Understanding Your Cargo Insurance

Not all cargo insurance are the same. The breadth of coverage, service, pricing, and loss prevention varies with each insurer. A low cost policy might save you money, but it could also mean you have less coverage. Because cargo insurance covers the legal liability of the carrier as the transporter of freight, carriers cannot afford to be cheap with cargo insurance. The carrier may have to do some research, but if the carrier knows what to look for, there are many cargo insurers that offer good policies at an affordable cost. It also helps if the insurance agent that understands the nature of your business.

Here’s what to look for when considering cargo insurance:

1. Description of Covered Property: This section of the policy informs you what is covered and what isn’t. For example, if you have a policy that covers only ferrous metals, it the cargo doesn’t contain iron, aluminum, or copper, it wouldn’t be covered. If the policy excludes garments, clothing wouldn’t be covered. Another example is that if the policy excludes electronics in which anything that can be plugged in or uses batteries wouldn’t be covered.
2. Insuring Agreement: There are two different types of insuring agreements. Be sure to know which insurance agreement you have. The Named Peril Policy covers only those perils that are listed, subject to exclusions. Perils include the overturn of a vehicle, collision bridge collapse, and so on. Theft is usually covered, but exclusions or endorsements may remove coverage for driver theft or theft from a vehicle which was left unattended. If the incident in question is not covered on the list then you will not be covered.
3. Exclusions: This is the section of the policy where you find that certain perils are not insured. Exclusions, as mentioned above, included theft by the drive (or any other employee), theft from an unattended vehicle (many policies will cover an unattended vehicle if it is completely locked and located in a secure place), and loss when the trailer is not attached to a power unit.
4. Scheduled Vehicle Policies: When the FMCSA removed the cargo insurance requirement, the BMC-32 endorsement was eliminated as well; therefore, the use of a truck that is not listed on policy will no longer be covered. No exceptions.
5. Endorsements: Endorsements covers modifications to the policy. This allows the insurer to expand, restrict, or eliminate coverage. One example is that some cargo policies exclude temperature damage, but with a endorsement coverage is provided if the damage is caused by damaged refrigeration unit. Pay close attention to endorsements since they can add to or limit your policy. Endorsements included removal of refrigeration breakdown coverage due to lack of maintenance records, providing limited theft coverage for unattended vehicles if certain security requirements are met, or removal of any theft coverage for an unattended vehicle. Carriers make a common mistake of looking only at the Exclusions section when analyzing a cargo policy. Be sure to read the full policy and understand its limits.

Do your research and find an insurance agent who has working knowledge of your industry and will answer your questions.  

FMCSA and Senator Charles Schummer Announce Steps to Reduce Bridge Strikes

200.  That's how many bridge strikes occur in NY state alone.  At least 2 trucks hit the Onondaga Parkway Bridge in upstate NY every year, despite 13 separate signs detailing the 10' 9" clearance, and a NYS Department of Transportation ban on truck traffic on that route.  In 2010, one of those strikes was responsible for 4 deaths and over 2 dozen injuries.  How does this keep happening?  One clear answer is the inappropriate use of GPS navigational devices by commercial vehicle operators.

In fact, 80% of bridge strikes by commercial vehicles in New York State have been attributed to the use of passenger vehicle-based GPS devices.  In an effort to alter this trend, the FMCSA (Federal Motor Carrier Safety Administration) and New York State Senator Charles Schumer have instituted a major campaign to increase driver education and understanding of the risks of using the wrong GPS devices to determine truck routes.

Senator Schumer, a long-time advocate of safe driving and sponsor of distracted driving legislation, has pushed hard for the Federal Department of Transportation to examine this issue and to determine methods to mitigate the damage to property as well as the safety risks involved. Although the originally focused on creating legislation limiting and carefully regulating the use of GPS navigation tools, he has now partnered with the FMCSA to develop recommendations and educational programs on the proper use of the technology.

As a result, the FMCSA has begun issuing official recommendations on the proper use of GPS devices in freight vehicle routing.  As part of the new CDL rules required by the Moving Ahead for Progress in the 21st Century Act (MAP-21), specific training in the appropriate use of GPS navigation tools has been proposed as a requirement for all new entry-level certification programs for commercial motor vehicle operators.  

Ongoing commercial driver education will also train and remind drivers to only use GPS systems designed specifically for the industry.  These specialized applications take into account the specifics of the truck they're in, including the height, weight and contents, and will route the trucks onto safe, appropriate roads. The GPS applications available to consumers focus on passenger vehicles only and frequently route trucks onto unsafe or restricted routes, causing them to crash into low overpasses and bridges.

Multiple education and awareness programs have also been developed, both by the industry and the FMCSA.  In partnership with Senator Schumer, a visor card has been designed and distributed reminding drivers of key items to keep in mind when using GPS navigation technology, including: a) use of commercial vehicle-specific technology only, and keeping any software up to date; b) avoiding distracted driving scenarios where the driver is more focused on the device than their driving, and c) ensuring that the driver has entered in all the relevant vehicle information into the system (height, weight) prior to travel so that the suggested routes are appropriate for that specific vehicle. The American Trucking Research Institute (ATRI) and the American Trucking Association (ATA) have also conducted major research studies on this issue as well as developing multiple education and outreach efforts to increase awareness of this issue. 

