The Transportation Intermediaries Association, which has about 10% of the nation’s freight brokers as members, is an extremely political body and sometimes is viewed as too self-serving to its constituency–lacking in what might benefit other non-member freight brokers and other related industries. But that is what lobbyists are supposed to do, right?
That said, they can provide important, effective education to these very freight brokers and to the stakeholder industries that serve freight brokers. To this end, they brought up an article that piqued our interest, and we felt it is worth sharing. It is on the rather dry subject of record keeping (Big Yawn…)
Why is this important? Because at the end of the day, it can save a freight brokers’ bacon, and without adhering to both requirements and best practices, can conversely cause irreparable harm to a freight broker’s livelihood. So, we are approaching this in 2 ways:
- What record keeping is required by the Federal Motor Carrier Safety Administration (FMCSA)?
- And absent regulation, what are record keeping best practices for third party bodily injury claims and cargo claims?
What is required by the FMCSA?
Brokers have to keep a record of every transaction for 3 years, including:
- The name and address of the consignor
- The name and address of the originating common carrier
- Bill of lading ( or related documentation)
- Amount of brokerage compensation and the name of the payer ( typically the shipper)
- Freight charges and date carrier was paid
For insurance agents working brokerage business, you can size up a broker quickly by checking to see if they have this information. That said, Transportation Management Software (TMS) typically will handle all these functions. It should not be a big deal–but it is required.
Interestingly, for freight brokerage claims, there are virtually no requirements for record keeping by the FMCSA. Yet for obvious reasons, having an organized, systematic approach can be very helpful to freight brokers, their insurance companies and defense counsel. Before we go through the list, it might be worth knowing what we ask from our adjustors for every single claim we get.
Here it is:
- Claims details
- Certificate of Insurance from the Carrier
- Broker Carrier Agreement the insured has with the Carrier
- Carrier Name and MC/DOT #s showing their operating authority
- Carrier vetting information showing how the insured qualified their carrier for use.
- Any communication from the carrier’s insurance company.
Note while this has nothing to do specifically with a broker’s record keeping, it does have a great deal to do with the operational best practices of a broker- which is in conjunction with record keeping best practices. So what is needed for third party bodily injury claims and what is needed for cargo claims?
The Bodily Injury Catastrophe Claim:
- Claims Details
- The Police Report
- Any photos
- Any media
- Transcript of statement with the carrier
- Carrier’s Insurance Company Contact information
- Copy of Carrier’s Insurance Acknowledgement
In obtaining the aforementioned information, it can be more important to make sure you keep low profile. Why? Since freight brokers are not legally liable by authority, it is the carrier’s and carrier’s insurance’s responsibility to defend and indemnify. Raising the freight broker’s profile by demanding a lot of information in a loss, can tether a freight broker to a suit- and raises the prospect for inclusion.
Your claims adjustor, defense counsel and lawyer should be your guide as to what you information and when you need it. Ask Them First!
The Cargo Claim
Here is what is needed:
- Claims Details
- The Police Report ( may not be one)
- Any photos
- Any media ( may not be any)
- Transcript of statement with the carrier
- Carrier’s Insurance Company Contact information
- Copy of Carrier’s Insurance Acknowledgement
- Copy of Shipper contract applicable to the loss ( may not be one)
- Proof the shipper or consignee filed the claim against the carrier to prove damages
Note that you can see some similar claims information record keeping needs between the bodily injury claim and the cargo claim. But it is worth noting they serve two completely different interests. In bodily injury claims, everyone is on the same page. That is, let’s avert any and all liability as much as we can.
Conversely, with cargo claims, it is the freight broker’s customer. He may want to have the insurance company pay the loss (with the carrier or carrier insurance failure to do same), while the insurance company may want to limit any and all liability. That makes record keeping more important as all insurance policies have terms, conditions, warranties, and exclusions which need to be addressed before acceptance or denial of a claim and this makes record keeping more important.
In summary, you and your freight broker should understand the FMCSA record keeping requirements, but also create a standard for record keeping best practices in claims. It will make the freight broker and their insurance companies do their job better.