Risky Business

Response to The Multi Carrier Driver Push thread

 Hi Everyone,

I've been following the rather lengthy thread “The Multi Carrier Driver Push” on E.O., as were 3,791 other people if the count is correct.  I always hesitate to chime in on threads, simply because I rarely have the time to stay on top of the communication and continue conversations.

If you’ll all indulge me, I’d like to take this opportunity here to give my opinion on the challenges of the “Multi” Insurance model and what we're all seeing play out:

It is legal under a correctly structured insurance model for a Motor Carrier to require, in writing, that their Owner Operators UNDER 10K GVW provide their own Primary Liability and Cargo Insurance.

The problem is, it’s hard for everyone to MONITOR those numerous Owner Operator policies.

Unlike other Contractor/Subcontractor insurance models, FMCSA casts their own legal requirements which oblige the burden of a 91X filing, a "promise to the public that all units owned or operating under an MC number be correctly insured at all times."

So what’s changed?

A very small number of insurance companies have adapted their insurance language in order for the “Multi” model to pay out in a serious Liability or Cargo Claim.

Most still expect the Motor Carrier policy to pay FIRST, regardless of structure or request of the Insured.

The insurance companies which have adapted their policy language demand close underwriting of the initial policy(s) and audit regularly to make sure procedures are in place to ensure that all those Owner Operators with their own policies have correct insurance language on THEIR end.

To be clear, when an Owner Operator does NOT have the correct insurance language on THEIR end, the Motor Carrier's insurance company is still responsible for that 91X… they’re on the hook for that "promise to the public" on something they might not know anything about without audits.

So that’s why in most cases, if an insurance company gets off a Motor Carrier risk, it’s because of audit results.

When Motor Carriers started “looking the other way”, and allowed their leased on Owner Operators to provide proof of insurance with policies that were clearly not designed for Expediting (on any structure), Insurance Companies started to audit even more to see if numerous Owner Operator policies were providing the coverage required to trigger.

This is not about radius or number of companies an Owner Op is hauling for, this is about the insurance policy language, coverage and the agreement in that contract of how it MUST PAY in event of a loss.

Some “Multis” are insured correctly, unfortunately too many Motor Carriers and their Owner Operators are not.  This has been bad for the entire risk pool.

On a second front, load providers and business partners in Sylectus & TEANA have a “Circle of Trust”.  Their understandable concern is their exposure to uncovered losses from improperly insured Motor Carriers and Owner Ops that will leave them holding the bag. No one wants to pony up THEIR excess insurance because they brokered a load to a Motor Carrier/Multi Owner Op policy combo that doesn’t “trigger” on a claim.

Ultimately, regardless if the “Insured” is a Motor Carrier or Owner Op, it is insurance fraud and illegal to represent one’s self as something they are not.  Every insurance contract, regardless of type, requires “Full Disclosure” of the risk or consequence of lawsuit and possible criminal charges.

All Commercial Policies are not the same, or there would just be ONE for everyone.

...A Carpenter’s policy would cost and trigger the same as a General Contractors policy.

In the insurance world, when someone chooses to misrepresent the facts of the risk…it’s likely to get caught eventually.

To end on a lighter tone and as Sheldon’s Mom would say, “A cat can have kittens in the oven, but that doesn’t make ‘em biscuits.”

…Thanks for listening.

Shelly