Professional liability

How does professional liability work for a broker or dispatcher?

A broker or dispatcher sells judgment and coordination, not a truck. When something goes wrong, the claim often is not "your vehicle hit me" but "you booked the wrong carrier," "you missed the appointment," "you gave us the wrong rate," or "you didn't do what the contract says." The loss is money, not an injury or a damaged load. That is the gap professional liability is written for.

It generally pays damages you are legally responsible for and your defense costs for covered claims, up to the policy limit. Four things to look for on the policy:

• Covered services. The policy describes the professional services it covers, such as freight brokerage, dispatching, or logistics consulting. A service not described may not be covered. Make sure the description matches what you actually do.
• Claims-made basis. Some professional liability policies are claims-made, meaning coverage depends on when the claim is made and reported, not only on when the mistake happened. Ask whether yours is, what the retroactive date is, and what happens when you change policies or retire.
• Defense inside or outside the limit. In some policies, defense costs reduce your limit. In others they do not.
• Retention. The amount you pay before the policy responds.

Where this sits next to other coverages. A cargo loss is motor truck cargo or a contingent cargo form. A bodily injury or property damage claim arising from a hired carrier's accident is contingent auto liability. An office slip-and-fall is general liability. Professional liability is the one that answers "our service was wrong."

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

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

Often covered

• Claims that you made an error or left something out in a covered professional service, such as a mis-booked load, a wrong rate confirmation, or a missed pickup window
• Claims about negligent selection or vetting of a carrier, depending on the wording
• Claims about incorrect paperwork or documentation prepared in the course of the service
• Defense costs for covered claims, under many policies

Often not covered, or covered only with conditions

• Bodily injury and property damage. Those go to general liability or contingent auto liability. Many professional liability policies exclude them.
• Cargo loss or damage. That is motor truck cargo or a contingent cargo form.
• Failure to pay a carrier or shipper. Claims that a broker simply did not pay what it owed are commonly excluded as a contract or debt issue. A broker's financial security is a different mechanism: see surety bonds.
• Fraud, intentional acts, and criminal acts. Commonly excluded
• Fines, penalties, and regulatory actions, depending on the policy
• Fees you charged. A claim that a fee should be refunded is often not a covered loss.
• Contractual liability and guarantees. Promising a result in a contract can fall outside the coverage.
• Employment claims and cyber losses. See management liability and cyber.
• Acts before the retroactive date, on a claims-made policy

Read the definition of "professional services" and the exclusions before you rely on the policy. These are common patterns, not universal ones.

What affects the cost of professional liability?

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

• Services you perform. Brokerage, dispatching, freight forwarding, or consulting
• Volume. Revenue, gross receipts, or loads handled, depending on how the insurer rates it
• Limit and retention
• Retroactive date. The earlier it reaches back, the more the policy has to cover
• Contracts and customers. Terms you accept, indemnities, and the size and type of customers
• How you vet carriers. Written procedures and records
• Claims and incident history
• Staff and experience. Number of staff and years in business

Who typically needs professional liability?

• Brokers and dispatchers: The main audience. Customers and contracts may ask for proof of E&O, and a mistaken booking is the claim this coverage is written for.
• New authority: A new brokerage may be asked by shippers for E&O along with other coverages and the broker's financial security. Have your service description ready.
• Small fleets: A fleet that also books freight for other carriers, dispatches for owner-operators, or sells logistics services may have professional exposure. Ask whether your auto and cargo policies address it.
• OTR and local haul: Mostly not a direct fit for carriers who only haul their own loads.
• Couriers: Usually not, unless you also arrange or dispatch work for others.
• Towing and repair: Shops and tow companies that offer consulting, inspection, or estimating services may want to ask whether those services are covered elsewhere.