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July 1, 2025 15 mins

Nate Cross & Ben Kowalski answer your freight brokering questions and discuss:

  • "What insurance coverage does a freight broker actually need—Contingent Cargo, General Liability, or both?"
  • "Two friends had loads stolen due to email hacks—how can brokers prevent this type of fraud?"
  • "Should brokers call a driver before booking, or is email confirmation enough?"

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Transcript

Episode Transcript

Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
All right, Welcome back for another edition of the
final mile.
This is actually edition 100.
I forgot that.
Our final mile and our freight360 numbers aligned just off by
200.
Episode 100 of Q&A.
We got three questions today.
Make sure to continue to sendyour questions to us.
You can message us through ourwebsite, freight360.net.

(00:22):
You can leave us a comment inthe YouTube world.
You can hop in our Facebookgroup.
All of those links will be inthe show notes description box.
You can also check out theFreight Broker Basics course on
our website if you're lookingfor educational options for you
or your team, and our sponsorsare in there too, so check them
out.
All right, Ben.

(00:43):
Our first question today oninsurance.
What types of insurancecoverages are truly necessary
for my brokerage?
I've been told I need bothcontingent cargo and general
liability.
What is truly essential?
You want to take a stab at thisone?

Speaker 2 (00:58):
Yeah, dude, there's this lizard staring at me right
through my window.
It's creeping me out so bad itwon't go away.
And it's literally just staringat me right through my window,
is creeping me out so bad itlike won't go away.
and it's literally living inflorida and new york, yeah and
it's like we keep trying to getrid of them because they're
eating all the flowers my wifeplants outside and I feel like
they're just trying to mock me,like it's literally just staring
at me and it like won't moveanyway.

(01:20):
Sorry, I was getting superdistracted because it kept like
literally going like this at thewindow and just like trying to
like stare inside and like Itapped on psychological warfare.

Speaker 1 (01:30):
Yeah, insurance, though We've both been through,
you know helping brokerages getoff the ground.
What have you seen as musthaves out the gate, and how do
you evolve down the line?

Speaker 2 (01:40):
So the first thing is like you don't need insurance
to run a brokerage, like youronly thing you're required to
have is a surety bond or a trustwith 75 grand in it.
If you don't pay carriers, theycan go after that.
That's what the governmentrequires you to have to operate.
Now, however, your shippers andyour customers are going to be

(02:01):
the ones that determine whichinsurance you need Right.

Speaker 1 (02:04):
Exactly Hundred percent.
So here's what I want to warnpeople, if you're brand new
because we've heard this a lotlike, I just got my authority
and I'm getting calls from everyfrigging vendor that's out
there that sells anything tofreight brokers and they want me
to buy their insurance and thisand that, and they're you know
they'll put a quote together forgeneral liability and
contingent cargo and contingentauto and an umbrella policy and

(02:25):
you know everything under thesun.
And then you realize, like what, why do you?
Why are you paying for that?
Like it doesn't, you don't needit.
No one's telling you you needit.
Yeah, and here's the thing willdictate like if you go through
a customer onboarding and theircontract States, hey, we need
you to have a million dollars ingeneral liability and a
hundred,000 in contingent cargo.
Well, now I know a startingpoint of all.

(02:47):
Right now someone's telling methat I have this requirement.
It's not the DOT or the FMCSA,this is a customer requirement
that if I'm able to do businesswith them, I need to meet their
requirements.
And I can decide is it worth itfor me to spend the money to get
a $5 million liability policywith no guarantee of business.
So it's kind of a navigatingthing there.

Speaker 2 (03:08):
Here's the thing I would say are like the most
important practical things tounderstand.
Most shippers require brokersto have the same contingent
cargo as they require a carrierto have cargo.
Right Now, the biggest thingyou've got to understand is your
shipper's telling you we needthis.
You, as a broker, need tounderstand your contingent cargo

(03:31):
does not ensure that shipperthe way they think it does.
Most shippers just think Irequire the broker to have
contingent cargo of 100K thatcovers my cargo.
Contingent cargo is not like atrucking company's cargo
insurance.

Speaker 1 (03:47):
Mm-hmm.

Speaker 2 (03:47):
What you need to make sure you do is you need to make
sure you are vetting thecarriers to those numbers, not
assuming your contingent cargowill cover the cargo.
So if they go, hey, all ourbrokers need 200 grand, for
example, in contingent cargo.
You're going to make sure everytruck you put on that
customer's loads has 200 grandin cargo insurance because

(04:09):
that's the insurance that'sgoing to cover the cargo, has
200 grand in cargo insurancebecause that's the insurance
that's going to cover the cargo.
The other thing I would say isreally good thing that I've
learned over the years is likelots of shippers require
workman's comp insurance but asa brokerage you're not sending
employees physically to theirsite, so that makes no sense.
But again, shippers typicallyjust require you as a broker to

