I recently read an article in which a Property Broker was successfully sued for an accident that resulted in the death of one man and other serious injuries. What had led up to the verdict is as follows:
A Carrier was involved in an accident with 3 cars, killing one person & seriously injuring others. The Carrier, like 90% of the carriers on the road only carried $1 Million in liability coverage. The lawyers on the case recognized that they needed to find a fatter pig to feed the hungry mouths of the injured victims and suffering family. They successfully found that pig when they recognized that the property broker that brokered this load was a major player in the industry. Also, through some more research in the SAFER site it was discovered that the carrier of the load had a terrible safety record (I.e. 238 safety violations, 3 accidents, 1 more fatality in 18 months prior).
Through even more investigation it was found that the Property Broker an additional DOT authority (Something that is common in the Third-Party Logistics world). At the time of the accident the Broker had common carrier authority. This exposed them to the Carmack Amendment in which they were exposed to potentially unlimited Liability.
* 5000 fatalities a year on average take place relating to common carrier accidents within the U.S.
* 120,000 injuries a year on average take place relating to common carrier accidents within the U.S.
* Actuarial statistics support average settlement for fatality in U.S involving a common carrier is 2.6 million.
* It’s estimated that 90% of companies with common carrier authority only have 1 million of auto liability coverage.
The Perfect Storm
The Storm was perfect, the broker failed to do what is arguably one of the most important jobs of a property broker which is Vetting the Carriers it chooses to tender loads. Further, the broker left himself wide open for lawsuits under his authority of a common carrier.
This is a prime example of the importance of a proper Risk Management Plan. GSIS Insurance Services. is dedicated to success of every business and person we touch. Each insured is offered Risk Management Consulting Services. Our goal as an insurance provider is not only to be there when the unthinkable happens but also, minimize the exposures before the unthinkable occurs.