Deductible question

[JACKBURTON]

So over the past few weeks we have run into some brokers who end up not giving us a load because we have a $10,000 deductible. Is this a new "thing"? Not entirely sure of the logic behind this new rule. Seems like most carriers would carry this kind of deductible these days, anything to keep rates down a little. Anyone else experiencing this/have this rule in place?

 

[Upper Ech]

its probably because the brokers would get less. insurance always covers loss minus deductible.

 

[bellcitytransport]

Because any claims under 10,000 they feel the insurance company would refuse and send the 3rd party back to carrier to settle.

 

[Upper Ech]

Because any claims under 10,000 they feel the insurance company would refuse and send the 3rd party back to carrier to settle.

yes this is the most correct answer. hence why every broker wants to be additional insured on COIs.

 

[JACKBURTON]

yes this is the most correct answer. hence why every broker wants to be additional insured on COIs.

I assumed that was why, but then why doesn't the broker just ask to be added to the insurance?

 

[Upper Ech]

I assumed that was why, but then why doesn't the broker just ask to be added to the insurance?

careful... your trying to understand the mind of a freight broker XD

 

[loaders]

its probably because the brokers would get less. insurance always covers loss minus deductible.

?????? A broker receives nothing in the event of a freight claim or motor vehicle accident. The settlement of a freight claim is always between the carrier and the owner of the goods. Certainly a freight broker can facilitate the negotiations, ensuring that the lines of communication between the parties involved remain open and information flows freely between all concerned. Carrying a large deductible shouldn’t be used as an excuse to ignore a legitimate freight claim. In any event, regardless of the amount of the deductible, a party who suffered a legitimate loss should report it directly to the carriers insurance, along with the carrier involved of course. Honest, professional carriers don’t go looking for excuses to avoid handling legitimate freight claims. Like all the other hazards inherent in this business, freight claims are a fact of life and must be managed, just like vehicle maintenance or driver training, not swept under the rug in some misguided hope that they will somehow disappear.

 

[JACKBURTON]

?????? A broker receives nothing in the event of a freight claim or motor vehicle accident. The settlement of a freight claim is always between the carrier and the owner of the goods. Certainly a freight broker can facilitate the negotiations, ensuring that the lines of communication between the parties involved remain open and information flows freely between all concerned. Carrying a large deductible shouldn’t be used as an excuse to ignore a legitimate freight claim. In any event, regardless of the amount of the deductible, a party who suffered a legitimate loss should report it directly to the carriers insurance, along with the carrier involved of course. Honest, professional carriers don’t go looking for excuses to avoid handling legitimate freight claims. Like all the other hazards inherent in this business, freight claims are a fact of life and must be managed, not swept under the rug in some misguided hope that they will somehow disappear.

This also makes sense. Though why do brokers insist on being added to the insurance?
Also the last broker I spoke to about this claimed their "boss had to write a $10,000 cheque". If the broker is not part of the settlement, why do they care?

 

[loaders]

I can’t speak for what the broker you spoke to experienced, however, we ask to be added to our carrier partners insurance policy not for any possible freight claim exposure (we are not and never are the owners of the goods) but in the event of a property damage or personal liability claim where the injured party may try and involve every entity, including the freight broker who arranged the transport. Perhaps the “$10,000 cheque” your colleague referred to was in fact a goodwill gesture made to the brokers customer when a carrier refused to honour a freight claim and the broker decided to pay out of pocket in order to keep his customer. We have made similar type payments but never for that large an amount. If and when we do, we go to great lengths to explain to our customer why their claim is being denied by the carrier/insurance company and suggest possible remedies to prevent any reoccurrence.

 

[Michael Ludwig]

Be wary of anyone asking to be added to your insurance policy as "additional insured" carte blanche. Competent insurance companies and brokers will insist on a phrase consistent with "in so far as the carriers operations ...". Otherwise adding someone simply as additional insured means you will be insuring against all of the additional insured's liabilities.

It's not a bad idea for load brokers to foster and facilitate communication, but for the most part, load brokers should stay out of the claims process. Typically what happens between a carrier and a shipper vis-a-vis claims is the shipper will send an intent to claim, the carrier will investigate and respond, and the shipper will send an invoice for the damage. Where the claim goes after this point is entirely dependent on the carrier's response. If the carrier accepts the claim, the carrier (or their insurance) will pay the invoice. If the carrier denies the claim then the shipper will either accept that, or begin legal proceedings.

