potentially restricting coverage. It is crucial to discuss with your agent the possibility of purchasing back coverage if restrictive endorsements are present on your policy.

Moreover, the type of insurance coverage chosen is fundamental. While contingent coverage is widely prevalent, it often leads to frustration due to its reliance on the denial of claims by the trucking company’s insurance provider first. Reliance Partners advocates for primary cargo insurance, which not only expedites the reimbursement process for shippers but also offers a broader spectrum of protection.

“Buying real cargo coverage rather than contingent coverage offers a lot more protection,” advises Jessie Merritt. She highlights the importance of understanding the nuances of cargo legal liability and the benefits of Shippers Interest, designed to comprehensively indemnify shippers for a wide range of cargo losses.

In addition to cargo coverage, it’s crucial not to neglect other areas of liability, such as cybersecurity and directors and officers coverage. In the complex and dynamic world of freight brokerage, staying informed and choosing the right insurance products is key. Reliance Partners is dedicated to guiding brokers through this intricate landscape, ensuring a thorough understanding of their coverage options.

For a more in-depth look at the full FreightWaves article here.

Click here to discover more about our services and how Reliance Partners can assist in navigating these challenges.