We are asked nearly every day to describe the differences between Truck Broker Liability coverage (TBL) and Contingent Auto Liability coverage (CAL). To understand the differences, it is important to look at the history of coverage for truck brokers.
History of Coverage
Heretofore, there was only Contingent Auto Liability with one exception, the AIG program of Primary Truck Broker Liability (TBL) – an unprofitable program that has now shut down. That program evolved out of the need to insure truck brokers on a primary basis- as many producing agents in the insurance marketplace felt the conventional CAL programs did not offer comprehensive coverage. The problem with the AIG program was that it was only designed for the largest truck brokers and the minimum premium was too expensive for the average sized truck broker to consider. Also, many shippers required additional insureds and waivers of subrogation, along with primary and non-contributory wording, which AIG was not willing to offer.
That changed with the Markel TBL program designed for all truck brokers. Now there are both Hudson and Beazley programs that offer TBL as well. These are the only three mainstream TBL programs in the marketplace. TBL coverage is more important today as shipper’s demands on both truckers and truck brokers have changed. Shippers have gotten much more educated relative to coverages and they want a truck broker to have several things:
♦ to have primary coverage
♦ to add the shipper as an additional insured
♦ to defend and indemnify the insured (and the shipper if named as an additional insured) irrespective if the trucker’s coverage defended/indemnified or not
♦ to waive subrogation
Discussion
Are CAL programs as worthless as the marketplace thinks they are? Absolutely not.
Is CAL coverage as good as TBL coverage? Absolutely not.
Let’s look at some of the differences:
♦ CAL – Covers damages resulting from auto liability that may arise on a contingent basis. That is, it will cover the broker if the carrier’s primary auto liability coverage fails to cover a claim.
♦ TBL – Covers bodily injury or property damage resulting from the ownership maintenance and use of a carrier’s auto arising out of and emanating from the insured’s operations as a transportation broker.
Note the TBL does not mention being contingent and is therefore primary coverage (a very big deal). The coverage form is a hybrid policy (GL & Auto) covering a truck broker’s liability arising out of an auto claim on behalf of a trucker to whom the insured brokers. The TBL’s wording comes straight out of an ISO commercial auto policy.
The major differences are the specific conditions that could negate coverage for an insured under the CAL policy that are not present in the TBL policy:
♦ Defense/Duty to Defend- Both programs have a duty to defend, but the CAL will not defend if there is other valid insurance. So a truck broker could be sued and not defended if the trucker’s coverage is providing defense. A big deal.
♦ Punitive and Exemplary Damages- Excluded under the CAL and not under the TBL (some smaller accounts are endorsed to have an exclusion for same).
♦ Annual Aggregate- CAL has an annual aggregate (which is the most the insurer will pay during a policy period). The TBL is like an auto policy and has no annual aggregate (some smaller accounts are endorsed to add aggregate limits).
Agent’s Duty
We are all in the business of trying to sell the best coverage to protect the insured. In the past, when there was only CAL, there was no other choice in coverage. It now makes sense to offer TBL coverage if a prospective insured meets risk acceptability and best practices standards. Note as more and more shippers become aware that this coverage is now available, TBL coverage will help truck brokers meet risk acceptability standards with new shippers.