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Freight Brokers Can Protect Themselves Against LTL Claims

07/27/2023 18:57

It would be reasonable to assume that remunerating solely for the quantity of space consumed during the shipment of a few pallets is a judicious and practical decision.

The utilization of less-than-truckload shipping has enabled businesses to efficiently transport smaller packages at a reduced cost.

This approach has emerged as a significant facet of the shipping strategies employed by numerous retailers in recent times.

Consequently, there has been a surge in the number of freight brokers and third-party logistics providers (3PLs) managing Less-Than-Truckload (LTL) shipments both domestically and across borders.

The factors that freight forwarders and shipping companies need to think about are the shipping process, freight claims, freight carrier to execute shipment, limited liability, cargo claim/damage claims/damaged freight/freight damage, freight moves, freight costs/competitive rates/freight rates, and the liability for freight charges.

In light of this, they require additional insurance coverage to safeguard against unforeseen circumstances that could bring financial risk.

Who Holds the Responsibility of Covering Claims

Although the responsibility of covering claims typically falls on carriers, it is important to note that motor carriers and their drivers may not possess adequate insurance coverage, potentially resulting in claim disputes.

This can create additional work for freight brokers and third-party logistics providers, who may ultimately incur the costs associated with the carrier's insufficient coverage.

According to Jamie Cannon, the Vice President of a logistics service company which is a freight insurance agency based in Tennessee:

"LTL freight presents distinct vulnerabilities that differ from those of full truckload shipping due to its numerous touch points. As a result, the mode is more susceptible to a heightened risk of claim frequency."

In contrast to the standard practice of sealing full truckload freight at the point of loading and unsealing only at the point of delivery, a less-than-truckload (LTL) route entails multiple stops along a predetermined route, which inevitably involves additional handling by multiple parties.

This presents a greater likelihood of mishandling, jostling, or temperature changes that could potentially prove detrimental to certain types of cargo.

The Types of Freight Matters

According to Cannon, the transportation of refrigerated or temperature-sensitive cargo presents a significant challenge. The frequent opening and closing of the trailer can disrupt the required temperature conditions, leading to adverse consequences such as product spoilage or multiple instances of financial loss.

In the realm of freight brokerage, safeguarding the transportation of goods is paramount.

While it is advisable to obtain insurance coverage for full truckload freight, it is equally prudent to secure LTL cargo insurance.

This strategic measure shields freight brokers from exposure to carrier coverage deficiencies. Nonetheless, LTL shipments frequently fall short of adequate coverage, leaving freight brokers to bear the brunt of exorbitant costs.

It is recommended that freight brokers take precautionary measures in ensuring that the LTL commodity is not omitted from carrier insurance policies and that the assessed valuation aligns with cargo value.

It is furthermore advised that the acquisition of a separate LTL policy be considered to mitigate any potential financial losses resulting from damage or loss claims.

When to Get Individual Policies or Usage-Based Insurance Program?

In instances where the shipment holds a moderate value, the opportunity presents itself for freight brokers, shippers, and motor carriers to procure individual primary policies per load through the reputable Reliance Usage-Based Insurance.

This arrangement allows for a reduced deductible, applicable across the board, regardless of cargo value.

By employing this innovative, usage-based insurance program, one may also opt for coverage of pricier cargo. The program provides coverage for gaps typically unaddressed by other policies, and offers ease of insuring on a per-load basis, even in cases of less-than-truckload cargo and when cargo limits are a factor.

There are a lot of insurance companies that boast a team of seasoned professionals with extensive expertise in freight brokerage coverage, trailer liability, and application programming interface (API)-enabled usage-based insurance solutions.

If you are uncertain about fulfilling insurance coverage mandates or apprehensive about potential coverage shortcomings, our team at Labworks USA can refer a company that, like RoadEX,  is well-prepared to address any queries or concerns you may have.

Conclusion: Taking Proactive Measures to Safeguard Against LTL Claims

To wrap up, it is imperative that freight brokers adopt proactive strategies to shield themselves from LTL claims. One important step is to thoroughly vet the carriers they work with, ensuring they have a good track record of delivering goods safely and on time. By conducting thorough background checks and verifying their insurance coverage, brokers can minimize the risk of partnering with unreliable carriers.

Another key measure is to clearly communicate expectations and requirements with both shippers and carriers. This includes providing detailed instructions on how to properly handle and secure the freight, as well as outlining any specific delivery requirements or deadlines. By setting clear guidelines from the outset, brokers can reduce the likelihood of disputes arising due to misunderstandings or negligence.

Furthermore, implementing a robust claims management process is crucial for protecting against LTL claims. Brokers should maintain comprehensive documentation of all shipments, including proof of delivery receipts and photos if possible. This will provide evidence in case a claim arises and help brokers navigate through any potential legal complications.

By taking these proactive measures, freight brokers can significantly reduce their exposure to LTL claims and ensure smoother operations within their business.

If you want to stay updated with the current trends in the trucking, freight, and logistics industry, stay connected to us.

Moreover, are you looking for a company to help you to stay DOT and FMCSA compliant? We at Labworks USA can support you.

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