Broker Bonds and Contingent Insurance
TransInsurers offers superior coverage to transportation brokers and freight forwarders at affordable rates. Following is an overview of the nature of coverage offered in the most common policies used by transportation brokers and freight forwarders.
We advise you to carefully review each and every policy you choose to protect your business so that you fully understand the extent of coverage and your responsibilities under the policy. If you have any questions on the policy format or coverage you should forward your questions to your insurance agent, who either answer the questions or present them to the insurance company for a response.
Types of Coverage Available to Transportation Brokers and Freight Forwarders
A surety bond in the amount of $10,000 is required by the FMCSA under 49 CFR Part 387.307 for all licensed brokers of property. A Form BMC-84 is used to make the filing with the FMCSA and remains in effect until cancelled by the bonding company. The surety bond is used to ensure the financial responsibility of the broker by providing for payments to shippers or motor carriers if the broker fails to carry out its contracts, agreements, or arrangements for the supplying of transportation by authorized motor carriers.
Broker Trust Fund
A trust fund in the amount of $10,000 is option under 49 CFR Part 387.307 that a licensed broker of property can use in lieu of a surety bond. A Form BMC-85 is used to make the filing with the FMCSA and remains in effect until cancelled by the bonding company. The trust fund is used to ensure the financial responsibility of the broker by providing for payments to shippers or motor carriers if the broker fails to carry out its contracts, agreements, or arrangements for the supplying of transportation by authorized motor carriers. Where a surety bond is administered by the bonding company, the owner of a trust fund has more control over how claims are paid from the fund.
Contingent Cargo Legal Liability
This type of policy is designed to protect a transportation broker or freight forwarder against the liability assumed when making arrangements to move cargo for others. Contingent Cargo Legal Liability provides coverage when a trucker's primary motor truck cargo policy fails to assume the responsibility for cargo loss or damage. These policies respond to the legal liability that transportation brokers and freight forwarders assume under law.
Principal benefits include:
- Claims Support: Attorneys and specialists in freight claims processing will provide support and council to assist in the collection of claims from truckers and their insurance carriers.
- Attorney Fees and Cost to Defend Your Firm From Suits Relating to Cargo Damage and Theft: If a trucker's motor truck cargo policy fails to satisfy a legitimate cargo claim and a suit is instituted against the freight broker or forwarder, defense coverage is provided. The costs associated with these types of lawsuits can be significant, even if groundless. With this coverage, your firm will avoid incurring the legal expenses associated with defending or paying the cargo claim. The cost of the attorney's fee, plus any settlements will normally be paid up to the policy limit.
Contingent Auto Liability
This policy is designed to protect against the liability assumed by transportation brokers and freight forwarders when the truckers that they have under contract are involved in accidents where bodily injury, death or property damage take place. Defense coverage will normally be provided in most policy forms and will provide for an attorney to be assigned by the insurance company to defend the transportation broker or freight forwarder. The policy will cover the cost of the attorney and if found liable, will pay the agreed settlement amount up to policy limits.
A policy designed to respond to the liability a freight broker could assume other then liability to cargo or liability as result of a vehicle being driven. For example if a third party trucker or warehouse personal were injured as result of cargo being unloaded from a truck and the freight broker is dragged into a law suit. Defense coverage will normally be provided in most policy forms whereby attorney will be assigned by the insurance company to defend the freight broker/forwarder and incur those costs and if found liable respond to the agreed settlement amount up to policy limits.
Freight Guard Excess Spot Cargo Insurance Program
A cargo program where direct physical loss and damage coverage is provided when the value or limit required for cargo insurance exceeds the Motor truck cargo limit in effect for a trucker.
The program allows freight brokers/forwarder the flexibility to use a multitude of Truckers as instant excess cargo insurance can be purchased at affordable prices to increase the cargo limit on any given shipment.
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