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Freight Broker Insurance: Cost & Quotes from $5

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The average annual income of freight brokers is $49,110 according to the Bureau of Labor Statistics. Freight brokers might earn a lot. However, it only takes one lawsuit for a big loss to happen. As a result, those who make money through freight service opt to get freight broker insurance. Let’s discuss what this is.


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Freight Broker Liability Insurance

Freight broker liability insurance provides coverage when a freight forwarder receives a lawsuit because of property damage, personal injuries, or negligence. Liability insurance policies carriers give to freight brokers are:

  • Contingent cargo insurance

  • Errors and omissions insurance

  • Contingent auto liability insurance

  • General liability insurance


Contingent Cargo Insurance

When the cargo becomes lost or damaged while under the care, custody, and control of a freight broker, clients can file a lawsuit to get reimbursement for any resulting losses. In most cases, the lawsuit can be as expensive as $100,000 or more.


The liability policy in freight broker insurance that will cover lawsuits after cargo in transit got lost or damaged is contingent cargo insurance. Through this, the freight broker can pay the full value of the lost or damaged products and goods. The policy limit can be as low as $100,000. However, insurance companies that specialize in insuring freight brokers provide $1 million up to $2 million.


Note that contingent cargo insurance will only provide coverage if the shipping carrier won’t cover the freight broker using their insurance policy. Also, contingent cargo insurance will only provide coverage for instances of loss or damage while the cargo in question are in transit.


Freight Broker Errors and Omissions Insurance

Aside from suing for the cost of their lost or stolen goods, clients and other concerned persons can also sue freight brokers for negligent hiring. Clients expect freight brokers to hire only the best motor carrier. And if it’s proven that the clients suffered damage or loss because the freight broker worked with an underperforming carrier, legal liability can be incurred. The cost of negligent hiring lawsuits isn’t a joke. Here’s an example:

  • Heyl Logistics, a freight broker, had to pay $5.2 million after a truck it hired caused an accident and killed a person


Freight broker errors and omissions insurance is the policy that will cover incidents of negligent hiring. It gives $1 million up to $2 million so that a freight broker can pay for attorney fees, other legal costs, and compensation to the concerned party.


Freight broker’s errors and omissions insurance won’t only cover negligent hiring. It can also cover a breach of contract. However, its terms will only apply if there's a failure to do the tasks or deliver services in the deal.

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Contingent Auto Liability Insurance

Freight brokers contract motor carriers to ship the goods of their clients.  So, it’s important to ask,  “ Will the freight broker have legal liability over accidents the motor carrier caused?”. The answer is yes.


There are a lot of ways in which freight brokers can have legal liability over accidents their motor carriers caused.  Examples are accusing the freight broker of failing to check the background of the motor carrier, treating the freight broker and motor carrier as a  joint venture, and treating the actions of the motor carrier as the actions of the freight broker (acting in concert & civil conspiracy ).


Out of all freight broker insurance coverages, the one policy that will help is contingent auto liability insurance.  Contingent auto liability insurance kicks in when the freight brokers face legal liability for the accidents their motor carriers caused. The policy limit of contingent auto liability insurance is $500,000 to $5 million. 


Freight Broker General Liability Insurance

Freight brokers will find general liability insurance incredibly useful. For instance, this policy can be used to cover these exposures when running a business:

  • Third-party personal injuries  - Vendors, clients, and visitors might experience a slip and fall or any other types of accidents while on the premises of the freight broker’s office. If the injured person decides to file a claim, general liability insurance will pay for medical expenses and compensation for pain and suffering

  • Third-party property damage - If not injuries, then vendors, clients, visitors, and other third parties might sustain property damage due to an accident happening within the premises of the freight broker’s office. General liability insurance will reimburse the value of the damaged property if the aggrieved party decides to file a claim

  • Legal defense costs - Property damage claims and personal injury claims are often contested in court. This is why general liability insurance also offers coverage for attorney fees, court payment orders, administrative costs, and other legal expenses


