Law

No assurance from insurance

Certification isn’t worth the paper it’s printed on


Q  As a broker, we tendered a load of beer to a newly authorized carrier that produced a certificate of insurance showing $100,000 in cargo coverage. The load never arrived, and we soon found out we were one of eight different brokers with stolen loads. The insurance company, notwithstanding a certificate of insurance, has declined to pay the claim, and the carrier cannot be found. What recourse do we have?



A  Little if any. As I have written previously, the certificate of insurance issued by an agent is a legally worthless document. It says only that at the time of issuance there was a policy, but it does not address coverage or disclose the loopholes. Typical exclusions in a cargo policy include theft and employee dishonesty, either of which could be used as a pretext for denying your claim. Increasingly, small carriers are obtaining specific vehicle cargo coverage that does not run to all equipment they use or operate. Shippers then will use this undisclosed exclusion as a basis for denying coverage.


All small carriers are hurt by the misdeeds of a few.


This sad state of affairs is exacerbated by proposed actions by the Federal Motor Carrier Safety Administration that do not acknowledge the need for cargo insurance verification in the spot marketplace. FMCSA recently sent the president a final proposal that would eliminate any requirement that a carrier post even a measly $5,000 cargo endorsement (Form BMC-34).

Henry Seaton - info@transportationlaw.netHenry Seaton - info@transportationlaw.net

Clearly, the problem you face is not an isolated incident. The absence of any effective assurance that a shipper’s or broker’s cargo claim will be properly adjusted and paid is one of the biggest impediments to effective use of small carriers. Yet the National Transportation Policy, which FMCSA is charged with promoting, requires the encouragement of an efficient privately owned motor carrier industry. Why, then, does it take such a laissez-faire attitude toward retaining and strengthening rules of commerce?

If a BMC-34 cannot be retained and increased to a realistic truckload minimum, then the industry should consider a private registry that would identify carriers and their insurers whose policies have no hidden exclusions or coverage issues and provide claimants with a direct cause of action.


– Henry Seaton is a transportation lawyer who represents carriers. n

 

In brief

* Midwest Crane and Rigging is a commercial motor carrier subject to regulation by the Federal Motor Carrier Safety Administration, a federal appeals court ruled in effect. The company had challenged a civil penalty, arguing that its self-propelled cranes were not commercial motor vehicles on the grounds that the crane and its transporting mechanism operated as an integrated unit and did not transport property. The U.S. Court of Appeals for the 10th Circuit deferred to FMCSA’s interpretation of its own regulations.

* Nebraska, Kentucky, Michigan and Wisconsin all signed anti-texting bills into law. The Wisconsin ban is a primary offense, while Nebraska’s ban is a secondary offense. The Kentucky law creates an exception for emergencies. Michigan’s law prohibits a person from reading, writing or sending text messages while driving.

* Truck owner Victor Kalinitichll, truck driver Valerjis Belovs and vehicle inspector Joseph Jadczak Jr. were sentenced April 26 on charges related to a fatal accident on U.S. 76 in Philadelphia involving a truck with faulty brakes colliding into stopped traffic. All three received 23 months incarceration and fines of varying amounts. Kalinitichll also was ordered to pay $26,000 in restitution.

* The American College of Transportation Attorneys (www.actalawgroup.org), a nonprofit association consisting of transportation defense attorneys, has been developed to assist trucking industry professionals.

* ATA Business Solutions (www.atabusinesssolutions.com) now offers “Maintaining Non-Union Status: The Big Picture – And the Nuts and Bolts,” a publication that emphasizes positive employee relations and strict compliance with the law as the keys for companies to maintain long-term nonunion status.