This is a long one.
A little back ground first.
About 50% of our fleet is composed of "independent" cargo van owner operators. We require all of these independents to have an unlimited radius policy with $1,000,000 in liability and $100,000 in cargo that both will act as primary in the event of a claim. In addition to this they have to be with an agent that monitors the policy daily. To date, CIS is the only agent that has offered this service to us.
A couple weeks ago we had an owner op tell us that he had to find a new agent because CIS was gouging him. A couple of days later he contacted me and claimed that he found a new agent that got him the same Progressive policy at a fraction of the cost.
My interest got the better of me and I had to investigate... maybe CIS really was jacking up the price on their customers. So I told the owner op that I would investigate the policy and if everything checked out I would ask our insurer for a special exception for him.
Upon review of the certificate, everything seemed legit. Tenpoint listed as Additional Insured, $1,000,000 CSL, $100,000 Motor Trucking Cargo. Here is a snapshot of the actual certificate sent to me by the agent, sensitive information has been removed.
Seeing this, I naturally began to question CIS method's due to the large cost reduction that the owner op claimed. I am also thinking maybe the new agent lied on the cert, or the radius of operation has be drastically reduced.
I decided to follow up with Progressive directly. As additional insured I am able to get a little bit more information than what is on the certificate. The meat of the conversation went a little like this...
Me "Can you please tell me the coverage's on this policy?"
Progressive Agent "$1,000,000 liability and $100,000 cargo"
Me "And what is the radius of operation?"
Progressive Agent "Unlimited"
At this point I am thinking that CIS might actually be ripping of their owner operators. And then I asked one last question.
Me "And what is the business type indicated on the policy"
Progressive Agent "Trucking for hire - Debris Removal"
And there you have it folks. Removing "Expediter" from your business type will save you a boatload of money on your insurance.
Now, anybody with half of a brain knows that being incorrectly categorized on your insurance policy is a bad idea. I don't know if in these situations the owner op is lying to the agent to get a better price, or if the agent is knowingly reporting a false business type in order to get a lower rate and secure the business. To me, it doesn't really matter.
Anyways, curiosity got the best of me again. I reached out to Progressive, explained the situation and asked what would happen in the event of a claim on this policy. Here is the response.
Jim, in regards to your Debris removal coverage question, there are a few ways this scenario's that could play out. Of course, all of these are dependent upon what is found by Progressive on why the Policy is written incorrectly.
1) Claim may be denied due to fraud and misrepresentations in the application process. If the IC clarified the business type to his agent and can prove this in a suitable manner, Progressive would deny the claim, forcing the Insurance Agent's E&O Policy to come into play.
**However, clients (insured) are signing the application for insurance which lists the business type and other items used to accept the risk and rate the risk. This could be used as an out for the agent.
2) Depending on the loss and it's 'press' Progressive could pay the limits of Liability and subrogate the payment back to the insured for reimbursement due to a fraudulent application.
3) Progressive, with proper evidence, could completely deny the loss. Progressive would inevitably find out the insured was hauling for or operating under the business use of a Motor Carrier at time of loss and exclude and deny coverage. This would then allow the Lawyers to seek coverage from YOU the Motor Carrier who has the filing, that promise to the public would then trigger payment. And your current mandatory requirement for basically a "deductible amount" of $1 million auto liability and $100K cargo would place liability to that amount on you. This underlying coverage for each IC is very important to be correct and pay as needed in the event of an auto liability or cargo loss to policy limits.
It is the duty and responsibility of the Motor Carrier under any insurance program to maintain, verify and monitor the coverage for ALL ICs, drivers & vehicles operating for their business use at all times. IC's gaming insurance companies ultimately can cause uncovered claims for them, and in this case more important, impact you and your freight partners.
So, all of this said...
I would love to hear from the owner operators with this kind of cheaper Progressive policy. Do you know that you are listed incorrectly, or did your agent sell you a bad policy? Are you willing to take the risk and plead ignorance in the event of a claim? If your carrier doesn't follow up with all of the other owner ops policies and somebody else has a big claim that takes the carrier down, are you willing to part with the $2-$3000 or more that the carrier owes you at any given time?
I would also love to hear from the carriers allowing these policies and the brokers feeding them. Are you just going to plead ignorance in the event of a claim?
And lastly I would love to hear from the agents. How many are knowingly doing this? Do you throw the owner op under the bus when s*** hits the fan?
We have since added the "Trucking for Hire - Expediter" to our growing list of requirements.
A little back ground first.