Additionally, general liability insurance doesn’t only cover personal injury claims and property damage claims. It has these add-ons that provide heightened protection for freight brokers:

  • Rented premises liability coverage - Rented premises liability coverage is an add-on in general liability insurance that will kick in if fire damages a rented or leased commercial space due to the policyholder’s fault. In particular, this will provide reimbursements if the landlord files a claim 

  • Advertising injury coverage - When a freight broker faces claims for slander, libel, copyright infringement, defamation, and other types of advertising or reputational harm, advertising injury coverage will cover attorney fees, court payment orders, administrative fees, and other legal expenses 


Some freight brokers take custody of a client’s cargo before sending it over to motor carriers for shipment. In connection, warehouse legal liability insurance is a useful policy for them. Warehouse legal liability insurance provides reimbursements to customers when items become damaged or lost while stored in a warehouse, storage facility, and other similar locations due to the freight broker’s fault. This insurance offers $500,000 up to $2 million coverage.


Contingent Cargo Insurance

When the cargo becomes lost or damaged while under the care, custody, and control of a freight broker, clients can file a lawsuit to get reimbursement for any resulting losses. In most cases, the lawsuit can be as expensive as $100,000 or more.


The policy in freight broker insurance that will cover lawsuits after cargo in transit got lost or damaged is contingent cargo insurance. Through this, the freight broker can pay the full value of the lost or damaged products and goods. The policy limit can be as low as $100,000. However, insurance companies that specialize in insuring freight brokers provide $1 million up to $2 million.


Note that contingent cargo insurance will only provide coverage if the shipping carrier won’t cover the freight broker using their insurance policy. Also, contingent cargo insurance will only provide coverage for instances of loss or damage while the cargo in question is in transit.


Freight Broker Commercial Property Insurance

Most freight brokers rent or own an office where clients are admitted and documents are processed. Some also own a small storage facility where items to be sent to the motor carrier are stored. There’s a lot of investment when it comes to having a commercial building. And so, many insurance companies offer commercial property insurance for freight brokers. The primary function of commercial property insurance is to cover these:

  • Building Damage - When a freight broker’s office or storage incurs damage due to fire, theft, vandalism, extreme weather, and other covered perils, commercial property insurance will reimburse the replacement cost or actual cash value of damaged structures 

  • Building Destruction - Fire and extreme weather will destroy a freight broker’s office or storage. In this situation, commercial property insurance will reimburse losses based on the replacement cost or actual cash value of the destroyed building


Commercial property insurance also protects a freight broker’s business equipment and office contents with these inclusions:

  • Stocks and contents coverage - Stocks and contents coverage in commercial property insurance will cover losses if items inside a freight broker’s office such as office furniture, records, shipping documents, and others become damaged or lost due to fire, theft, vandalism, and other covered perils. 

  • Business equipment and tools coverage - Business equipment and tools coverage will reimburse losses if items integral to the smooth continuity of business operations become lost or damaged due to theft, fire, vandalism, and other covered perils 


Freight Broker Commercial Auto Insurance

Freight brokers might also need commercial auto insurance. Commercial auto insurance provides the following protections:

  • Auto liability coverage - Auto liability coverage covers medical expenses of the third parties who a freight broker injured in a vehicular accident. It also covers damaged property. Commercial auto insurance offers auto liability coverage as its primary inclusion. This means that a freight broker can’t decide not to have it

  • Physical damage coverage - Physical damage coverage functions to cover parts repair or replacement of a damaged vehicle. It has two types  - collision and comprehensive. When fire, hail, storm, and other covered perils damage a freight broker’s automobile, comprehensive physical damage coverage will cover parts repair or replacement. On the flip side, collision physical damage coverage will pay for parts replacement or repair if a freight broker’s vehicle incurs damage after colliding with an object or another vehicle

  • Medical payments/personal injury protection - Medical payments and personal injury protection will take charge of the freight broker’s medical bills if he or she sustains injuries after causing an accident or getting involved in one. Passengers, if there are any, are covered too


It must be noted that auto liability coverage won’t take care of expenses if a freight broker caused a vehicular accident because of criminal activity - driving under influence, driving in hot pursuit by police authorities, and many more. As for physical damage coverage, it must be noted that it doesn’t cover the replacement or repair of aftermarket vehicle parts. 

