Trailer Insurance Excludes Over-the-Road Use, Brokers Discover

What coverage gaps exist in broker trailer insurance?

Broker trailer insurance policies often exclude coverage when trailers are actually in use on the road, according to Andy Kuchar, president of Centerline Insurance Company. The first policy Kuchar reviewed after launching a dedicated trailer insurance product five and a half years ago, written by a major carrier, contained a specific exclusion for trailers over the road. The broker holding that policy believed it was fully covered and had thousands of trailers in its fleet. "The coverage was with a great company. It was inexpensive, but it didn't really cover anything," Kuchar said.

The gap matters because providing a trailer to a motor carrier adds a distinct layer of liability beyond brokering a load. The equipment itself can be named in litigation. Kuchar cited one claim where a worker unloading building materials from a parked trailer was killed in an accident and the trailer lessor was pulled into the lawsuit. "Today to get somebody out of a claim is usually at least $100,000," he said.

Why brokers face rising trailer liability

Plaintiffs' attorneys are increasingly bypassing small single-truck carriers, who typically carry only $1 million in coverage against a federal minimum of $750,000, and targeting brokers directly because of their deeper pockets. This shift follows the post-Montgomery legal environment, where broker liability exposure has expanded.

Small property-damage claims compound the exposure. Kuchar noted that in legacy trucking insurance programs his firm previously wrote, a third of property-damage claims involved losses under $2,000. Bodily injury payouts on those same claims ran $50,000 to $75,000 or more as claimants continued treatment to inflate values.

What Centerline's trailer product covers

Centerline's trailer liability product targets three customer segments: freight brokers that lease trailers and need coverage acceptable to lessors, transportation firms that operate combined motor carrier, brokerage, and equipment-leasing arms, and leasing companies themselves. Kuchar said Centerline has signed master programs with half a dozen leasing companies in the last 30 to 60 days.

The firm also writes per-shipment cargo coverage on high-value loads, with a growing volume of business covering inbound freight from Mexico, often auto parts moving through Laredo, on loads that can reach $1 million in value. That cargo product is nearly 10 years old. The trailer product is five and a half years old.

Red flags in current broker policies

Kuchar, who holds a doctorate in insurance from the University of Georgia and said he personally wrote every word of every policy Centerline has issued, flagged two red flags brokers should watch for in their current coverage: any policy language using the word "contingent," and reliance on a motor carrier's certificate of insurance, which explicitly confers no rights on the certificate holder.

Centerline is owned by Watkins Associated Industries, the family behind Watkins Motor Lines that became FedEx Freight. Kuchar said Reliance Partners, a Chattanooga-based retail insurance agency, is among Centerline's largest distribution partners, and that the firm works with any retail broker whose clients need the specialty coverage.

What this means for broker equipment operations

Brokers operating trailer pools should review current policies for over-the-road exclusions before the next claim surfaces the gap. The difference between a policy that covers trailers in storage versus trailers in use can determine whether a $2,000 fender-bender turns into a $75,000 bodily-injury payout with no coverage response. Kuchar's warning is straightforward: many trailers are "criminally underinsured" because the policies brokers hold were never designed to cover equipment once it leaves the yard.