Trailer Insurance Gaps: 3 Red Flags to Check Now

Trailer insurance gaps can get expensive fast — especially if you’re relying on someone else’s coverage or anything called contingent coverage. Andy Kuchar of Centerline Insurance breaks down 3 red flags companies should watch for, who actually needs dedicated trailer coverage, and why freight brokers, trailer pool operators, repower networks and leasing companies may all have exposure. If your business owns or leases trailers that someone else is pulling, this is the risk check worth making now.

Freight brokers, motor carriers, and trailer leasing companies that let third parties pull or reposition their equipment may be operating with little to no meaningful insurance protection — a risk that Centerline Insurance President Andy Kuchar says is far more common than most operators realize. Kuchar, whose firm designed a dedicated trailer coverage product roughly five and a half years ago, identified three warning signs that a company likely has a gap: relying on another party’s policy, holding any form of contingent coverage, and lacking dedicated coverage for the specific trailer exposure.

The first red flag, Kuchar said, is dependence on someone else’s insurance. If a policy is canceled without notice, or if the party using the trailer never disclosed that use to its own insurer, coverage can evaporate at the moment a claim is filed. He compared the situation to a personal-auto policyholder who quietly starts driving for a rideshare platform without telling the carrier — an omission that can void coverage entirely.

“If you ever pick up a contingent policy or really any insurance policy as a layperson and you don’t want to read the whole thing — and who does — just go to the exclusions and just read the exclusions. It’ll probably just be a couple of pages long. It won’t be overwhelming, I don’t think. And if you read the exclusions on a contingent policy, you’ll probably start to scratch your head and say to yourself, what is this thing really covering?”

Kuchar noted that only about 30% of motor carriers carry trailer interchange coverage, meaning that companies relying on a lessee’s interchange policy to protect their physical asset are likely unprotected. Centerline’s product covers physical damage, theft, and liability on an à la carte basis, and Kuchar said 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 for dedicated trailer coverage beyond freight brokers. Kuchar said that in roughly the last 60 to 90 days, Centerline has written policies for about half a dozen trailer leasing companies, arguing that 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.

Defense costs are a significant and often overlooked exposure. Kuchar said Centerline pays outside counsel at approximately $1,100 per hour, and that spending $100,000 to defend a single claim is “very routine,” with costs rising sharply if the claim has merit. Importantly, those defense costs sit outside the policy limit. 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.

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.

• Centerline’s Andy Kuchar flags three trailer insurance gaps: relying on another party’s policy, holding contingent coverage, and lacking dedicated trailer-specific coverage.
• Only about 30% of motor carriers carry trailer interchange coverage, leaving many trailer owners without recourse when lessees have an accident.
• Centerline has written policies for roughly half a dozen trailer leasing companies in the past 60 to 90 days, citing post-Montgomery ruling liability exposure similar to that faced by freight brokers.

This Summary is generated thanks to a transcription of the interview, for the full interview please enjoy the video above.