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Should Freight Brokers Purchase a Bond?

The Federal Motor Carrier Safety Association requires all who provide freight brokerage services to have freight broker bond insurance. To specify, the agency mandates that every freight broker must have a $75,000 freight broker surety bond insurance.

So how does freight bond insurance work? In simple terms, a bond sees to it that the freight broker can pay any financial obligations to the client in the event of jettison, missed delivery, or failure to complete a service. Freight brokers can use their bonds to pay for the cost of lost cargo or damaged cargo, reimburse the client for business losses because of missed deadlines, and many more.

According to freight insurance brokers, the cost of a surety bond is 1.5% - 2% of the total bond amount. This means that since the Federal Motor Carrier Association requires $75,000, the cost of a surety bond will be `$1,125 or $1,500 a month.

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Freight Broker Insurance Requirements

Know that you can’t opt to get insured immediately.  You must satisfy some freight broker insurance requirements to qualify.

 

The primary requirement for a successful freight broker insurance application is a freight brokerage license from the Federal Motor Carrier Safety Association. These are what you need to do in case you don’t have a license yet and want to get one:


Step 1: Register your freight brokerage at  the Unified Registration System



Step 2: Get a surety bond or trust fund agreement from freight insurance brokers or carriers  (form BMC-85)




Step 3 : Designate a Process Agent (FORM BOC - 3)





Note that the application for a freight broker license will cost $300, which is not refundable.  Moreover, you’ll have to wait for 4 - 6 weeks for the application process to finish. 


There are other insurance requirements for freight brokers. For instance, carriers will request you to get a business certification from where you’re living.  This is important as it allows them to verify your business location. 


You’ll also have to specify to the carrier which businesses you provide freight services.  And so, carriers will ask you to send some clientele documents for verification.   Why is this?  Specifying which businesses you provide freight services helps to determine insurance rates. Note that freight brokers shipping perishable goods have more expensive premiums than those shipping non-perishable goods. 


Is Truck Broker Insurance The Same as Freight Broker Insurance?

Consumers use truck broker insurance and freight broker insurance interchangeably. Therefore, the answer is yes. 


However, there’s one company that offers stand-alone truck broker insurance along with its freight broker insurance  - TransInsurers.  According to this company, its truck broker liability insurance is a hybrid primary liability policy that addresses the truck broker's general liability arising out of the ownership and use of a truck by the motor carrier of a brokered cargo move, in conformity with a written truck brokerage agreement.  TransInsurer’s truck broker liability coverage will answer the cost of bodily injury and property damage.  



Freight Broker Insurance Cost

  • The average freight broker insurance cost for a $1 million general liability policy is $1,300 a year or $108.33 a month

  • Contingent cargo insurance for freight brokers is $125 a month or $1,500 a year

  • Freight brokers pay $47.25 a  month or $567 a year for errors and omissions insurance



Cost per YearCost per MonthBest for
CoverWallet$35$420Freight broker insurance quotes comparison online
State Farm$45$540Freight broker surety bonds
Transinsurers$84$1,008Custom freight broker insurance limits and deductibles
Progressive$89$1,068Freight brokers, truck brokers, and transport brokers

Best Freight Broker Insurance Companies

It’s best to check out numerous companies before purchasing your freight broker insurance. Who knows? You might find freight broker insurance companies that offer comprehensive coverage at cheap rates. With that being said, here’s a quick outlook of the best freight broker insurance companies.


CoverWallet Freight Broker Insurance


Insuranks rating10/10
Best forFreight broker insurance quotes comparison online 
Average cost$35
Year FoundedSeptember 2015 and acquired by AON at 2020
CEOInaki Beringuer (former)
Headquarters101 Avenue of the Americas 18th Floor New York, NY 10013 United States
Customer Support(646) 844-9933
AM Best RatingA ( excellent)
BBB RatingA+
Number of Complaints158


Why Get Insured by CoverWallet?

