Freight Forwarder Insurance Policy Information
Freight Forwarder Insurance. From preparing goods to be shipped, arranging cargo space, tracking packages, handling paperwork - and so much more - freight forwarders have a lot of responsibilities on their plates. Your goal is to ensure that the goods the companies have hired you to ship arrive safely at their final destination.
Due to the nature of freight forwarding, organizations in this industry are exposed to a variety of risks.
Freight forwarders and freight agencies organize the shipment of freight from its initial pickup at the shipper's location through final delivery at the receiver's location. Transportation of the cargo from point to point can include various modes of transportation such as trucks, railroads, aircraft and watercraft, with warehousing at some point along the route.
Freight forwarders may combine shipments from several customers into one. Services may be limited to domestic shipments or include international operations.
If you operate a freight forwarding company, protecting business, your clients, your employees and your own personal assets is crucial. What's the best way to do that? - With the right type of insurance coverage.
Why is freight forwarder insurance so important? What type of coverage do professionals in the forwarding industry need? Find the answers to these questions below.
Freight forwarder insurance protects your forwarding business from lawsuits with rates as low as $47/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked freight forwarding insurance questions:
- What Is Freight Forwarder Insurance?
- How Much Does Freight Forwarder Insurance Cost?
- Why Do Freight Forwarders Need Insurance?
- What Type Of Insurance Do Freight Forwarders Need
- What Does Freight Forwarder Insurance Cover & Pay For?
What Is Freight Forwarder Insurance?
Freight forwarder insurance is a type of insurance that protects freight forwarders and their clients from potential financial losses related to the transportation of goods. This insurance is designed to cover the costs of damage, theft, or loss of goods while they are in transit, as well as any legal or liability issues that may arise.
Freight forwarders are responsible for arranging and coordinating the transportation of goods on behalf of their clients. They often work with multiple carriers and must ensure that the goods are delivered on time and in good condition. Freight forwarder insurance helps to protect the freight forwarder from any financial losses that may occur as a result of the goods being damaged or lost during transit.
The types of coverage offered by freight forwarder insurance can vary depending on the policy. Some policies may include coverage for cargo damage, theft, or loss, while others may also include coverage for legal or liability issues. Some policies may also include coverage for freight forwarder's errors or omissions, which can help to protect the freight forwarder from any financial losses that may occur as a result of mistakes or oversights made during the transportation process.
Overall, freight forwarder insurance is an important aspect of the freight forwarding industry as it helps to protect both the freight forwarder and their clients from potential financial losses related to the transportation of goods. It is essential for freight forwarders to have a comprehensive insurance policy in place to ensure that they are protected in case of any unforeseen events.
How Much Does Freight Forwarder Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small freight forwarders ranges from $47 to $59 per month based on location, size, payroll, sales and experience.
Why Do Freight Forwarders Need Insurance?
Freight forwarders play a critical role in the logistics and supply chain industry, as they manage and coordinate the movement of goods from one location to another. As intermediaries, they are responsible for ensuring that goods are delivered on time, in good condition, and to the correct destination. Given the nature of their work, freight forwarders need insurance to protect themselves and their clients from potential losses and liabilities.
First and foremost, freight forwarders need insurance to cover any losses or damage that may occur during the transportation of goods. This could include damage caused by natural disasters, accidents, theft, or other unforeseen events. Without insurance, freight forwarders would be liable for any damages, which could result in financial losses and damage to their reputation.
Additionally, freight forwarders need insurance to cover any liabilities that may arise during the course of their work. This could include liability for injuries or damage caused by the handling of goods, as well as liability for any legal disputes that may arise. Without Freight forwarder insurance, they would be financially responsible for these liabilities, which could result in significant financial losses.
In conclusion, freight forwarders need insurance to protect themselves and their clients from potential losses and liabilities. By having insurance coverage, freight forwarders can safeguard their financial stability, as well as protect their reputation in the industry. Ultimately, insurance is an essential aspect of running a successful freight forwarding business, and is necessary for any freight forwarder to protect their business from unforeseen events.
What Type Of Insurance Do Freight Forwarders Need?
Since each freight forwarding business is different, the specific insurance requirements for freight forwarding vary from organization to organization.
Some of the factors that will affect the type of insurance coverage an organization needs include the size of the operation, the type of cargo they deal with, where the goods are being shipped (domestic or international shipping), and where exactly the company is located.
While the Freight forwarder insurance requirements for companies do vary, there are specific types of coverage that all forwarding businesses should carry, including:
- Commercial General Liability - This type of coverage protects you from third-party property and personal injury claims. For instance, if a client claims that the goods you were hired to arrange transportation for were damaged or a vendor sustains an injury while visiting your warehouse and takes legal action, commercial general liability insurance will cover the cost of any legal fees, as well as the damages that you are liable for.