About 50% of our fleet is composed of "independent" cargo van owner operators. We require all of these independents to have an unlimited radius policy with $1,000,000 in liability and $100,000 in cargo that both will act as primary in the event of a claim. In addition to this they have to be with an agent that monitors the policy daily. To date, CIS is the only agent that has offered this service to us.
A couple weeks ago we had an owner op tell us that he had to find a new agent because CIS was gouging him. A couple of days later he contacted me and claimed that he found a new agent that got him the same Progressive policy at a fraction of the cost.
My interest got the better of me and I had to investigate... maybe CIS really was jacking up the price on their customers. So I told the owner op that I would investigate the policy and if everything checked out I would ask our insurer for a special exception for him.
Upon review of the certificate, everything seemed legit. Tenpoint listed as Additional Insured, $1,000,000 CSL, $100,000 Motor Trucking Cargo. Here is a snapshot of the actual certificate sent to me by the agent, sensitive information has been removed.
Seeing this, I naturally began to question CIS method's due to the large cost reduction that the owner op claimed. I am also thinking maybe the new agent lied on the cert, or the radius of operation has be drastically reduced.
I decided to follow up with Progressive directly. As additional insured I am able to get a little bit more information than what is on the certificate. The meat of the conversation went a little like this...
Me "Can you please tell me the coverage's on this policy?"
Progressive Agent "$1,000,000 liability and $100,000 cargo"
Me "And what is the radius of operation?"
Progressive Agent "Unlimited"
At this point I am thinking that CIS might actually be ripping of their owner operators. And then I asked one last question.
Me "And what is the business type indicated on the policy"
Progressive Agent "Trucking for hire - Debris Removal"
And there you have it folks. Removing "Expediter" from your business type will save you a boatload of money on your insurance.
Now, anybody with half of a brain knows that being incorrectly categorized on your insurance policy is a bad idea. I don't know if in these situations the owner op is lying to the agent to get a better price, or if the agent is knowingly reporting a false business type in order to get a lower rate and secure the business. To me, it doesn't really matter.
Anyways, curiosity got the best of me again. I reached out to Progressive, explained the situation and asked what would happen in the event of a claim on this policy. Here is the response.
Jim, in regards to your Debris removal coverage question, there are a few ways this scenario's that could play out. Of course, all of these are dependent upon what is found by Progressive on why the Policy is written incorrectly.
1) Claim may be denied due to fraud and misrepresentations in the application process. If the IC clarified the business type to his agent and can prove this in a suitable manner, Progressive would deny the claim, forcing the Insurance Agent's E&O Policy to come into play.
**However, clients (insured) are signing the application for insurance which lists the business type and other items used to accept the risk and rate the risk. This could be used as an out for the agent.
2) Depending on the loss and it's 'press' Progressive could pay the limits of Liability and subrogate the payment back to the insured for reimbursement due to a fraudulent application.
3) Progressive, with proper evidence, could completely deny the loss. Progressive would inevitably find out the insured was hauling for or operating under the business use of a Motor Carrier at time of loss and exclude and deny coverage. This would then allow the Lawyers to seek coverage from YOU the Motor Carrier who has the filing, that promise to the public would then trigger payment. And your current mandatory requirement for basically a "deductible amount" of $1 million auto liability and $100K cargo would place liability to that amount on you. This underlying coverage for each IC is very important to be correct and pay as needed in the event of an auto liability or cargo loss to policy limits.
It is the duty and responsibility of the Motor Carrier under any insurance program to maintain, verify and monitor the coverage for ALL ICs, drivers & vehicles operating for their business use at all times. IC's gaming insurance companies ultimately can cause uncovered claims for them, and in this case more important, impact you and your freight partners.
So, all of this said...
I would love to hear from the owner operators with this kind of cheaper Progressive policy. Do you know that you are listed incorrectly, or did your agent sell you a bad policy? Are you willing to take the risk and plead ignorance in the event of a claim? If your carrier doesn't follow up with all of the other owner ops policies and somebody else has a big claim that takes the carrier down, are you willing to part with the $2-$3000 or more that the carrier owes you at any given time?
I would also love to hear from the carriers allowing these policies and the brokers feeding them. Are you just going to plead ignorance in the event of a claim?
And lastly I would love to hear from the agents. How many are knowingly doing this? Do you throw the owner op under the bus when s*** hits the fan?
We have since added the "Trucking for Hire - Expediter" to our growing list of requirements.
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!
. So that's what ya get for the extra premium cost?