Freight Broker Insurance: Cost & Quotes from $5

The average annual income of freight brokers is $ 48,330 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. In this article will discuss freight broker insurance in detail including cost, policy coverages and the best companies offering the policy.

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 for freight brokers. 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. 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.

Contingent Auto Liability Insurance

Freight brokers contract motor carriers to ship the goods of their clients.   

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.

General Liability Insurance for Frieght Brokers

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 –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

Warehouse Legal Liability Insurance for Freight Brokers 

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.

Freight Broker Commercial Property Insurance

Most freight brokers rent or own an office where clients are admitted and documents are processed. 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 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. 
• Physical damage coverage – Physical damage coverage functions to cover parts repair or replacement of a damaged vehicle. It has two types  – collision and comprehensive. 
• 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

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.

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.

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.

 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

Best Freight Broker Insurance Companies

It’s best to check out numerous companies before purchasing your freight broker insurance. here’s a quick outlook of the best freight broker insurance companies.

CoverWallet Freight Broker Insurance

 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. 

Ratings:10/10

Average cost:$35 per month

Pros

• Cancel a policy anytime
• Get insured online
• No lengthy talks with agents

Cons

• Not an insurance company but an insurance broker

State Farm

  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. 

Ratings:9/10

Average cost:$45 per month

Pros

• 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

Cons

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

Freight Broker Insurance Progressive

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

Ratings:9/10

Average cost:$89 per month

Pros

• 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

Cons

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