BUT​

Carriers ... don't think you can just deny a claim when you are at fault, and force the shipper to take you to court. Inevitably it will come out in court that you were at fault, and not only will you have to pay the claim, you will have to pay punitive damages, and you will have to pay the shipper's lawyers. I am almost 1,000% certain no carrier wants to pay Loblaws' lawyer bill !!!
Shippers ... don't think you can submit an overvalued invoice in the hope that you can use the carrier's insurance as a cash cow. If the carrier makes a fair offer, and you deny it, and take the carrier to court, you will lose altogether, and the court will make you pay the carrier's legal bills. You ever seen a carrier's insurance company legal bills? These guys charge for the period at the end of a sentence. Trust me, it's cheaper to pay Loblaws' legal bill.

ANYWAYS​

Where load brokers can be of the utmost value to their shipper clients, vis-a-vis claims, is as an advisor. If I were to hazard a guess, I would suggest fully 75% of shippers out there have no idea how to properly handle a cargo claim, and you can bet your bottom dollar the carrier is not going to help them out, so brokers who know their way through the claims process can become invaluable to shippers.

 

[loaders]

No insurance broker and certainly no insurance company is going to willingly expose themselves to any unnecessary, additional liability, especially without compensation. My suggestion to any carrier who is asked by a freight broker to be added as an additional named insured, is to consult with your insurance provider before you say no. This is not a unique or out of the ordinary request and occurs regularly in a number of different businesses, not just transportation . I understand the need to be wary at all times, but if I ask a carrier to add me to their policy as protection in the event of an accident or incident where they could be found at fault, don’t over think it, I am not out to scam or screw anyone. It is just prudent risk management on my part. As far as claims settlement is concerned, in most cases a freight broker can be invaluable resource for smaller, less experienced shippers or in cases where a carrier has adopted a negative, uncooperative and unsubstantiated position.

 

[fratenate]

The deductible amount is 100% something I would vet a carrier for, when the final remittance comes from Insurance and they offer to pay the claim amount less the deductible and then instruct the cargo owner to go collect the deductible from the carrier, how is the cargo owner expect to hold the carrier to account for those funds, its to much money for the cargo owner to settle in the event the carrier never pays. We instructed cargo owner to request full payout from Insurance and have insurance collect the deductible, could have been insurance trying to pull a fast one on the cargo owner who is inexperienced, if the deductible was less maybe the cargo owner accepts the loss and moves on at but $10,000 is to much.

 

[Michael Ludwig]

If you look at the date of the last post, this was settled 2 years ago.
With respect to your post though, as a load broker, you don't get to "instruct" anyone to do anything with an insurance policy that you are not paying for. The best you can do is advise, and your advice better be correct, else you'll be held liable for discrepancies, because what you are describing is not how insurance works.
In reality what happens, assuming the claim is legitimate, is the insurance company pays 100% of the claim to the cargo owner, and invoices the carrier for the deductible. The cargo owner is never, ever, left to collect the deductible from the carrier. If someone has told you different, you have been lied to.

 

[fratenate]

Exactly which is why I “advised” sorry I did say “instruct” my client not to accept I saw the email from the adjuster, they sent the letter of final remittance instructing the carrier to pay the cargo owner the deductible and insurance would remit the amount less the deductible, I knew it wasn’t correct and I appreciate being acknowledged someone such as yourself who may have more experience to confirm what I felt was right but also did my own research on before I advised my client.

 

[Freight Broker]

This also makes sense. Though why do brokers insist on being added to the insurance?
Also the last broker I spoke to about this claimed their "boss had to write a $10,000 cheque". If the broker is not part of the settlement, why do they care?

Because it’s the broker’s account to lose. I'm always involved in the claims process, and I care deeply. When my customer is upset over a claim I cannot simply say “sorry, not my problem, take it up with my carrier”. At a minimum I help them navigate the claims process to minimise their frustration, and worst case, I pay the claim out of my own pocket. Why? Because they’re my customer. Last claim I paid was 32K US about five years ago. Their underwriter refused to pay the claim, and I had a choice to make: do I lose a four million dollar a year account and risk litigation, or, do I pay the claim? I paid the claim. I also sued the carrier and won, but it took years..Apart from this biggie, I’ve paid lots of smaller claims over the years..usually the carriers’ insurance will payout, but often I’m left with the deductible. They correctly believe that I’m not going to kick up any sand over a 3 k deductible as the cost of recovery (going to small claims court 2000 miles away etc.) would be pennywise and pound foolish. A 10K deductible, on the other hand..

