We require you to have a minimum of $25,000 cargo insurance...

ExFedEx · Jan 11, 2013

As I mentioned earlier in another thread, I am just a regular Joe Blow with one van, a "Common Carrier" as defined by Rocketman's post of "http://www.fmcsa.dot.gov/about/other/faq/faqs.aspx#question6". If I sign a contract with this company than I am defined as a "Contract Carrier" per the same FMCSA FAQ #6. Either way, as I am understanding it, and to me it can't be much clearer than what it says, that I do not need to carry cargo insurance. Here is the direct quote from the email telling me I have to have cargo insurance:

"We require you to have a minimum of $25,000. cargo insurance. in case you are
Involved in an accident to cover any cargo you may have at the time.

Please advise "

Second email reply:

"if you have our freight in your vehicle then we need to be covered in case the
freight is damaged "

Third email reply, this time from the VP of Safety:

"If you have our freight in your vehicle to deliver and it is damaged or stolen you have to have insurance to pay for the loss. Our insurance will not pay because you do not work for us."

End of quotes.
So, without being a pain in the rear and appearing to be argumentative with this cubicle person who obviously doesn't believe the link I provided (through Rocketman) and is doing what her manager is telling her to do (he/she doesn't know the FMCSA either), it might only be a minor expense to buy the cargo insurance and make the big bucks (?) with this company.

Feedback please...

osumike33 · Jan 11, 2013

Interesting...appears that the FMSCA does not now require cargo insurance, but would think that a broker or shipper could require it if you want to work with them, which I am presuming a lot of shippers/brokers would. Here is a small blurb about the 'final' rule, linked below:

In its discussion of the proposal, the Agency noted that motor carriers typically have cargo insurance well in excess of the regulatory requirements, in part because many shippers require such insurance as a condition of doing business. Some common carriers offer shippers the opportunity to purchase additional cargo insurance. Shippers have always had the opportunity to purchase cargo or inland- marine insurance directly from insurance providers rather than rely on motor carriers and freight forwarders to provide coverage for loss and damage risks.

Final Rule - Federal Motor Carrier Safety Administration

As typical, they can make what one would think would be a fairly simple straight-forward response into pages and pages of legaleze.

davekc · Jan 11, 2013

You are a leased contractor IF you are actually leased to the carrier. If you operate with YOUR own authority or on a contract by the load arrangement (partner carrier), then you are the carrier and must provide cargo insurance.

If you are hauling the carriers freight and you are leased to them, why would you pay to insure THEIR load?

jelliott · Jan 11, 2013

davekc said:
You are a leased contractor IF you are actually leased to the carrier. If you operate with YOUR own authority or on a contract by the load arrangement (partner carrier), then you are the carrier and must provide cargo insurance.

If you are hauling the carriers freight and you are leased to them, why would you pay to insure THEIR load?

I agree with Davekc completely. My opinion if you are leased to a carrier and hauling their freight, than the carrier should provide the insurances and manage any claims. I would question the intent if someone is doing it differently. They are shifting expense and burden to the owner operator for some reason. It could be profit, conserve cash outlay, bad insurance history or something else possibly.

osumike33 · Jan 11, 2013

davekc said:
You are a leased contractor IF you are actually leased to the carrier. If you operate with YOUR own authority or on a contract by the load arrangement (partner carrier), then you are the carrier and must provide cargo insurance.

If you are hauling the carriers freight and you are leased to them, why would you pay to insure THEIR load?

I took it that the guy WAS the carrier, had his own authority...evidently my mistake. But from what I read and posted, motor carriers are not required by FMCSA to have cargo insurance...which seems strange, but here is what it says:

SUMMARY: The Federal Motor Carrier Safety Administration eliminates the requirement for most for-hire motor common carriers of property and freight forwarders to maintain cargo insurance in prescribed minimum amounts and file evidence of this insurance with FMCSA. Household goods motor carriers and household goods freight forwarders will continue to be subject to this cargo insurance requirement.

DATES: Effective March 21, 2011.

Or am I reading this incorrectly? Not that it matters, I'm sure if I had my own authority I would want plenty of cargo insurance, required or not....

Rocketman · Jan 11, 2013

The problem appears, to me anyway, to be whether or not the OP is leased to the carrier or operating on his own authority. I suspect he is doing the multiple carrier thing. In that case, who does carry the cargo insurance? I would think that it would be by far simpler for the o/o to carry it. Of course, I would want more of a premium rate to cover the cost, but....well, you know.

highway star · Jan 11, 2013

As a practical matter, where would someone find shippers willing to put their freight on a truck and not have it insured?

Rocketman · Jan 11, 2013

ExFedEx said:
As I mentioned earlier in another thread, I am just a regular Joe Blow with one van, a "Common Carrier" as defined by Rocketman's post of "http://www.fmcsa.dot.gov/about/other/faq/faqs.aspx#question6". If I sign a contract with this company than I am defined as a "Contract Carrier" per the same FMCSA FAQ #6. Either way, as I am understanding it, and to me it can't be much clearer than what it says, that I do not need to carry cargo insurance. Here is the direct quote from the email telling me I have to have cargo insurance:

"We require you to have a minimum of $25,000. cargo insurance. in case you are
Involved in an accident to cover any cargo you may have at the time.

Please advise "

Second email reply:

"if you have our freight in your vehicle then we need to be covered in case the
freight is damaged "

Third email reply, this time from the VP of Safety:

"If you have our freight in your vehicle to deliver and it is damaged or stolen you have to have insurance to pay for the loss. Our insurance will not pay because you do not work for us."