FMC Approves Rewrite of OTI (Ocean Transportation Intermediary) Regulations

Recently, the U.S. Federal Maritime Commission (FMC) voted 3-2 to move forward on a proposed rewrite of OTI (Ocean Transportation Intermediary) regulations. The new regulations would require:

1. OTI's to renew their licenses every two years;
2. foreign-based non-vessel ocean common carriers (NVOCC) to keep a full-time staffed U.S. presence; 
3. more stringent qualification requirements for new OTI entrants, regarding age, experience, and character; and
4. increase in OTI bonding levels.

To some, this decision suggests a general assumption among advocates that costs will only rise marginally and that regulatory burdens will see a minor and harmless increase. However, FMC Commissioner Rebecca Dye disagrees and issued a dissenting statement.

 

Commissioner Dye's statement hinges on the belief that any regulatory changes should work to limit government compliance costs, increase the efficiency of the supply chain, and "allow American businesses to be more competitive in the global marketplace." The proposed regulation changes, as Dye describes, negate more appropriate advances.

 

Firstly, Dye asserts that the new proposal does not address the potential harm of the change in regulations. Such changes should come with a clear analysis of harm with the weigh-in of all stakeholders, including the shipping public. Dye cites Executive Order 13563's call for a Retrospective Review of Existing Rules as grounds for a thorough harm analysis.

 

Next, Dye points out worrisome blanks where the user costs should be. Dye suggests advocates for changes have not adequately forecasted what the costs of such changes will be. Without detailed forecasting, the shipping public cannot respond knowledgeably.

 

Thirdly, Dye does not believe the harm to the public of raising OTI bonding has been quantified. Specifically, Dye points to the possibility of deterring new OTI entrants with raised bonds, thereby diminishing the U.S. capacity to be competitive in the global marketplace.

 

Finally, in her dissenting statement, Dye asserts that the proposed changes initiate a higher bonding level with a shorter renewal time period than those "recently enacted by Congress in MAP-21, Public Law 112-141." This creates a disharmony between MAP-21 and proposed OTI regulations. Dye believes OTI regulations should be made synchronous to MAP-21.

 

The advanced notice of the FMC's proposal will be published in the Federal Register. Upon publication, a 60-day notice and comment period will precede the final rule publication.

Freight Broker Insurance, do you need it?

There comes a time when a business owner can avoid  finger-pointing and a "who is ultimately responsible" type of situation if they are familiar with motor carrier safety rules, laws and even guidelines that can all be addressed with Freight Broker Insurance.  Business owners in this industry have a lot on their plates as they focus on operating their business.  Often they may not be fully aware of everything that can help protect them and the best interests of their operation.

 

Let's check out the "for instance" situation that was recently cited in the Transport Topics Issue of Trucking and Freight Transportation News - "Carriers that re-broker freight — again without separate broker authority and bond — usually are held to retain full liability as the carrier for the cargo (even though they did not transport it), but they will likely have no insurance protection for the actions of the brokered truck."  In cases like this often the business owners are not aware of what is necessary to protect them and their business in complicated and even ordinary situations.

 

This is why it is important to work with knowledgeable people who specialize in this type of industry.  First, you should consult with your insurance agent and possibly even check with your attorney. Together with your property and general liability package there are some other coverage options that you should consider.

 

It is recommended that brokers obtain vicarious auto liability insurance. That will enable your insurer to defend you if you are named in a lawsuit. Be aware that this type of coverage widely varies, so get an expert to help you review the terms and conditions to make sure it is right for you. Another option is contingent cargo coverage. This will help cover some of the gaps that might be contained in the policy that the carrier has in place. You can't be sure what exactly their policy covers, so it is a good idea to play it safe. This is also another type of insurance coverage that is not always the same in policies. You can easily find out more details if you simply contact us to learn more and get answer to your questions.

TIA Releases New Fair Labor Standards Act Framework at 35th Annual Conference

The Transportation Intermediaries Association (TIA) saw a record attendance at the 35th Annual conference held in April. Over 900 3PLs, brokers, forwarders, and suppliers attended the event, the most ever at a TIA convention, according to PerishableNews.com.

Participants received updates to the Carrier Safety Administration and MAP-21. In addition, a new Carrier Selection Framework was released. TIA members can access this new framework at the TIA website.

Conference participants also received the new Fair Labor Standards Act Framework. The working draft is accessible via the TIA website, as well. A brief discussion of this framework appears below.

The document sites two frequently occurring personnel-related issues as the foundation of the new Fair Labor Standards Act Framework:

1. the designation of workers as independent contractors versus employees; and
2. the classification of employees as exempt versus non-exempt.

Designation of workers as independent contractors versus employees is particularly common as it pertains to sales agents, transportation brokers, and similar positions. Businesses who are found to have improperly designated a worker as an independent contractor may be liable for large amounts of back pay, unpaid employment taxes, and penalties.

