3 Things to Know About Freight Broker Insurance
Ensuring you have the right amount of and types of freight broker insurance is one of the most important — and complicated — aspects of the profession. In fact, it’s a federally mandated prerequisite.
Of course, you also don’t want to be stuck paying for needless or overpriced coverage. It’s a delicate balance that’s made easier if you have the right information. Here are three things to know about freight broker insurance:
Freight Broker Insurance of All Shapes and Sizes
Freight broker insurance is so complex partly because there are so many variations to choose from. Knowing the differences between the many types of insurance is one of the most important steps to making the right coverage decisions.
Types of freight broker insurance include:
Broker Bond — The Federal Motor Carrier Safety Administration (FMCSA) requires each freight broker to carry a surety bond in the amount of $75,000 — to be renewed once a year. The bond helps ensure shippers or motor carriers will be payed even if the broker is not able to fulfill its contracts.
Contingent Broker Auto Liability — Protection against third-party claims, such as when it is discovered that a trucker driver’s certificate of insurance was falsified.
Contingent Broker Cargo Liability — Pays claims that the carrier will not pay.
General Liability and Property Insurance — To address liabilities beyond issues involving cargo or driving.
Workers’ Compensation — Insurance for on-the-job accidents, including coverage in case one of the trucking companies you work with does not have workers’ compensation.
Different Applications Lead to Different Types of Coverage
Based on the type of broker authority application you submit to the FMCSA, the types of insurance you need will vary.
For instance, brokers who submit Form BMC-34 will need insurance protecting against both loss or damage to vehicles and to property. Those who utilize Form BMC-91 or MBC-91X should seek bodily injury and/or property damage insurance, as well as environmental restoration coverage.
Be Prepared to File Immediately
There are several steps in the process toward becoming a freight broker, so being prepared to move quickly is important — especially regarding the filing of insurance forms, which must be received by the FMCSA within 90 days of the agency publishing public notice of intention to register you.
“In addition to filing an application for operating authority, all applicants for motor carrier, forwarder, and broker authorities must have specific insurance and legal process agent documents on file before the FMCSA will issue the authorities,” according to the FMCSA.
There are many details involved in obtaining freight broker insurance and, ultimately, becoming a broker. Building as much knowledge as possible before starting the process is the best first step.
Extensive Insurance Support
Independent freight agents who work with Freight Tec receive $100,000 broker and military bonds, errors and omissions insurance, and contingent liability insurance — along with claims processing support. It’s one of the many perks that allow freight agents to spend less time worrying about administrative duties and more time finding and finalizing deals.