Contingent auto liability

How does contingent auto liability work for a broker or shipper?

If you arrange a load and a carrier you hired causes an accident, the injured person can sometimes look beyond the carrier, at the broker or shipper that arranged the move. The carrier's own primary auto liability is supposed to respond first. Contingent auto liability is coverage written for the business that hired the carrier, for claims where that carrier's insurance doesn't respond or isn't enough.

Points that decide how it works:

• It is contingent. It is generally secondary to the hired carrier's coverage, not a first-line policy. Read the policy's wording on when it "kicks in."
• It is not the carrier's policy. A carrier operating for hire still needs its own liability coverage and, in many cases, must meet the federal minimum. See primary auto liability.
• Names vary. Insurers use different names for similar coverage, such as contingent liability, broker contingent auto liability, or shipper's interest liability. What it covers depends on the wording, not the name.
• Carrier vetting is part of the picture. Many policies and contracts ask what steps a broker takes to verify a carrier's authority and insurance. Keep records.

Brokers and the broker bond. A freight broker has its own separate federal financial security requirement, met with a surety bond or a trust fund, which is a different thing from insurance. See surety bonds for how the bond works. A bond doesn't replace contingent auto liability, and contingent auto liability doesn't replace the bond.

What does contingent auto liability cover, and what doesn't it?

Policies vary. Read your declarations, definitions, and exclusions. In general:

Often covered

• Bodily injury and property damage claims against you arising from a hired carrier's operation of a vehicle, where the carrier's own coverage doesn't respond or is insufficient, up to the policy limit
• Legal defense for covered claims, under many policies

Often not covered, or covered only with conditions

• Trucks you own or operate. It is written for hired carriers. Your own trucks need primary auto liability.
• Claims the hired carrier's policy covers. Contingent coverage is generally secondary.
• Cargo loss or damage. That is motor truck cargo or a contingent cargo form.
• Carriers you didn't vet, or ones your policy excludes, depending on the wording
• Intentional acts, fraud, and certain pollution losses
• Professional errors and omissions. That is professional liability.
• Contractual liability beyond the policy, under many policies

These are common patterns, not universal ones. Because contingent coverage is secondary and conditional, the wording matters more here than for most lines.

What affects the cost of contingent auto liability?

We don't publish prices. Cost is set by insurers and the licensed agents you work with. The factors that generally move it:

• Volume of loads you arrange. Number of loads or total freight revenue
• Who you hire. How you select, vet, and monitor carriers
• What the loads are. Commodity, with hazardous materials treated differently
• Limit. The limit you or your contracts require
• Your operation. Broker, freight forwarder, shipper, or third-party logistics provider
• Carrier insurance requirements you enforce. Minimum limits and certificate checks
• Claims history

Who typically asks about contingent auto liability?

• Brokers and dispatchers: The main audience. Brokers who hire carriers often ask about it. Dispatchers who don't arrange freight or hire carriers have a different exposure.
• Shippers and third-party logistics providers: Businesses that hire carriers directly can face similar exposure, whether or not they call themselves brokers.
• New authority: Carriers with their own trucks need primary liability. Contingent coverage is generally not for you.
• Small fleets: A fleet that sometimes hires other carriers to cover overflow loads may ask about it. Ask your insurance agent whether it applies.