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Resolving High Freight Loss Claims


Photo courtesy of: Maren Guse,

Operating as an independent, small broker or a carrier with 5 to 20 trucks, one high damage freight claim can make the difference between maintaining a successful trucking business to having to shut the doors completely.

With the rise of cargo theft increasing by an overall average of nearly 600% within the last few years, the average loss value across all categories of incidents was $161,676 per quarter as last reported in August, 2013.

In fact, on a scale of 1-5, with 5 being the highest for theft risk, the United States sits at a scale of 4 with “deceptive pickup” still being one of the highest forms of methods used by thieves. This method represents 6.4% of cargo theft incidents.

Should a small carrier or independent find themselves in such a situation where they are at a loss of tens of thousands of dollars, what happens if their insurance carrier does not pay the high damage claim? In many cases, the smaller carrier and independent will find that the insurance company will deny the claim due to what is known as “Intellectual Act of Driver.”

Case in point:

A small broker turned over a high, over-sized load to a small carrier operating around 20 trucks. The driver of the flatbed was told by the pilot car driver in front that he was good to go for clearance to an upcoming bridge. Unfortunately, he was mistaken. The truck driver ended up topping out the bridge, causing nearly $30,000 in damages.

With a high damage claim and the insurance company denying coverage due to “Intellectual Act of Driver,” $30,000 could prove to be the end of a business for both broker and independent. Such incidents can result in the smaller broker not being able to pay such a large claim and fines, unable to pay the carrier and driver as well as not capable of paying the bond.

Same can be true for cases involving “deceptive pickup.”  How easy is it for someone posing as a driver or associate for a carrier to enter a shipper claiming to be the pickup for a particular high value load?  Shippers rarely confirm a driver’s identity or even the markings on the truck, such as the Vehicle Identification Number (VIN). By not doing so, how can the shipper be absolute certain that the vehicle used for pickup is valid?

Smaller brokers also find themselves the target of cargo thefts by not confirming the VIN and/or identity of the driver and vehicle. Because of this, it remains that cargo theft is a serious cause of brokers and independents taking the responsibility  for such high damages, fines and claims which can ultimately lead to the failure of their business.

Out of court settlements for brokers and independents

In the case of the above over-sized load incident, the broker was caught in a serious “who to blame” scenario. The broker needed the claim paid but the insurance company denied it; the truck driver pointed at the pilot car operator while the operator pointed at the truck driver. Having to take the issue to court would only further compound expenses for all parties involved.

An important lesson to learn for small brokers, as well as independents, is that in serious cases such as these where claim damages, fines and the possibility of court costs could ruin their company or seriously damage their business profitability, Network FOB can help all parties involved to settle the damages without having to go to court.

In the over-sized load claim, Network FOB assisted the agent by offering an affordable finance plan to cover the cost of the $30,000 damage claim. Specializing in the handling of freight loss claims, the Network was founded by Executive Chairman, Tim Taylor and offers services for truckload, heavy haul, LTL, inter-modal, international, expedited and small parcel.

By offering the smaller agent in this case a payment plan for 11 months at 8%, resulting in a monthly payment of $2,900, the agent was able to pay the claim and not fear losing the business. Where claim settlements are usually based on a 50/50 split, as in the past when it was often seen at 55/45 and even 60/40, NetworkFOB has offered the ratio of a 80/20 split, easing the burden for many brokers and truckers when faced with a high damage claim where the insurance company denies coverage.

In my interview with Mr. Taylor, he also offered advice for shippers, brokers and drivers in order to further assist in the battle against truck cargo theft:

“It’s a matter of wising up. Brokers and shippers need to check the certificate of insurance. They need to verify the VIN on the truck, the markings on the truck and trailer. The shippers especially have to get more involved. As a broker, how do you know that the driver and truck VIN and markings are valid? We just can’t take their word for it when they are on the phone, a thousand miles away. Have them email or fax you the required documents and then relay that information to the shipper.

“Drivers must keep up on their paperwork and documents. They need to be careful when talking on the phone with the broker or shipper, taking down all the load information. These cargo thieves will stand by, listening, taking down your notes and load info and beating them to the shipper. They have all the info the driver just provided for them; why would the shipper not believe them?”

“The shippers have to get more involved by checking the vehicle markings and numbers, as well as the information on the so-called pickup driver. This will play a major role in combating cargo theft.”

You can read more about their services via the NetworkFOB press release.

© 2014, Allen Smith. All rights reserved.

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By: Allen Smith

Allen Smith is a 37 year veteran who started at an early age in a household goods family moving business. He began driving straight trucks in 1977 and moved to the big rigs in 1982. His experience within the industry includes; owner operator, company driver, operations manager, and owner of a long distance HHG moving business, taking many of the long haul moves himself when needed. Allen Smith, a truck driver advocate who is driven by the desire to help others succeed within an industry where injustice, unrewarded sacrifice, and lack of respect and recognition exists. Allen and his wife Donna are hosts of Truth About Trucking ”Live” on Blog Talk Radio. Other websites include AskTheTrucker, TruckingSocialMedia, NorthAmericanTruckingALerts, TruthAboutTrucking, and many Social Media websites. In 2011 Allen and Donna hosted the first Truck Driver Social Media Convention, designed to create unity and solutions for the trucking industry. This is now being extended through the North American Trucking Alerts network as those within the industry join forces for the betterment of the industry. Allen strongly supports other industry advocates who are also stepping up to the plate to help those who share honesty, guidance and direction. He believes that all those involved in trucking need to be accountable for their part within the industry, including drivers, carriers, brokers, shippers, receivers, etc… The list of supporters and likeminded people grow daily, networking together and sharing thoughts and ideas for the betterment of trucking. He has coined the popular phrase "Raising the standards of the trucking industry"

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