Transportation insurance and, more specifically, motor truck cargo insurance are not fields where an agent should dabble without some expertise. The specific nuances in this class of insurance lead to extensive errors and omissions exposures for agents if they are not familiar with the caveats of coverage and terminology.
Motor truck cargo insurance provides legal liability coverage for truckers, whether common or contract, while they are transporting property of others. The policy protects the insured (trucker) and the covered property (cargo).
The contracts must be reviewed for legal liability. The agent needs to know who is legally liable at which point during shipping to guarantee that the correct coverage is in place in the event of a loss. This requires knowing who is transporting what, where, how and when.
While other classes within the industry are seeing companies come and go, and coverage change dramatically from year to year because of catastrophe losses and capacity, motor truck cargo tends to be constant. Although influenced by the times and economy, and some price fluctuation is seen from year to year, the coverage is basic when understood.
Many cargo forms have sub-limits, co-insurance requirements or deductibles that an insured may not be aware of when choosing a policy. It can be difficult for a producer and insured to completely understand the differences between one form and another if the producer does not review this type of form or coverage on a regular basis.
The types of forms can be narrowed down to scheduled or composite. The composite form will charge on revenue/miles/units audited at end of year. The scheduled form looks at each unit individually. The composite can be used when looking to add new and/or replacement trucks during the policy terms, while the scheduled form is able to better control the number of drivers for example. Both have benefits depending on the size of the fleet, number of drivers (and experience) and the units of cargo.
Policy forms usually have limitations and sub-limits for certain commodities unless a buyback is in place. Certain commodities will always be difficult. Tobacco, alcohol, precious metals, furs, monies–these risks pose problems and can be excluded if not specifically mentioned. In most cases a buyback of coverage would have to be in place. Other exclusions can include electronics or computers.
The high value target commodities are the most difficult classes to write. These would be items that are the most common targets for theft. Tobacco will always lead the list, but pharmaceuticals, furs and automobiles are close behind.
There are some carriers allowing experienced transportation agents the ability to access electronic rating over the Internet. Great American will look at up to 10 units online. Chubb will review up to 15, and The Hartford is expected to roll out a program by the end of 2006.
Some clients and agents, even if they are familiar with the coverage, like having an experienced transportation department behind them. Wholesalers with transportation departments can provide agents with knowledge and experience in industries where they may not have access to markets or information on a daily basis.
New agents would be advised to use a “team” approach, whether that is with a wholesaler who is familiar with this type of coverage or with a carrier.
Donna Chiapperino is the director of marketing with Jimcor Agencies, a northeast regional E&S wholesaler, which has a transportation division. David Pohle is transportation underwriter for Jimcor Agencies in its Plymouth Meeting, Pa. office. Chiapperino can be reached at firstname.lastname@example.org. Pohle can be reached at email@example.com.
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