- Commercial Property - With this type of policy, the physical structure of your commercial space, as well as the contents within it, are protected from damages such as fire, theft, and vandalism. For example, if a hail storm damages the roof, windows, and other parts of your building, or if someone breaks into your warehouse and steals equipment, your commercial property insurance would help to cover the cost of repairs, as well as the replacement of any stolen equipment.
- Workers' compensation - Should an employee sustain a work-related injury or be exposed to something that causes an illness while working, workers' comp insurance will pay for the necessary medical care, lost wages, and litigation, should he or she take legal action. For example, if a staff member develops a respiratory disease and it is determined that asbestos in your warehouse is the case, workers' comp insurance will cover the damages.
These are just some of the types of insurance that freight forwarding companies need to have in place.
Freight Forwarding Risks & Exposures
Premises liability exposure is limited due to lack of public access to the premises. Cargo containers stored outside may present an attractive nuisance to minors. Fencing and lighting help reduce this exposure. Contracts with transportation and storage providers may expose the operation to additional liability.
Environmental impairment exposure can be high if there are underground fuel tanks and waste disposal of fluids used for servicing and repairing trucks. All underground fuel tanks must meet state or federal regulations and be routinely tested for leakage. Contracts should be in place to dispose of all environmentally dangerous chemicals. Spill procedures must be in place to prevent the accidental discharge of sludge from water reclamation systems used in washing trucks.
Workers compensation exposure depends on the amount of freight handled by employees of the freight forwarder. If workers are involved in handling and/or storage of cargo, there is an increased exposure to injuries due to strains, sprains and back injuries. Proper lifting techniques must be taught and safety equipment provided. Garage employees can be injured by vehicles falling from hoists, strains, sprains and other lifting injuries. Good housekeeping is critical to reduce injury from slips, trips, and falls.
Burns, eye injuries, and respiratory problems can occur with the welding and painting. Dermatitis can result from employees coming into contact with harsh cleaning detergents. Repair areas should be properly ventilated. Proper safety equipment is required. Drivers must operate in adverse traffic conditions such as inclement weather or road construction. They must be monitored to ensure that an appropriate amount of time is allocated for sleep.
Property exposures may be limited to electrical, heating and cooling systems for an office. All electrical wiring must be up to code. If the forwarder stores customers' goods at an owned warehousing facility, the types of goods handled and stored may increase the exposure to both fire and theft. Theft protection should be appropriate for the types of goods stored and the location. Additional property exposures can result if the freight forwarder repairs, refuels, and maintains its own vehicles on premises.
Exposures include flammable liquids, including gasoline and diesel fuel, and heat-producing activities such as welding. Flammable liquids and heat-producing activities must be separated from combustibles to prevent fire and explosion. All spray-painting should be conducted in a spray booth with approved fixtures. The condition and controls of fuel tanks, whether above or below ground, are important for both property and environmental liability.
Crime exposure is from employee dishonesty and money and securities. Background checks, including criminal history, should be performed on all employees handling money. Freight forwarding operations involve a number of transactions and accounts that can be manipulated. There must be a separation of duties between persons handling deposits, billing, ordering, disbursements and reconciling bank statements. Regular internal and external audits should be conducted.
Inland marine exposures include accounts receivable, bailees, computers, goods in transit, and valuable papers and records. Customers' property may be damaged while being transported due to overturn, collision, or theft. Cargo containers should have locks and appropriate alarm systems. Coverage for customers' goods may be purchased using a motor truck cargo carrier coverage with modifications, or companies may offer coverages that are specifically designed for this type of operation. Any items in storage must be marked to prevent incorrect release. All data must be duplicated and kept off site for easy replication in the event of a loss.
Commercial auto exposure may be high if the freight forwarder is involved in one or more legs of the transportation process. Loading and unloading of freight is included on the auto policy. There may be considerable opportunity for contact with the client, who can be injured should the movers drop or overturn cargo. Children may be present during loading or unloading operations, requiring additional caution. All drivers must have training in lifting and handling or items being carried.
They must be well trained and have valid licenses for the items being transported and the type of vehicle being driven. In some cases, a commercial driver's license (CDL) will be required. MVRs must be acceptable and run on a regular basis. Random drug and alcohol testing should be required. Vehicles must be well maintained with records kept at a central location. Accidents can result in the spillage of diesel fuel or other operating fluids from within the truck, requiring cleanup.
What Does Freight Forwarder Insurance Cover & Pay For?
Freight forwarders may be sued for various reasons, including:
Loss or damage of goods: Freight forwarders are responsible for the safe delivery of goods, and if the goods are lost or damaged during transit, the forwarder may be held liable for the loss. If the freight forwarder is sued for the loss or damage of goods during transit, the liability insurance can help pay for the damages awarded to the customer.
Late delivery: If the goods are not delivered on time, the customer may suffer financial losses and may sue the freight forwarder for the damages. If the freight forwarder is sued for late delivery, the liability insurance can help pay for any financial losses suffered by the customer due to the delay.
