Broker Contingent Cargo Insurance

[Cruise]

I think I know the answer but i'm just gonna put this out there anyway. If a broker has a customer that requires higher cargo insurance than $2/lb (and will declare it on BL) but broker only utilizes carriers that will not insure for more than the the $2/lb, are there any options for a broker to obtain any additional insurance to cover the overage? This is considering it is a Canadian shipper.

 

[loaders]

Yes. Most insurance companies will offer a one time cargo, or trip, insurance coverage. Check out Cargo Cover, a product offered through Marsh Canada. You can insure pretty much any shipment at reasonable rates with low deductibles. In our experience, these other forms of coverage have a lower cost than what carriers will offer for high value shipments.

 

[Cruise]

Thanks loaders. I will check with Cargo Cover for their insight. I'm looking for coverage on a shipper that has a number of shipments per week so was hoping there was a option that might cover more than a per load basis.

 

[Ins-Broker]

Hey Cruise, do you have your own contingent cargo coverage? Check with your company/broker about getting coverage for shipments at more than $2/lb.
I have done this for both carriers and brokers.

 

[Cruise]

Yes I have contingent cargo. I've inquired with them before and said there was no way I could do that as I am not a trucking company and can't have primary insurance coverage. I don't quite understand all of it. Last time I checked was 2 or 3 years ago.

 

[loaders]

You are correct about "primary coverage". The carrier provides the primary coverage and your contingency policy picks up your liability in the event the primary coverage is declined, has been cancelled or otherwise does not respond. You can have your contingency policy cover high value shipments, or just about anything else (for a price of course), but the "first responder" still is the carrier's insurance.

 

[Cruise]

To your best of your knowledge, my contingent should cover the excess value of 2$ per pound that would be declared on the BL? I was never adverse to paying for xtra (as long as it wasn't ridiculous) ....wonder why my broker says that there is nothing available to cover me for this scenario, and that is not what the contingent cargo policy is for. I do have carrier contracts limiting their liability to $2/lb. I will talk to my insurance company again but as I already have a couple times, I don't think I will get a different answer. I have explained the situation and was told I was not covered in this situation, and basically I had no options.

 

[PackRat]

Hi Cruise,

Here is something else to think about: if your carrier ACCEPTS and signs the BOL with the declared value on it they are accepting the value as declared. Their only recourse is to NOT accept the pickup or remove the DV on the BOL when picking up. Your insurance company should most definitely have a policy that will cover you for the extra (with a corresponding cost) by either adding said client to your policy as an additional insured, or adding the coverage as an addendum for that specific client. If your insurance company says no it's because they don't want that business. Not that they can't underwrite it. As well, most carriers that have a $2/lb liability have this as a company policy, it doesn't make it law, meaning a shipping customer could have a case to go to court for a value greater than $2/lb.

 

[loaders]

No. It is my understanding that your contingency policy would not make up the difference in the declared value between the carrier's liability of $2/lb and what is on the B/L. In this case a carrier would have to be careful accepting a shipment with a declared value in excess of $2/lb. Your insurance provider is correct in saying that you, as a broker cannot assume of the role of providing primary insurance. However, you can arrange for additional insurance on behalf of your customer through offerings such as those like Cargo Cover. The insured party is your customer and in the even of a loss, they receive payment. As an added benefit, you can add a mark-up to the cost. There is no limit to the number of shipments you can arrange and as far as I know, no upper limit to the insured value. Again, talk to Marsh Canada for a more informed discussion of what is available and how it may benefit you and you customer.

 

[lowmiler88]

So if there is no Declared Value then the carrier is only responsible for $2/lb in Canada or shipping to the states. If you are bringing a load in from the US then it is full pop whatever it's worth and if they are bastards it is their sell price not just cost of replacement. Declared Value we will charge 1% to 2.5% of value over the seemingly standard $200,000 in Cargo Insurance. We have a Million on load insurance but don't really tell the customer that because everyone else is a 100K to 200K (we will use it to our advantage if it is a lot of loads and cover higher values at no extra charge). Generally shippers with high value shipments have their own insurance and once they see the extra charges generally will remove the DV, don't be afraid to charge them they know it costs more.

 

[Rob]

So if there is no Declared Value then the carrier is only responsible for $2/lb in Canada or shipping to the states. If you are bringing a load in from the US then it is full pop whatever it's worth and if they are bastards it is their sell price not just cost of replacement. Declared Value we will charge 1% to 2.5% of value over the seemingly standard $200,000 in Cargo Insurance. We have a Million on load insurance but don't really tell the customer that because everyone else is a 100K to 200K (we will use it to our advantage if it is a lot of loads and cover higher values at no extra charge). Generally shippers with high value shipments have their own insurance and once they see the extra charges generally will remove the DV, don't be afraid to charge them they know it costs more.

I have a couple high value shippers and they always send me a signed letter stating they will cover anything over my cargo coverage. That and I charge them a premium as the risk needs to support the reward.

 

[Freight Broker]

As a broker I stay away from high value freight. Just too risky even with insurance to cover. And besides there's lots of 2:00/lb freight out there.. no need to broker loads of computers.

 

[TRKINSURE]

Thanks loaders. I will check with Cargo Cover for their insight. I'm looking for coverage on a shipper that has a number of shipments per week so was hoping there was a option that might cover more than a per load basis.

Most insurers that specialize in 3PL guys will offer a package whereas you buy the contingent cargo policy and you get online access to a 'reporting' system which you can buy primary insurance coverage (called an open ocean marine cargo policy) and are given a rate and everything you need to calculate your costs... Coast Underwriting comes to mind (best wording), CNA, SUM Insurance are a couple to name a few.

 

[TRKINSURE]

No. It is my understanding that your contingency policy would not make up the difference in the declared value between the carrier's liability of $2/lb and what is on the B/L. In this case a carrier would have to be careful accepting a shipment with a declared value in excess of $2/lb. Your insurance provider is correct in saying that you, as a broker cannot assume of the role of providing primary insurance. However, you can arrange for additional insurance on behalf of your customer through offerings such as those like Cargo Cover. The insured party is your customer and in the even of a loss, they receive payment. As an added benefit, you can add a mark-up to the cost. There is no limit to the number of shipments you can arrange and as far as I know, no upper limit to the insured value. Again, talk to Marsh Canada for a more informed discussion of what is available and how it may benefit you and you customer.

you're correct... 100%.

 

[TRKINSURE]

don't know if this was resolved but to the 3PL who said you can't buy primary coverage - www.coastuw.com (you have to do some browsing around).

They will put primary coverage on cargo but then 'subrogate' against the carrier for the loss. it's usually (but not always), done on a 'per trip' basis. Hope that helps!