(04:31):
have the same things as thetrucking companies.
So one of the things I found islike you can actually get what's
called like a dead policy.
You still pay for it but iteffectively is nothing but a
piece of paper that says youhave it and then the actual
wordage in your policy basicallycovers nothing.
So like I've been able to getworkers comp plans that are like

(04:52):
dead policies for like 500bucks, that basically it gets
the customer what they'rerequiring you to have, but it
does the same thing to themthey're doing to you, meaning
like it covers nothing becausenothing's ever going to happen
that that would make sense tohave.
So you pay a lot less moneybecause it's basically not
insurance, it's just a policythat excludes everything because

(05:13):
nothing's ever going to happenwhere you, as a broker, are
going to be like on a dock or bya forklift or, you know, at
their warehouse.

Speaker 1 (05:22):
So interesting with contingent cargo is they're
usually fairly inexpensive.
A lot of shippers will requirethem and they don't really like.
Practically speaking, theyhardly ever cover anything.
And one time I've ever seen acontingent cargo policy pay out
and it was because the carrier'sinsurance policy lapsed while

(05:46):
in transit due to nonpayment.
And you'll see like somecontingent policies will say
like yeah, we'll cover.
If it's a, you know they'll sellit as like you know if the
policy expires or if thecommodity is excluded or like
all this stuff.
But then there's like wordagein there that's like well, if
there's broker liability, it'snot going to pay out.

(06:07):
Broker liability meaning likeyou didn't check to see if the
carrier's insurance covered thatcommodity, you didn't check to
see if what the expiration datewas on it.
The one rarity was like brokerdid all the right things and the
carrier, unbeknownst to thebroker, didn't pay their premium
and while in transit the policywas withdrawn.
Right, yeah, and for every time, russians, every time, for that

(06:30):
one time that I've actuallyseen a contingent policy pay out
for that circumstance.
There's probably been a hundredother policy lapses that just
never we knew about becausethere was no claim on the load.

Speaker 2 (06:44):
There was no claim.

Speaker 1 (06:46):
Hopefully not hundreds, maybe a dozen, I don't
know.
Anyway, insurance Big takeawayInsurance brokers are a great
resource.
They can shop the market foryou and help you put together a
package that works for youractual customers needs.
All right, next up, this onewas from our Facebook group.
I'll try to summarize it here.

(07:07):
Recently, two of my friendsboth had loads stolen and the
carrier said that their emailwas hacked.
What steps can we take whenbooking loads to prevent stolen
freight?
So this is like the last,probably the last, couple of
stolen loads.
I've uh encountered two or cameacross.
Both were the same carriers,email got hacked, etc.

Speaker 2 (07:28):
Um, there's insurance for that, by the way.

Speaker 1 (07:30):
There is Actually, I want to say Avalon risk has like
some, they have like some likereally cool policy now that,
like it I think it's called likethere's dishonest acts by a
third party, I believe is whatit's called.
Right it's rolled up we, yeah,we, we've got it as well.

(07:50):
The tricky thing is like so itdoes cover certain
double-brokered situations, butthe reality is when you look at
your deductible and what it'sgoing to do to your premium, you
have to make a decision.
Am I going to file a claim toget reimbursed for the two grand
for my rates to go up, or do Isuck it up and eat it and

(08:13):
improve my processes?

Speaker 2 (08:14):
It's kind of a it's there for the nuclear incidents
right with the big ones of a youknow it's there for the nuclear
incidents, right With the bigones.
So when usually they have maxeslike the ones we've seen, when
they first came out they onlycovered 50 grand I think.
Then they increased them to ahundred grand.
And I want to say we paysomething like 14 grand a year

(08:36):
just in premium for that policyand if a load stolen it's got
like a $10,000 deductible.
So to your point, like if youget a $50,000 load stolen like
you're really spending about 25grand to get that 50.
So like, yeah, that kind ofmakes sense, but they usually
don't go super high.
Third party insurance, like loadsure and things I believe also

(09:00):
will cover theft in someinstances.
But you really got to talk tothem about those policies to
make sure that's the case.
Because if you're moving somethree 400 grand like, you want
to make sure you are covered.
Also, you want to make surelike, how do you prevent this?
Like the only real company Iknow that's I'm not saying there
aren't other ones, just theones that I know that we use

(09:21):
like we use a load lock withhighway that verifies their
email addresses and againsttheir ELDs and our load tenders
go through that system to makesure they don't go to a hacked
email.
But I also know for sure, likethat's still not a hundred
percent, like nothing's ahundred percent, like nothing's
100 percent.

Speaker 1 (09:40):
The whole point here is to try and like reduce the
amount of risk.
Right, that's really what itcomes down to.
So like practical steps, whatdo you got I?

