Information reprinted per readers' request 
By Advance Business Capital 

Finally. Cargo Insurance That Really Covers Your Cargo

Veteran truckers know that cargo insurance is a gamble. The minimum liability coverage required of an owner-operator by DOT is $5,000, which is widely agreed to be seriously inadequate in case of loss or damage. The independent trucker is in more than a bind; he’s in a trap. The truth is that the way most cargo coverage is written, a $50,000 policy wouldn’t be adequate. Nor, for that matter, a $5 million policy.

 “The loopholes are big enough to drive a truck through.” says Steven Hausman, CEO of Advance Business Capital, one of the country’s largest factoring companies.

“You can’t be in this business without being aware of the problem. Our clients have been asking for it for a long time, but in the past we saw ABC as offering strictly financial assistance, not insurance. We still wouldn’t offer it if we hadn’t found a way to deliver coverage that closed the loopholes.” Hausman, a fourth-generation trucker, has run ABC since its founding in 2004. Widely recognized in the industry for its solidity and transparency, ABC is the first factoring company to receive a P3 (Preferred Platinum Provider) endorsement from the Transportation Intermediaries Association.

The company’s cargo insurance program will fill a gap faced by small trucking firms and independent owner-operators for years. These operations are forced to daily gamble that accidents or theft won’t happen to their business. Their dilemma isn’t new. In 2002, attorney Henry E. Seaton, one of the country’s most active experts on cargo insurance, warned in a column in Commercial Carrier Journal’s etrucker:

“Cargo claims, particularly for small carriers, are quickly becoming a dangerous game of roulette. Many small carriers must factor their receivables. Don’t let one catastrophic uninsured theft or cargo loss coupled with a shipper’s or broker’s setoff be the coup de gras that ends your truck line.”

Inevitably, over the years such catastrophes have ended more than a few lines. In this time of tightened belts, companies are more than ever inclined to pass on liability. To reduce their exposure, shippers require brokers to accept more risk. Brokers in turn pass the risk on to carriers, who pass it on to contract carriers. Sooner or later something breaks and the one left holding the pieces is often the least able to afford it.

This shell game endures because of the unique nature of cargo law, where—unlike most areas of the law—the burden of proof lies with the defendant. A trucker who fails to detect load problems at pickup is responsible for any that are noted at delivery. Even a careful trucker can’t scrutinize every pickup for mis-packed or damaged goods, yet the shipper never has to demonstrate carrier negligence or irresponsibility. That’s presumed, unless you can prove otherwise.

Large carriers commonly provide cargo coverage for contractors (typically at least $100,000). Most also require contractors to meet the insurance deductible, usually $1,000, often a potential hardship on a fledgling O/O. This itself isn’t objectionable, but many carriers also require exclusions that place an unreasonable, even outrageous, burden on the driver. These include disallowing coverage if:

• the driver leaves his vehicle “unattended”

• the driver parks in an “unsecured” area

• the driver provides “inadequate” documentation

In a contest to define these terms, who do you think is going to win, you or an insurance attorney? Using commonsense precautions will not be sufficient if you’re the victim of theft or accident. (Not to mention freight improperly packed by the shipper!)

“There’s a crying need for small carrier cargo coverage.” says George Thorson, Executive Vice-President of ABC. “This wouldn’t have been possible without our relationship with Frost National Bank. ABC will serve as a broker for a kind of policy that will protect these guys at premiums that are comparable or below what they’re paying now. And they’ll be able to go the bathroom without forfeiting coverage.”

Now that’s the kind of insurance a trucker will stand up for.

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