Podcast Episode 5 Freight Insurance
On today’s podcast, we have a special guest. John Crassel is an insurance broker from right here in South Florida. He works for assured partners, who are a leader in the transport insurance industry.
We will be asking John some of the major questions that most carriers will have about their insurance and go over some principles of day-to-day operations.
John started in the industry as a drayage operator about 20 years ago. He worked with several intermodal trucking companies that were moving things in and out of ports. During this time, John mostly managed compliance and insurance claims. He had 17–18 years of experience before moving to the insurance industry.
This podcast’s target audience is young entrepreneurs and people in this industry who would like to start their own operation.
How much coverage you need
The amount of coverage you need depends on the type of operations you are managing. There are three basic types of trucking: Last-mile delivery, which uses box trucks, vans, 53’ trailers, etc. and is generally less than 50mi; Container drayage, which involves rail and port pickups and delivery from there; and OTR, which covers all 48 contiguous states and where you expect drivers to move 3,000mi/week. With OTR, you have unlimited locations. There are two types of OTR. There is the spot market, which is transactional. On top of that, you have contracted work where you see dedicated lanes, and you work on a quarterly, monthly, or yearly basis.
Your minimum coverage will depend on what type of carrier you are and what you carry. If you are doing interstate, intrastate, carrying passengers, hazmat, etc., each will require different insurance amounts.
When dealing with long-haul OTR trucking, you need operating authority with the FMCSA .
Onboarding as an Insurance Provider
When onboarding and vetting companies, we generally offer a separate cargo coverage policy underwritten by a different company. People generally prefer the two to be separate in the case of a catastrophic loss. Typical cargo coverage is around $100k but frequently can be $250k or higher. We can also arrange specific increases in coverage if you need it for a single customer or order but do not wish to raise your coverage more broadly.
Can I get Combined Deductibles?
It depends on what you wish to combine. Often, physical damage has separate deductibles for the power unit and the trailer, but for a fee, those can be combined. However, you cannot combine cargo insurance and auto liability.
What is the Best Deductible?
The deductible is a decision that must be made on a case-by-case basis by the business owner. When we are offering packages, we will present options with both $5,000 and $1,000 deductibles. It is ultimately a risk tolerance thing.
How Quickly Can You Change A Policy?
Outbound tender rejections are up massively, and class 8 vehicle sales up 44%. That means we are seeing unprecedented demand for transportation. As a result, many companies are tripping over themselves to expand to fill this demand. With this, it is essential to let your brokers and underwriters know the situation you are in.
In the insurance business, your relationship with your customer is an ongoing active affair from the moment the ink has dried until the expiration of the policy. Constant communication is what sets transport agents apart from general-purpose agents. There is lots of customer service.
Why Do Insurance Premiums Keep Going Up
The big question everyone asks is why insurance premiums are shooting up year over year. Some broader industry factors are contributing to this. Among these are some of the nuclear insurance verdicts you have seen in recent years. There is also a lot of consolidation in the industry that you have seen. That means that today there are not many options when looking for cargo insurance. These factors and others mean that carriers who are doing all the right things and limiting theft, claims, and damage for 5+ years and still seeing increases of 11–12% in their premiums.
This situation is difficult because of how cost-competitive the industry is.
What Underwriters Look at Most
There are a few things that underwriters put a lot of weight on. Among these are loss history, claim frequency, and severity.
The Issue With Trucking Accidents
One of the greatest difficulties with trucking accidents is the natural human response is to assume that the trucker is at fault. Take, for example, a large tractor-trailer that collides with a small car, like a Toyota Corolla in most cases, the trailer will be largely untouched, and the Corolla will be in pieces.
The Importance of Trucking and the Driver Shortage
While many look down on trucking, it is the lifeblood of America and the world as a whole. Without trucking, you do not get food in grocery stores or clothes at target. Truck drivers go through immense sacrifice. They sleep in small cabins and have to utilize public showers amid a pandemic. With this difficulty, you see the older generation of truckers starting to get to retirement age while very few younger people are getting into trucking.
Rising Costs in Trucking
Truck parking is difficult, and the system around it is largely obsolete. Outside of truck stops, you are paying $5–7k/acre for your land, and most of the time, you do not get paid yard/storage fees, all while the cost of land continues to rise.
The Permanence of Trucking
Trucking is not going anywhere anytime soon. Products still need to be moved, and even when you use air, rail, or sea to cover the bulk of the journey, you still need trucks to get these packages and containers from the transport depot to the warehouses and customers who need them.
Compliance and Violations
One thing that can affect your premiums is roadside inspection history. If your insurance providers see that you have repeated violations for vehicle maintenance, driver fitness, or hours of service, it will raise flags. Such incidents boost the likelihood of you having to file a claim.
It is essential to make sure that you check the results of your inspections frequently so that you can file a dispute if you believe a violation was handed out in error so that you can have it expunged from your safety record.
Penalties for Violations
It is essential to file reports when drivers fail to comply with regulations and make sure they are warned/penalized for it. If they are continually failing to meet ELD mandates, they need to be, warned, penalized, and, if it continues, terminated.
Thank you for reading, and make sure to check out the full podcast available here!
The Freight Guru