Freight Broker Risk Management 101
You are a Domestic Freight Broker. You gave up your common
carrier authority years ago. Now you enjoy the comfort of limited liability
thanks to common law and don’t play by the Carmack Amendment. Right?
Many brokers believe that the separation of authorities will
nullify the risk of being seriously affected by a lawsuit as a result of the
movement of freight. However this is merely one step in a series of steps to
help prevent being sued as anything other than a Freight Broker (which enjoys
limited liability).
The other day I was reading an insurance policy wording and
it was clearly set up to cover damages for a; Motor Carrier, Warehouseman, Freight Forwarder, Logistics ServiceProvider or Other Bailee.
A plaintiff’s attorney would read the policy wording and say
“Eureka! We got them now. If they are a freight broker why would they buy
coverage for a motor carrier, or freight forwarder? They are clearly holding
themselves out to be something other than a freight broker. “
If an auto accident occurs injuring or killing a third party
the average settlement is $2.6 Million. The average truck driver only carries
$1 Million in liability coverage. What most attorneys do is drag everyone who
had anything to do with the shipment into this case including a Freight Broker
and those with the deepest pockets.
In recent court cases such as Travelers Insurance a/s/o Vera
Bradley Designs v. Panalpina, Inc., 2010 WL 3894105 (N.D. IL. 2010). The courts
have upheld the notion that even though you have sole freight broker authority,
how you hold yourself out to be (i.e. the way you run your operations,
contracts in place, broker/shipper/carrier relationships) plays a big role in how
the courts will actually view your authority.
There are many steps you can take to protect your assets and
not face serious punitive damages as a result of death or injury from the
movement of freight. One of the best steps is having someone with years of
industry experience to review your current business model & current
contracts in place. GSIS, Inc. is a leader in Risk Management education and
Insurance Solutions. With tailor made products specifically designed for
Freight Brokers you will not find yourself in this situation. When it comes to
Freight Brokers, GSIS should be your first call & only call every time.
