In the world of trucking, there are (literally) many moving parts. One of these consistently moving and changing parts is trucking insurance. Numerous policies are designed to protect you and your business, including trucking liability insurance. In this blog, we’re going to explore one aspect of liability insurance: motor carrier contingent liability insurance.
First of all, what is contingent liability insurance? Contingent liability insurance provides coverage to businesses that could face liability in future lawsuits or other avenues. Essentially, it is protecting your business from future unknowns.
In the world of motor carriers, it can mitigate risks and future liabilities that may occur with contracted employees. This topic is complex, so let’s start with the key characteristics of motor carrier contingent liability insurance.
Key Characters in Motor Carrier Contingent Liability Insurance
For starters, let’s review some of the key characters involved in this insurance:
- A motor carrier is an individual or business that uses commercial vehicles to transport products, property, or hazardous materials.
- An employee is an individual hired by the motor carrier and can be eligible for benefits such as insurance, workers compensation programs, etc.
- An independent contractor is a self-employed driver who works on a contract basis with a company or carrier.
So, what makes an independent contractor different from an employee? Independent contractors are self-employed. In this instance, independent contractors in the transportation industry have the flexibility to choose who they work with and how. They can set their own work schedule, drive for multiple different carriers, and likely own their equipment.
An employee, however, directly works for the carrier. Their day-to-day work and activities are dictated by the carrier, and they utilize company equipment, adhere to company guidelines and standards, are eligible for benefits, and more.
In some cases, it can be more beneficial for a motor carrier to work with independent contractors rather than employees. Working with an independent contractor allows for:
- Scheduling flexibility
- Fewer costs
- Reduced liability
- Greater efficiency
So, why does motor carrier liability contingent insurance matter?
Motor carrier contingent liability insurance is designed to protect a motor carrier if an independent contractor files a lawsuit seeking compensation for equipment damages, workers compensation, etc. Some policies also provide additional benefits including reputation management regarding the lawsuit.
How does contingent liability differ from primary liability insurance?
Primary insurance is necessary and vital to your business. This insurance protects your company from damages, including accidents, property damage, or bodily injury related to your operations. Your contingent liability policy is there when situations, such as a lawsuit, go beyond the coverage of your primary liability policy. It’s helpful in preparing for unexpected or unforeseen circumstances regarding contracted employees.
Do I need Motor Carrier Contingent Liability Insurance in Florida?
Florida does not require motor carrier contingent liability insurance; however, it can be extremely beneficial to your company. You might be thinking, “How often would a company use this?” Well, FedEx may have a helpful answer.
In 2015, FedEx settled a $250 million lawsuit with over 2,300 FedEx employees resolving claims from 2000 through 2007. For years, FedEx relied on independent contractors for their services and paid them accordingly. But in 2014, the Ninth Circuit court found FedEx had mislabeled these independent contractors.
While FedEx is a large company, contingent liability insurance can be beneficial regardless of your company size. Overall, contingent liability insurance can help keep your business protected in the case of an independent contractor lawsuit.
If you have any questions about motor carrier contingent liability insurance, our team is here to help! Contact our Transportation Insurance Specialist, Carlos, to learn more!