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Risky Business

How Does a Broker chase coverage for an Owner Operator

How Does a Broker chase coverage for an Owner Operator

By Shelly Benisch, T.R.S., C.I.C.
Posted Mar 5th 2015 3:47AM


When a Motor Carrier allows his Owner Operator to provide his own Cargo Insurance, it all seems clear cut in the beginning of the relationship.  But what happens when a Cargo loss occurs at the same time a 'falling out' occurs in that relationship?  Then the Freight Broker can be left holding the bag since they have no contact with that Owner Operator.

This situation has recently occurred.

The 91X says nothing about Cargo.  And standard Cargo coverage follows Carmack which includes the Bill of Lading requirement. The Owner Operator's name is not on the Bill of Lading. 

This is an example of why VOI requires Blanket Cargo that extends to all Owner Operators.  A Multi or Independent can still ask their Owner Ops to provide their own Cargo coverage as a first line of coverage. 

But if THAT coverage fails, then the 3PL, Shipper or Broker can look to the Motor Carrier's backup Blanket Cargo to trigger. 

Remember that 'Contingent' Cargo is Broker coverage, not Motor Carrier Coverage. 

The Broker who provided that load shouldn't have HIS Contingent Cargo cover the loss.  It should be the Motor Carrier's responsibility as he accepted that freight with the promise of his insurance.

And the Cargo is the least of it! The exposure is peanuts compared to Bodily Injury.

What happens when an Owner Op causes serious injury or a fatality while still operating on behalf of the Motor Carrier... but then abruptly leaves the Motor Carrier?

Owner Operators have been known to 'disappear' from time to time in these cases.  This  makes it extremely difficult for the 3PL, Broker or Shipper to remain disengaged from lawsuits where the injured parties are understandably looking for someone to pay.


Because for a Liability claim to be paid, there must be insurance in place.  If no one can FIND the insurance for the Owner Op, then it goes to the courts where the 91X on the Motor Carrier comes into play after lengthy litigation.   No payment is made to anyone until that 91X 'triggers'.  During this time, lawsuits are pursued by the injured parties against the 3PL, Broker or Shipper.   

This is another reason why VOI requires "Hired Auto" on that Motor Carrier's policy... it ensures that the 3PL, Broker or Shipper is protected even IF that Owner Operator's Liability insurance "disappears."



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