Do freight brokers need cargo insurance?
Freight brokers aren't required to have cargo insurance, but they can in some cases be held liable for lost or damaged shipments.
What is Contingent Cargo?
Contingent cargo covers goods in vehicles that are the legal liability of insureds (usually freight brokers) and their carriers. “Contingent” means it is not primary coverage and will only kick in if the carrier’s general cargo policy doesn’t pay out (because of policy cancellation, insufficient limits, loss or damage exclusions, etc.).
One of the biggest benefits of contingent cargo insurance is the due diligence brokers perform before issuing coverage. To ensure the policy will successfully protect the broker and shipper in a cargo claim, brokers follow a “best practices” system to vet the carrier—including its liability insurance, authority, safety programs, etc. Brokers do their homework to confirm your carrier has the proper credentials and your second layer of coverage will be effective.
What is contingent damages?
CONTINGENT DAMAGES. Where a demurrer has been filed to one or more counts in a declaration, and its consideration is postponed, and meanwhile other counts in the same declaration, not demurred to, are taken as issues, and tried, and damages awarded upon them, such damages are called "contingent damages".
Do brokers need to hold cargo liability insurance?
Brokers can be held liable if a shipment doesn't arrive and insurance companies offer certain types of cargo insurance to third-party vendors. A freight broker isn't required to have insurance, according to Entrepreneur magazine, but they can be held liable if the shipment is damaged, lost or stolen.