Unintended consequences
The elimination of required cargo liability insurance by the FMCSA now forces shippers to independently verify the existence of the policy and nature of the coverage held by their carriers. Sound time-consuming? Our transportation law expert offers some practical advice. This year cargo liability insurance and the fact that as of March 21, 2011, motor carriers and surface freight forwarders (other than household goods carriers and household goods freight forwarders) are no longer required to have any cargo liability insurance at all.
The unintended consequences for shippers of these changes in the government’s regulatory scheme for motor carriers is that there is no longer a requirement for cargo liability insurance, they will overlook the unintended consequences at their economic peril.
To compound the problem, most cargo liability policies will have “endorsements”—the term the insurance industry uses for amendments or addenda to an insurance policy. As an example, “unattended vehicles” are typically covered by a cargo liability insurance policy, but often this coverage is then removed in an endorsement.
Conversely, cargo liability insurance policies do not typically cover losses resulting from a “change of temperature,” however an endorsement can add coverage for “breakdown or mechanical failure of a refrigeration unit.”
This leads to the third alternative: A telephone call to the agent who issued the policy for the trucker. The telephone call to the insurance agent will often lead, albeit informally, to a verification that there is, indeed, a policy and of the policy limits.
The advice for shippers when making the call to the agent is to “ask about what you are shipping.” For example, if you are shipping only lumber, you probably don’t need to worry about an exclusion for damage from rust. Another area of inquiry is the policy definition of “covered property.” For example, coverage for cell phones may not appear in exclusion, but if it is not included in the definition of “covered property” then indeed it will not be covered.
Regards,
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Leslie G. Brand III | Chief Executive Officer| |
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Phone: 616.554.8900 Ext: 106 | Cell: 616.836.7074 | Toll Free: 877.554.8900 | scsolutionsinc.com |Skype:lgbrand |