3 Trailer Insurance Gaps That Can Cost You $100,000 in Defense Alone
Only 30% of carriers carry trailer interchange coverage. If you own trailers someone else is pulling, you may be unprotected the moment a claim is filed.
If you own trailers that someone else is pulling, you may have zero meaningful insurance protection the moment a claim is filed. Andy Kuchar, president of Centerline Insurance, says three red flags signal a coverage gap: relying on another party's policy, holding contingent coverage, and lacking dedicated trailer coverage.
What happens when you rely on someone else's trailer insurance?
The first red flag is dependence on another party's insurance. If that policy is canceled without notice, or if the party using your trailer never disclosed the use to its own insurer, coverage can disappear when you file a claim. Kuchar compared it to a personal-auto policyholder who starts driving for a rideshare platform without telling the carrier. That omission can void coverage entirely.
Only about 30% of motor carriers carry trailer interchange coverage, Kuchar said. If you're counting on a lessee's interchange policy to protect your physical asset, you're likely unprotected.
How much does it cost to defend a single trailer claim?
Defense costs are a significant exposure that sits outside the policy limit. Centerline pays outside counsel at approximately $1,100 per hour. Spending $100,000 to defend a single claim is "very routine," Kuchar said, with costs rising sharply if the claim has merit.
He illustrated the at-rest exposure with a large claim in which a trailer parked on a hill was tied to a fatal workplace accident involving a piece of glass. Even though the lessee had no operational role in the incident, significant legal spending was required to exit the claim.
Who needs dedicated trailer coverage now?
Centerline designed a dedicated trailer coverage product roughly five and a half years ago. The product covers physical damage, theft, and liability on an à la carte basis. Insureds range from operators with as few as five trailers to those with more than 1,000.
The post-Montgomery ruling environment has expanded the market beyond freight brokers. In roughly the last 60 to 90 days, Centerline has written policies for about half a dozen trailer leasing companies. Kuchar said leasing firms face the same plaintiff-attorney scrutiny as brokers when an accident involves equipment they placed with a carrier. "All the same arguments I think you can make against a freight broker, you can make against a trailer leasing company," he said.
Freight brokers, trailer pool operators, repower networks, and leasing companies that let third parties pull or reposition their equipment may all have exposure.
How is dedicated trailer coverage priced?
Centerline prices coverage on a per-move, per-day, per-month, per-quarter, or annual basis depending on the insured's business model. Kuchar said inquiries to centerlinepc.com are typically handled personally, and that he prices and writes most risks himself, usually in consultation with the insured's agent.
What to do this week
If you own or lease trailers that someone else is pulling, check three things: whether you're relying on another party's policy, whether you hold any form of contingent coverage, and whether you have dedicated coverage for the specific trailer exposure. If the answer to the third question is no, you may be carrying six-figure defense costs with no policy to pay them.
