Brokers are the front-line defenders for insurers covering commercial trucking. Especially since some fleet owners may attempt to insure only the trucks in use, while not reporting those sitting on lots and not being driven.
“Some guys will say, ‘No, I don’t have that many trucks,’ and they’ll incorrectly report their fleet size. That does happen for a multitude of reasons,” says Lee Sherback, Canadian transportation practice leader at Hub International.
“I had one vehicle schedule I came across — let’s say it was 10 pages long — and they had Sharpied out about 50% of their units.”
It’s important for commercial transportation brokers to verify fleet sizes because sometimes the numbers don’t add up. Possible reasons include intentional misrepresentation by truck fleets, a simple miscount, or pure misunderstanding by a truck fleet owner on their duty to report.
Brokers verify the numbers by obtaining documentation from clients — which lists the make, model, year and serial number of each rig — and then cross-referencing that information in search of any discrepancies.
“We’re getting their schedule, we’re getting their driver’s licence, we’re getting a carrier profile, and we’re getting IFTA [international fuel tax agreement] reports,” says Sherback. “Between those items, you’re able to quickly identify if there’s accurate information being relayed.”
Some underwriters also request copies of vehicle registrations, he says. When they encounter discrepancies in fleet count, they rely on the broker’s diplomacy—and some simple math—to address the situation with their clients.
“If anybody’s been in the trucking industry, you’ve got a pretty good understanding to look at [their IFTA reports] and go, ‘Hey, how are you doing 100,000 miles with 200 trucks?’”
Avoiding uninsured losses
Sherback offers another example: “Your fleet schedule that you gave me says 20 trucks, your carrier profile says 80 — where’s the other [60] trucks?”
Since some trucks might be on the road, brokers can’t do a manual count of the yard. But for fleets operating cross-border, brokers can access software that verifies the number of units going south.
And, if that doesn’t work, brokers must resort to asking more questions — and making them direct.
“That may be, ‘Hey, your fleet and your mileage aren’t making sense here.’ Maybe they’re doing more pickup and delivery versus long-haul trucking, [or] they may have a number of units parked due to lack of drivers,” Sherback says. “It’s about asking that question.
“Insurance operates on utmost good faith. If they’re misleading the broker and the underwriter, it could [lead to] a situation where they have an uninsured claim.”
If a broker suspects a client’s intentionally misrepresenting their fleet count, it’s their right to withdraw.
“An honest, ethical broker will be able to obtain the information or will know that this is not a good account; they’re misrepresenting all over the place….a good broker will walk away from the account.”
Although brokers are responsible for educating their clients about insurance coverage options, as Sherback puts it: “It’s not our job to spend their money. If they don’t want to spend $500 for a coverage, that’s their choice. We just have to ensure that they’re fully understanding what it is that they’re choosing to insure or not insure.”
This article is excerpted from one appearing in the June-July 2024 print edition of Canadian Underwriter. Feature image courtesy of iStock.com/Miguel Perfectti