  • Cancel a policy anytime 

  • Get insured online

  • No lengthy talks with agents

Why Take CoverWallet with a Grain of Salt?

  • Not an insurance company but an insurance broker


CoverWallet is an insurance broker and online quotes comparison platform that helps customers find the best carriers offering coverage for freight brokers. Note that CoverWallet allows for the immediate purchase of any quote a customer receives. Also, upon getting insured, customers then get access with the MyCoverWallet app for easy online policy management. 


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Freight Broker Insurance State Farm


Insuranks rating9/10
Best forFreight broker surety bonds
Average cost$45
Year Founded1922
CEOMichael L. Tipsord
HeadquartersBloomington, Illinois, United States
Customer Support800-782-8332 and  customer service portal
AM Best RatingA++  ( superior)
BBB RatingB
Number of Complaints 538


Why Get Insured by State Farm?

  • State Farm offers surety bonds for freight brokers such as contract and performance bond, and license and permit bond

  • Covers freight brokers through its distributor insurance program that offers motor truck liability coverage, business liability coverage, equipment breakdown, and more

  • Best freight broker insurance for bonds

Why Take State Farm with a Grain of Salt?

  • Doesn’t have a stand-alone freight broker insurance


State Farm has distributor insurance available to freight brokers. Inclusions are commercial property insurance with equipment breakdown coverage, general and professional liability insurance, motor truck cargo insurance, and employee dishonesty insurance. Work with this company because its customer satisfaction rating is high, it's financially stable, and it handles claims fast. 


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Freight Broker Insurance Progressive


Insuranks rating8/10
Best forCustom  freight broker insurance limits and deductibles
Average Cost$89
Year Founded1937
CEOTricia Griffith
HeadquartersMayfield, Ohio, United States
Customer Support1-800-444-4487 and customer service portal
AM Best RatingA+  ( superior)
BBB RatingD -
Number of Complaints 1,313


Why Get Insured by Progressive?

  • Progressive offers insurance for freight brokers and truckers

  • Custom policy limits and deductibles

  • Covers loss or damage to client’s cargo due to fire, theft, collision, and hitting or running over

Why Take Progressive with a Grain of Salt?

  • Has numerous exclusions on its insurance for freight brokers and truckers


Progressive offers freight broker insurance having custom policy limits and deductibles. Primary inclusions are commercial property insurance, contingent cargo insurance, and general liability insurance. 


Freight Broker Insurance TransInsurers


Insuranks rating7/10
Best forFreight brokers, truck brokers, and transport brokers
Average cost$83
Year Founded2002
CEON/A
Headquarters13841 Hull Street Rd #3a, Midlothian, VA 23112, United States
Customer Support866-748-4200 or mail@transinsurers.com
AM Best RatingN/A
BBB RatingN/A
Number of Complaints N/A


Why Get Insured by TransInsurers?

  • An insurance company that specializes in the exposures common in freight forwarding businesses

  • Partner of accredited insurance companies like AIG, Progressive, and  Zurich

Why Take TransInsurers with a Grain of Salt?

  • No online third-party reviews from business watchdogs


TransInsurers offer contingent auto liability and contingent cargo liability insurance for freight brokers. Also, it sells bonds that freight brokers need to comply with requirements. TransInsurers has FreightGuard Spot Cargo Insurance Program that provides comprehensive protection regardless if a cargo got damaged or lost due to a freight broker’s fault or not. 


How to Get A Freight Brokerage Insurance Quote Fast?

We are dedicated to helping consumers get a freight brokerage insurance quote fast. And so, we included a free generator on this page. All you have to do is click the “Get Quotes” button and provide some details. After finishing, you’ll receive the quotes from the top freight broker insurance carriers sorted from the cheapest to the most expensive or the most comprehensive to the least comprehensive. 


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