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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 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:
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.
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:
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.
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.
Freight brokers will find general liability insurance incredibly useful. For instance, this policy can be used to cover these exposures when running a business:
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.
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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.
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:
Commercial property insurance also protects a freight broker’s business equipment and office contents with these inclusions:
Freight brokers might also need commercial auto insurance. Commercial auto insurance provides the following protections:
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.
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.
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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 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
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
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
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