Some of your risks are clear, such as the possibility of a catastrophic accident. But many risks are hidden or less obvious. What are some things that you should be worrying about that perhaps you aren’t?
Henry Seaton, a partner with Seaton & Husk and CCJ’s legal columnist, addressed that question last month in a presentation at the Truckload Carriers Association annual meeting. He highlighted 12 areas for concern.
Vicarious liability and negligent entrustment. Plaintiffs in accidents involving smaller carriers may look for deeper pockets by arguing that the 3PL or core carrier is liable. To limit the risk, Seaton recommends avoiding any language assuming carrier liability, keeping your name off the bill of lading and assuming no liability other than arranging transportation with a contractor who is licensed, authorized and insured as required by Federal Motor Carrier Safety Administration regulations.
‘Arising out of indemnity’ and ‘additional insured’. Shippers and brokers often ask that carriers indemnify them against loss “arising out of” the carrier’s services and add them as “additional insured.” Shippers sometimes even seek indemnity and coverage for their own contributory negligence. But a motor carrier’s commercial liability insurer may not accept the additional insured obligation when a loss occurs.
Gaps in insurance coverage. Motor carriers often are unaware that their cargo policies exclude coverage for certain commodities, for moisture, for vehicles left unattended or for upset not caused by an accident, for example. Also, carriers that accept unit-specific bodily injury and physical damage policies must pay careful attention to additions and deletions.
Cargo theft. Carriers must know what they are hauling to ensure they have sufficient coverage. Truckload carriers should establish a standard release rate equal to the level of insurance coverage, Seaton says.
Detention/spotted equipment. Spotting loaded trailers increases the chance for disputes over stolen or damaged freight. Seaton recommends that carriers insist on “shipper load and count” terms and make clear that effective delivery is when they tender it, not when it’s unloaded.
