When speaking with Contract Drivers for 3PLs, we hear this question quite often: “Why do I need insurance coverage that is specifically designed for the Last Mile Delivery segment?” The short answer is that, as a contract carrier for a 3PL, you must be in compliance with commercial insurance requirements set forth in your 3PL agreement.
Let’s take a closer look at the Key Insurance Requirements for Contract Carriers:
- Commercial Auto Liability: Commercial auto liability covers damages and injuries that a business is responsible for when its vehicles are involved in an accident. This includes bodily injury to others, damage to their property, and the costs of legal defense against related lawsuits.
- Commercial General Liability: Covers claims for bodily injury, property damage, and personal and advertising injury (like slander, libel, or copyright infringement) that arise from a business’s everyday operations, products, or on its premises. The policy helps pay for the injured third party’s medical or property repair costs, as well as the business’s legal costs, settlements, and judgments.
- Cargo Insurance: Protects for-hire trucking businesses from financial losses due to lost, stolen, or damaged freight during transit, loading, or unloading.
- Workers’ Compensation: Workers’ compensation insurance covers medical treatment, wage replacement benefits, and rehabilitation for employees injured or made ill by their job, and in some cases, death benefits for dependents. Benefits vary by state, as each state has its own workers’ compensation laws dictating specific coverage amounts and rules.
- Occupational Accident: Occupational accident (Occ/Acc) insurance provides financial benefits for work-related injuries sustained by individuals, often independent contractors or owner-operators, who are not covered by workers’ compensation. It typically covers costs like medical expenses, accidental death benefits, disability income, and accidental dismemberment, with the specific benefits determined by the policy. This coverage acts as an alternative to workers’ compensation and is particularly common in industries like trucking.
- Umbrella (optional coverage): Commercial umbrella insurance covers liabilities that exceed the limits of your primary auto & general liability policies, providing higher liability limits for covered claims like bodily injury or property damage, and also covering defense costs for lawsuits such as slander or defamation. It offers an extra layer of protection against large, unexpected claims that could otherwise financially devastate a business.
Why the 3PL Requires These Coverages:
- Contractual Obligation: The 3PL’s own insurance policies or the contract with the customer may require them to have third-party carriers that hold specific insurance coverages
- Risk Management: The 3PL wants to ensure that if the carrier causes an accident or loses goods, the carrier’s insurance will cover the damages, protecting the 3PL from financial loss.
BizCHOICE Transportation has been customizing insurance programs for the Last Mile Delivery segment for 15 years, so we are well-versed in helping our customers maintain compliance with their 3PL contracts and obtain insurance that meets their unique needs.
Yolanda Ybarra
Yolanda Ybarra is AVP of the BizCHOICE Transportation Insurance Program, with a focus on 3PL partnerships in the Last Mile Delivery Program. She holds licenses in life and health and property and casualty insurance.