 

[Michael Ludwig]

Because it’s the broker’s account to lose. I'm always involved in the claims process, and I care deeply. When my customer is upset over a claim I cannot simply say “sorry, not my problem, take it up with my carrier”. At a minimum I help them navigate the claims process to minimise their frustration, and worst case, I pay the claim out of my own pocket. Why? Because they’re my customer. Last claim I paid was 32K US about five years ago. Their underwriter refused to pay the claim, and I had a choice to make: do I lose a four million dollar a year account and risk litigation, or, do I pay the claim? I paid the claim. I also sued the carrier and won, but it took years..Apart from this biggie, I’ve paid lots of smaller claims over the years..usually the carriers’ insurance will payout, but often I’m left with the deductible. They correctly believe that I’m not going to kick up any sand over a 3 k deductible as the cost of recovery (going to small claims court 2000 miles away etc.) would be pennywise and pound foolish. A 10K deductible, on the other hand..

Now that's the right way to go about it, from a broker's perspective. Your customer, your account to lose. Hold their hand, and walk them through the process. I expect you also use this as an educational moment so your customer knows what to do when this happens in the future.
I am genuinely curious though about how you recovered the $32K USD. In theory, that should not have been possible. From a legal perspective, unless you had authorization from your customer to represent them, or your name was on the bill of lading, you have no standing. The freight was not yours, as in you did not own it, and I suspect the carrier did not ask you to pay the $32K USD on their behalf with a promise to repay, and then reneged.
It seems to me you might have lucked out and got a sympathetic judge, and the other side did not have a very good lawyer, if they had one at all, or is there something in your load confirmation or carrier contract that you were able to leverage?

 

[Freight Broker]

Good questions. I wasn’t sure about my legal standing in this situation, nor was my legal standing ever top of mind or even something I gave a moment’s thought to. My immediate concern was to make my customer whole. They had been with me since 2002, and I had no desire to lose them.

Probably the best thing I did was to take control over the situation. Had I not done that the claims process and resultant litigation would have dragged on for years, and I would have most certainly lost the customer.

The second best thing I did was to promptly write a check to the receiver of the goods for the lost load. My thinking was that in doing so I would at least get one monkey off my back..with the receiver and my shipper customer now protected and assuaged I could continue to move their loads as before, and I could proceed with the claim at more or less my own leisure.

The carrier proved to be uncooperative throughout the claims process, and once their truck was recovered they lost all interest and stopped communicating with me. Furthermore their insurer declined the cargo claim, citing an “unattended vehicle” exclusion in their policy. The truck had been stolen from the Exxon Fuelmax in Humble, TX, with the driver inside the facilities when the truck was stolen.

Toughest part was finding a good lawyer in Texas to represent me. Most wouldn’t return my call..some replied with no interest in the case..and a few would take my case on a 20K retainer. After making about 400 calls I lucked out and found Jason Scofield, a one man band who at first blush didn’t sound too promising. A man of very few words, but as I discovered, big on action and results. Long story short, he got me my 32K back..PLUS. It took just over two years..but these things often take time. The case never went to court.. things work somewhat more expediently in Texas than they do here...my lawyer got a court order to seize the carrier's assets in lieu of settling the claim and that was it. Fortunately it didn't come to that, and my lawyer soon had a check in hand.

So was luck involved? Yes..I had both good luck and bad. But isn’t that true of almost everything? I learned a-lot from this one claim. First and foremost..a COI means squat. Read the carrier's policy in its entirety and be aware of any exclusions on their policy. Second, every claim is different..think on your feet and go with your gut, and that means having the ability to ignore the prevailing wisdom and advice. Best of all.. what doesn’t kill you makes you stronger..it’s a tired and overused bromide, but in some cases it really is true. I learned volumes from this experience, and I’m much more confident now because of it. On to infinity!

 

[loaders]

There has never been a better example to show how valuable a Contingency Cargo Insurance Policy can be to a broker who finds himself in this type of sticky situation. Yes, it can be an added cost to your overhead, but oh boy…they can save you a ton of money when you run up against a reluctant carrier and his negligent insurer who refuse to honour a legitimate claim. Just like an American Express card, “don’t leave home without it”!

 

[Michael Ludwig]

The second best thing I did was to promptly write a check to the receiver of the goods for the lost load.

Aha !!! The smoking gun ... LOL. That was key right there. You took ownership of the goods, which now means you have standing before the court. Everything else simply followed as it should in a claims case.
If I can ask though, why did you pay the receiver, and not the shipper?
Technically the receiver has to accept the goods, then the receiver goes back on the shipper, and the shipper goes back on the carrier.
From a legal standpoint I suspect it's much easier to prosecute a case in the U.S. as the laws are much clearer, and better tested, there than here, and assuming you can find reliable legal representation there.

 

[Freight Broker]

I paid the receiver under the direction of my customer. I wondered about that too.. My deal was with the shipper. On the day after the incident I contacted both my customer and the receiver. My customer advised that the receiver would be in touch, and sure enough, they were and away we went. In retrospect they were good to deal with. They were pretty happy to get a check promptly, and I was happy to have them off my back too.