Cautionary tale on switching cargo

Agents new to the transportation insurance field must be careful of exclusions-especially when it comes to motor truck cargo. This frequently arises where an agent is switching coverage from one carrier to the next. Maybe the agent is taking a client away from another agent or just moving a present client to another carrier due to pricing or coverage/forms. Whatever the reason, it is important to pay attention to the commodity limitation when switching forms or carriers. Consider a policyholder who has been insured for five years and has been transporting temperature-controlled perishables. The new agent asks the client what they are transporting and the client explains that they normally transport temperature-controlled perishables. The agent binds a policy that covers this specific type of cargo. Concentrating on price and forms, the agent binds the account. The client is happy because they are paying less and have higher limits. However, six months into the policy there is a loss. It is then discovered that the client was transporting something other than the temperature-controlled perishables. The insured may not be covered if the item was excluded, or even not specifically named on the policy. The agent’s argument is when completing the application and stating cargo, the insured listed “temperature-controlled perishables.” The policyholder’s argument is that this “other cargo” was never excluded under the previous policy and the agent never explained that other cargo could not be transported.

While it is up to the courts to decide who is right and who is wrong, we can assume that nobody is leaving completely satisfied (at least not the agent).

Topics Agencies Trucking