Lloyds Contingent Auto Liability (CAL) versus Markel Truck Broker Liability (TBL)

We are asked nearly everyday to describe the differences between contingent auto liability and truck broker liability. It's a fair request but it is important to look at the history of coverage for truck brokers.

Heretofore, at this time last year, there was only contingent auto liability with one exception, the Chartis program of primary truck broker liability. That program evolved out of the need to insure truck brokers on a primary basis- as many agents in the insurance marketplace felt the conventional CAL programs ( like Lloyds) did not cover much. The problem with the Chartis program is that it was only designed for the largest truck brokers and the minimum premium was too large for the average sized truck broker to consider.

That changed with the Markel program which was designed for all truck brokers. At the same time, shipper's demands on truckers and trucker brokers also 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 the insured ( and the shipper if named as an additional insured) irrespective if the trucker's coverage defended or not
•to waive subrogration
Is the Lloyds' CAL program worthless as the marketplace thinks it is? Absolutely not.

Is Lloyds' CAL coverage as good as Markel's TBL coverage? Absolutely not.

Let's look at some of the differences:
Lloyds' CAL " Pays of behalf of the insured damages resulting from auto liability that may arise on a contingent basis"
Markel TBL- " We will pay those sums an insured becomes legally obligated to pay because of bodily injury or property damage resulting from the ownership, maintenance and use including loading and unloading of an auto and arising out of the the insureds operations as a transportation broker.

Discussion: Note the TBL does not mention being contingent as therefore primary coverage ( a very big deal) and is in essence a hybrid policy( GL & Auto) covering a truck brokers liability arising out of a auto claim on behalf of a trucker the insured brokers to. The TBL's wording comes straight out of an ISO commercial auto policy.

Big Differences:

There are specific conditions that could negate coverage for an insured under the Lloyds CAL policy that are not present in the Markel TBL policy


•Certificate of Insurance ( COI) or Verbal Checklist- this is a condition of coverage under the CAL and without same there is no coverage. The Markel TBL has no such condition so if the insured accidentally misses one and there is a loss, there would be coverage. ( I need to say that Markel asks the question if the insured gets a COI on each trucker in the application process.)
•Double Brokered Loads- any occurence sustained by a motor carrier whom the insured has entrusted shipment is covered. Unfortunately if a trucker double brokers the load, there is no coverage because the trucker has entrusted shipment to only one trucker usually. Note Markel has no such exclusion in the TBL
•Defense/ Duty to Defend- Both programs have a duty to defend except the Lloyds CAL will not defiend if there is other valid insurance. So a truck broker could be sued and not defended if the truckers coverage is providing defense. A big deal.
•Commodites Excluded- explosives, gas, acid , liquified petroleum. There are no such exclusions under the TBL.
•Errors & Omissions are excluded under the CAL. The TBL does exclude professional services. Note we are seeing more and more requests for stand-alone E & O Coverage.
•Punitive and Exemplary Damages- Excluded under the CAL and not under the TBL
•Annual Aggregate- Lloyds CAL has an annual aggregate which is the most they will pay during a policy period. The TBL is like an auto policy and per claim.
•Valid and Collectable Insurance- there is no coverage under the CAL if there is valid and collectable insurance which means in most cases if the truckers certificate is valid and in force there would be no coverage. The Markel TBL has no such exclusion
Other issues:

Coverage Tidbits- The Markel TBL has broader supplementary payments than the Lloyds CAL. The TBL does exclude expected or intended injury, mobile equipment and racing. We see none of these issues material to coverage differentiation.

Agent's duty- We all are in the business of trying to sell the best coverage to protect insureds. In the past when there was only CAL coverage, there was not a choice. It makes sense to offer TBL coverage if a prospective insured meets risk acceptability and best practices standards.

Providing COI's to the truck broker's customers and shippers- Since the TBL is a hybrid GL/Auto policy it makes sense when issuing a certificate to put under the " other" section at the bottom and put TBL. Note there are a great deal of shippers who are not aware this coverage is now available. When they hear it is available, they demand it. It also helps truck brokers meet risk acceptability standards with new shippers.

Posted 23rd December 2010 by Benji
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