Speaker 2 (09:48):
don't want to cut practical steps.
The thing that I've seen catchevery one of these, even the
ones that got through systems,even for clients.
Look at FMCSA contact changesand if you call the old phone
number you almost always get theactual owner of the company and
you just confirm hey, I justwant to make sure so-and-so

(10:10):
works there, confirm thedispatcher, the load and the
driver.
Because in every scenario whereI've seen a load get stolen,
the first place I've had clientscall me they're like, hey, this
load's stolen.
What do I do?
I literally go right to carrier411, for example, go to FMCSA
name change, look for the olderphone number that wasn't changed
or the old email address.
I call the oldest phone number.
In there I get the owner of thetrucking company.

(10:31):
I'm like, hey, do you guys haveso-and-so working for you and
is this your truck?
And they're like, nope, ouremail was hacked, we just put
out a thing and like that's thepreventative measure too, right.
So if you theoretically callthe phone numbers and the oldest
ones for every trucking companyevery time you book a load, I
think this would probablyprevent almost all of them.

Speaker 1 (10:52):
Yeah, there's other things too.
So like quick scope is a loadlevel tool you can use, like if
I'm you know some people use iton every load.
So maybe, just maybe, on like anew customer or high value
stuff that might get stolen, forexample, I'm going to have you
when you're, let's say, a milefrom the pickup, right, hey,
it's near this area, call mewhen you get here.
I'll will verify your truck andthen it'll release a pickup

(11:16):
number to you so you can checkin.
It's going to have them take apicture of the side of their
truck.
It's going to geotag them, it'sgoing to read the MC number,
truck number, all that stuff,and if it matches what you put
in the system, boom, they getreleased their pickup info.
Just saying you're going to usethat will deter the bad actors
in like 99% of the cases, right,even like Trucker Tools now has

(11:37):
a way you can do a vinverification.
You could take a picture, um,and upload it as like a
registration document to showhey, this is the vin number, it
matches the insurance, I want tomake sure it's insured, etc.
All that stuff.
There's so many tools out there, the old school way of gps
tracking and having them take apicture of the side of the truck
at pickup showing the thesignage of the customer's

(11:58):
facility, like there's all kindsof ways you can do this stuff.
And another part of it, too, islike explain to your customer
what your processes are, becauselike just doing it yourself
doesn't mean the customer won'tjust load somebody without you
know, correct.
So, yeah, I've got the loadgoing to Savannah.
Well, cool, yeah, go to doorthree, we'll load you up.
Right, they got right by you.

(12:19):
If you tell your customer, hey,I need to verify this guy, it's
really important that we makesure that you know, because this
is a very important shipment ofyours.
I want to make sure there's nofraudulent, even anything close
to fraud, here.
The guy's going to be in a bluecab, it's a, it's a 2018
Peterbilt.
You know, if anybody else showsup or it doesn't have this MC
number or this logo on the side,like it's not the right truck,

(12:41):
right, that's the kind of stuffand that shows your customer
like you care.
You know what I mean.
Interestingly, our thirdquestion it's going to tie right
into it is someone asked shouldI be calling a driver before
booking them on a load, or canit be done over email Well this
is the biggest A lot gets doneover email but.

Speaker 2 (12:57):
I'm all out of email.
Right, this is where criminalsare going to try to steal from
you.
If they know you're justsending emails, that email could
be coming and going to anywherein the world, right, yeah, it's
much harder for somebody to lieover the phone, just like we
were talking about in theepisode.
Like building a relationship.
Like you can pick up so manythings in tones of voice how

(13:19):
they're speaking.
Does this sound sketchy?
Can pick up so many things intones of voice, how they're
speaking.
Does this sound sketchy?
And also like, again, even ifyou call the oldest phone number
, like you're almost alwaysgoing to get somebody that
actually works at that truckingcompany, because if they changed
any of that, you're stillgetting to the person that
originally owned it.
They're going to tell youwhat's happening.
And also, like you should bedoing this anyway.

(13:40):
One you need to know if yourdriver's empty on time for their
pickup, you want to know whatis the MC on the side of the
truck.
You should be verifying.
Do they have the equipment?
The dispatcher said they sentvia email.
Right, that is the guy that isgoing to perform the work for
your customer.
Your job as a broker is to hirepeople on behalf of a company.
Like wouldn't you want to speakto anybody that you hired to

(14:04):
come work at your house?
Would you hire somebody to comework at your house via email
without talking to them?
I guess maybe, but like I wouldwant to speak to the person
before letting them in my houseand knowing what's going on.
Like to me it's kind of commonsense, but it absolutely should
be done on every single load,all of the time, 100%.

Speaker 1 (14:23):
Use our dispatch checklist on our website.
It's going to help you get allthe details you need from your
customer and carriers to makesure that you're preventing
fraud, cargo theft, bad actorsin general.
So good questions.
Thanks for sending them our way.
We'll continue to answer them.
Final thoughts, Ben.

Speaker 2 (14:41):
You believe you can, or believe you can't.
You're right.

Speaker 1 (14:45):
And until next time go Bills.
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