End of quotes.
So, without being a pain in the rear and appearing to be argumentative with this cubicle person who obviously doesn't believe the link I provided (through Rocketman) and is doing what her manager is telling her to do (he/she doesn't know the FMCSA either), it might only be a minor expense to buy the cargo insurance and make the big bucks (?) with this company.

Feedback please...

I honestly don't think your understanding the "contract carrier" correctly. I believe that you are probably confusing "contract carrier" with "independent contractor". Most of us are "independent contractors", much, much different than having carrier authority of either kind. I believe that resolution of your problem lies in accurately determining what exactly you are doing....or wanting to do.

moose · Jan 11, 2013

jelliott said:
. I would question the intent if someone is doing it differently. They are shifting expense and burden to the owner operator for some reason..

This is the way OTR TruckLoad carriers work, for the most parts, when leasing an O/O. not only are they require the O/O to provide his own 'cargo liability', but the leased O/O require to buy coverage directly from the carrier & those premiums are deducted from the settlements. {this is only one of the items that made OOIDA take LandStar to court back in 2002.}.
this is a litmus test for a carrier integrity. here's how you can test your carrier: call the insurance provider and ask for an Email/Fax confirmation stating the premiums charges by the carrier. so you can compare it to your settlements deductions. or call your carrier and ask for the same info.
simple.
most OTR carriers will immediately terminate your contract if you dare to ask this question.
-"a women gets home early from work, in the middle of the afternoon and see her beloved Husbands cheating on her via the bedroom window"
"without entering the house, she go to her favorite coffee shop, and promise to herself never to go home again midday without calling ahead"-
same deal when leasing to a carrier.

ExFedEx · Jan 11, 2013

Rocketman said:
I suspect he is doing the multiple carrier thing.

Bingo. I should have stated that I do NOT have my own authority, and am doing the multiple carrier thing. I already have the commercial insurance, and the brokers are the ones (as I understand it) who need to have the cargo insurance. Now, FAQ #32 of "http://www.fmcsa.dot.gov/about/other/faq/faqs.aspx#question6" (question 32, not 6) seems to contradict what is defined as "common carrier" and "contract carrier", with the exception of the key word "authority". That's the gotcha. I am not leased to the carrier, but I do check in with different brokers every morning to see what is happening out there. So am I an "independent carrier" as opposed to a "common carrier"? I have signed contracts with a couple of these guys, so now according to the FMCSA I am a "contract carrier", at least with those who I've signed a contract with. Talk about technicalities and semantics, all I'm trying to do is pay a mortgage, live a life and hopefully be able to save for a quiet retirement. Bottom line is, is this trucking company wrong in telling me I need the cargo insurance or not? I don't want to get into a ****ing contest with them and then end up screwing myself proving that I'm right and they are wrong; these guys are the hands that will feed me. But at the same time, I'd like to not have to spend any more money on insurance that I don't need.

Rocketman · Jan 11, 2013

ExFedEx said:
Bingo. I should have stated that I do NOT have my own authority, and am doing the multiple carrier thing. I already have the commercial insurance, and the brokers are the ones (as I understand it) who need to have the cargo insurance. Now, FAQ #32 of "http://www.fmcsa.dot.gov/about/other/faq/faqs.aspx#question6" (question 32, not 6) seems to contradict what is defined as "common carrier" and "contract carrier", with the exception of the key word "authority". That's the gotcha. I am not leased to the carrier, but I do check in with different brokers every morning to see what is happening out there. So am I an "independent carrier" as opposed to a "common carrier"? I have signed contracts with a couple of these guys, so now according to the FMCSA I am a "contract carrier", at least with those who I've signed a contract with. Talk about technicalities and semantics, all I'm trying to do is pay a mortgage, live a life and hopefully be able to save for a quiet retirement. Bottom line is, is this trucking company wrong in telling me I need the cargo insurance or not? I don't want to get into a ****ing contest with them and then end up screwing myself proving that I'm right and they are wrong; these guys are the hands that will feed me. But at the same time, I'd like to not have to spend any more money on insurance that I don't need.

What kind of truck are you operating?

ExFedEx · Jan 11, 2013

Rocketman said:
What kind of truck are you operating?

Just a regular cargo van. E-350.

Rocketman · Jan 11, 2013

ExFedEx said:
Just a regular cargo van. E-350.

In that case, I'm pretty sure that the contract/common carrier explanations have nothing to do with your operation.

I have an opinion on who should provide the cargo insurance (you), but I have nothing to back that opinion up.

tknight · Jan 11, 2013

25k. Your getting off cheap all 3 of the companies I drive for *** an o/o want 100k coverage!! Which I'm more than willing to cover as I don't like the thought of being on the hook from relyin on some one to do it for me .i worked for a company that wanted to take 50 a week for their insurance I told em to stick it and pushed my coverage in their face! 1000 vs 2500 a year is a big deal to me

Rocketman · Jan 11, 2013

$25k sounds cheap to me too. $100k would seem more appropriate.

Turtle · Jan 11, 2013

The key to all of this is the "We require you to have..." statement.

You: "The FMCSA doesn't require it."

Them: "Well, we do."

jelliott · Jan 11, 2013

Well another example if why I think the multi carrier model. The carriers are signing most contracts with customers and carriers that require 100k. So then they only have the van get 25k. Then the carrier gets a cert for one truck showing 100k for the customers. NICE.

Rocketman · Jan 11, 2013

It will catch up sooner or later. I wouldn't want to be the guy with $25k in cargo insurance, transporting $90k worth of freight. I'm pretty sure that I would be liable for the shortage in the event of a claim.