It is easy to find an explanation of Hired and Non Owned coverage from a business auto perspective, but there are not many good examples of this coverage from a trucking stand point. If you are in the trucking business you will often broker a load to another trucker, whether it is because you are too busy, or you don't have the right equipment, brokering is everywhere in the trucking business. What you may not know, is that when you broker that load out to "John's Trucking" you are liable for an accident as well. Furthermore, most truck insurance policies don't have coverage for this exposure. Let's go into more detail.
It is the busy season and you are having to broker loads in order to keep your customer happy, whether it be dirt, sand, gravel, freight, reefer goods, general freight, cars, boats, it doesn't really matter; you are opening yourself up to a big liability exposure that most truck insurance policies don't cover unless requested. The exposure I want to discuss doesn't come into play frequently, but when it does come into play it is always a significant sum of money that would put most companies out of business.
Although the sub hauler has coverage of let's say $1 Mil liability limits, what happens when the attorneys and the courts want to go after more money than is available on your sub hauler's limit. Bingo, they name you (the broker) on the lawsuit as well. They can do this because their truck was in that location at that time because you dispatched the load to them. The courts have proven over and over now that, if you broker the load and if that sub hauler's limits are exceeded you are liable and your company will pay. Most people would say no big deal, my insurance should cover that, right? The only way your company will cover you for this exposure is if you have "Hired & Non Owned" coverage in force at the time of the loss. This coverage is usually equal to your liability limits.
Most trucking insurance companies will add this coverage when requested by the insured, but many insured's do not add the coverage when they find out how much it costs. Like anything else in the insurance world, if the possibility of paying out large sums of money is high the coverage will be expensive, and Hired & Non Owned coverage is no exception for large scale brokers. If you are just a Mom and Pop trucking company with an occasional load being brokered this coverage averages around $500 per year. If you are a large broker with 1099 going to sub haulers exceeding $500,000 per year, it is usually based on a percentage of the gross sub haul expense. Cost for this coverage will vary from 1% all the way up to 5% of the cost of the sub haulers, pretty steep especially if you are not getting a percentage for a trailer lease. Although many companies broker large amounts of business with no coverage for this exposure, sooner or later most large broker's will directly or indirectly have an experience with this coverage which causes them to factor this insurance expense into the cost of brokering loads.
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