The issue of employee classification as exempt or non-exempt has occurred most commonly in relation to account managers or similar sales or support positions. Specifically, an employee must be properly classified as exempt from overtime and minimum wage requirements or "non-exempt" (requiring payment for hours worked over 40 per week, or over 8 hours per day in some states). Regulators assume most employees are non-exempt and should be paid overtime. Businesses found to have improperly classified an employee's exemption status face significant liability for back pay (unpaid overtime) and attorney fees.

The framework guides TIA members with greater detail through these commonly occurring personnel challenges. It serves as a resource in identifying potential challenges and making adjustments as necessary. However, members are urged to seek legal advice based on their specific situations and with adherence to any and all applicable laws. Requirements may differ by location of business, location of operations, and finer details of their business models.

The FMCSA (Federal Motor Carrier Safety Administration) TACT (Ticketing Agressive Cars and Trucks) Program

The FMCSA (Federal Motor Carrier Safety Administration) has a major impact on safety standards for all commercial vehicles that travel the highways of the United States.  A goal of the FMCSA is to remove high risk carriers and drivers both at entry level and through education and maintenance programs. 

Key FMCSA programs include:

·         Border and International safety

·         The Commercial Driver's License program

·         Federal Motor Carrier Safety Regulations (FMCSR)

·         Hazardous Material Regulations (HMR)

·         Motor Carrier Safety Assistance Program (MCSAP)

·         Ticketing Aggressive Cars and Trucks (TACT)

 

The TACT program began in 2004 with the key state of Washington for the pilot program.  Its mission was to promote safe driving behaviors by educating car, bus and truck drivers on how to share the road safely.  Also to reduce CMV related accidents and crashes involving injuries and fatalities.

The hierarchy of the TACT program begins at the top with the FMCSA headquarters' outreach programs to divisional and regional areas.  From there it filters down to lead state coordinators and steering committees who communicate, enforce and evaluate programs like TACT to various state agencies such as:

·        Department of Transportation

·         Sheriff and Police Departments

·         Federal Highway Administration

·         State Trucking Associations

·         Government Highway Safety Representatives

 

The State Peer Exchange Network (T-Spen) helps to support and share the results and lessons of TACT and bring federal state and local resources together on the same page to educate the public. In 2004, there were five states participating; in 2009 13 states; and by 2011, 19 states and 3 individual US cities and counties were on board.  Improvements to the administration of TACT have included streamlining evaluations, grant funding and more outreach communication programs. 

In 2013 so far, the FMCSA has shut down 15 passenger carriers and carried out 13,500 roadside inspections and ticketed 1,500 drivers and vehicles for violations. The violations include unsafe lane changes, tailgating, failing to signal or yield right of way, speeding and any combinations of violations of 2 or more that is considered "aggressive behavior."

35th Annual TIA Convention And MAP 21  

For the 8th Consecutive year GSIS was in attendance for the TIA Convention. We made many new friends and thank all those in attendance for an educational and entertaining week.

 

The past 12 months in the 3PL industry have, like the economy, had its ups and downs. Most notably the introduction of MAP 21 of the Highway Authorization Bill. Last July President Obama forever changed the logistics field with the introduction of Map 21 (moving ahead for progress in the 21st century act). Since its introduction, MAP 21 has been implemented by DOT, FTA, FMCSA and FHWA with one goal in mind: to develop a national strategic freight plan. Just renewed by congress in April, MAP 21 is running full steam ahead. we can revisit some key points pertinent to our field:

 

1. Electronic Logging Devices- the law requires DOT to establish regulations mandating electronic logging devices (EOBR’s) for motor carriers currently required to complete paper logs. The regulations must be in place within 1 year and carriers will have two years thereafter to adopt/install the devices.

2. Freight Policy- DOT is creating a national freight plan that includes an assessment of the condition and performance of the national freight network and identification of highway freight bottlenecks. This is intended to improve freight efficiency from 80% to 90% off of interstate systems and 95% for interstate systems.

3. Truck Size and Weight- the act does not include an increase in size and weight limits except for an increase in allowable weight for idling reduction devices from 400 pounds to 550 pounds. States are also allowed to issue 120 day oversize-overweight permits to trucks responding to disasters if a national emergency is declared.

4. Performance Standards- each state and urban area is required to establish minimum performance standards related to highway and bridge maintenance, congestion, system reliability, safety, freight efficiency, air quality and project delivery. Failure to do so will result in the transfer of federal funds from non logistic areas in order to compensate.

5. Broker Bond- MAP-21 increases the broker bond to $75,000 and applies it to freight forwarders. It also tightens requirements on bonding companies to respond to carrier claims.

6. Proficiency Testing- all new employees entering the motor carrier field now must complete the DOT safety testing within 12 months rather than the previous standard of 18 months.

7. Transport of Agricultural Commodities & Supplies-increases air mileage from 100 to 150 and eliminates “in the state” from regulation; making it an "interstate" issue.

8. HAZMAT- Hazardous Materials Safety Administration (PHMSA) is to update its accident and release recordkeeping and reporting requirements. PHMSA is also to assist DOT in creating mandatory standardized training for HAZ enforcement officials.