Misrepresentation or miscommunication: If the freight forwarder provides incorrect or incomplete information to the customer or fails to communicate important details related to the shipment, the customer may sue the forwarder for the damages. If the freight forwarder is sued for providing incorrect or incomplete information, the liability insurance can help pay for the damages awarded to the customer.
Breach of contract: If the freight forwarder fails to fulfill its contractual obligations, such as providing the agreed-upon services or meeting specific deadlines, the customer may sue the forwarder for the damages. If the freight forwarder is sued for breach of contract, the liability insurance can help pay for any damages awarded to the customer.
In summary, liability insurance is essential for freight forwarders to protect themselves against potential lawsuits. It can help pay for legal expenses and damages awarded to the customer in the event of a lawsuit arising from the forwarder's negligence or errors.
Commercial Insurance And Business Industry Classification
- SIC CODE: 4731 Arrangement of Transportation of Freight and Cargo
- NAICS CODE: 488510 Freight Transportation Arrangement
- Suggested Workers Compensation Code(s): 7350 Freight Handling NOC - Coverage Under U.S. Act, 7360 Freight Handling NOC - Coverage Under State Act Only
4731: Arrangement of Transportation of Freight and Cargo
Division E: Transportation, Communications, Electric, Gas, And Sanitary Services | Major Group 47: Transportation Services | Industry Group 473: Arrangement Of Transportation Of Freight And Cargo
4731 Arrangement of Transportation of Freight and Cargo: Establishments primarily engaged in furnishing shipping information and acting as agents in arranging transportation for freight and cargo. Also included in this industry are freight forwarders which undertake the transportation of goods from the shippers to receivers for a charge covering the entire transportation, and, in turn, make use of the services of other transportation establishments as instrumentalities in effecting delivery.
- Agents, shipping
- Auditors, freight rate
- Brokers, shipping
- Brokers, transportation
- Consultants, tariff
- Customhouse brokers
- Customs clearance of freight
- Domestic forwarding
- Foreign forwarding
- Freight agencies, railroad: not operated by railroad companies
- Freight consolidation
- Freight forwarding
- Freight rate auditors
- Freight rate information service
- Shipping documents preparation
- Tariff consultant
- Tariff rate information service
- Transport clearinghouse
- Transportation rate services
Freight Forwarding Insurance - The Bottom Line
To find out exactly what type of policies you need and how much coverage you should carry, speak with a reputable insurance broker who knows your business.
Additional Resources For Commercial Auto Insurance
Learn about small business commercial auto insurance which includes liability and physical damage protection for vehicles that are used for business purposes.
- Insurance Automotive Terms Glossary
- Amazon Delivery Drivers
- Ambulance Services
- Big Rig Truck
- Bobtail Non-Trucking Liability
- Charter And Tour Bus
- Commercial Auto
- Commercial Auto Liability
- Commercial Electric Vehicle Insurance
- Commercial Van
- DoorDash, GrubHub & Uber Eats Drivers
- Dump Truck
- Food Truck
- Freight Forwarder
- Household Goods Moving
- Motor Truck Cargo
- Non-Owned And Hired Auto Liability
- Owner Operator
- Pizza Delivery
- Tow Truck
- Specialty Automobiles, Trucks And Recreational Vehicles
- Specialty Physical Damage
Commercial auto insurance is a type of insurance that provides coverage for vehicles used for business purposes. This includes vehicles such as delivery trucks, company cars, and other vehicles that are used to transport goods or employees.
Commercial auto insurance is necessary for businesses that rely on their vehicles to conduct their operations. It helps to protect the business from financial losses due to accidents, theft, or other unexpected events. It also helps to protect the business from potential lawsuits that may arise from accidents involving their vehicles.
There are several types of coverage options available under business auto insurance policies. These include:
- Liability coverage, which covers damages or injuries that you or your employees cause to others while operating a business vehicle.
- Physical damage coverage, which covers damages to your own vehicle, is also available.
- Other coverage options may include medical payments, uninsured or underinsured motorist coverage, and rental reimbursement.
It is important for businesses to carefully consider their commercial auto insurance needs and to choose a policy that offers the right level of coverage. This can help to ensure that the business is protected in the event of an accident or other unexpected event.
Minimum recommended small business insurance coverage: Building, Business Personal Property, Business Income and Extra Expense, Accounts Receivables, Computers, Motor Truck Cargo, Valuable Papers and Records, Employee Dishonesty, Money and Securities, General Liability, Employee Benefits, Umbrella, Motor Carriers Liability and Physical Damage, Hired and Non-owned Auto & Workers Compensation.
Other commercial insurance policies to consider: Earthquake, Flood, Mobile Equipment, Signs, Warehouse Operators' Legal Liability, Cyber Liability, Employment-related Practices, Environmental Impairment, Underground Storage Tank, Stop Gap Liability and International Coverages.