TRIP Client Advisory & Consultation 3

Question 1

A client who brokers freight but owns no trucks asks about their liability exposure. Which coverage is MOST critical for a freight broker to carry?

Accepted Answer

Freight broker contingent cargo liability and errors & omissions coverage

Answer

Freight brokers face liability for cargo losses when carrier insurance is inadequate and professional liability (E&O) claims for errors in carrier selection; contingent cargo and E&O are their primary coverages.

Question 2

When conducting an annual coverage review for a transportation client, which change in operations would MOST likely require immediate policy endorsement?

Accepted Answer

The client began hauling hazardous materials under a new shipper contract

Answer

Hauling hazardous materials triggers additional federal filing requirements, exclusions in standard cargo and auto policies, and may require specialized endorsements or separate policies.

Question 3

A transportation client asks what 'bobtail liability' coverage protects against. What is the BEST explanation?

Accepted Answer

Liability arising when a tractor operates without a trailer, outside the motor carrier's dispatched use

Answer

Bobtail (or non-trucking) liability covers owner-operators driving their tractor without a trailer or while not under dispatch, filling a gap that motor carrier policies and personal auto policies both typically exclude.

Question 4

A client's insurer offers a loss-sensitive program with a large deductible plan. What is the PRIMARY financial consideration an advisor should communicate?

Accepted Answer

The client retains significant financial risk per occurrence and must have sufficient cash flow to fund retained losses

Answer

In a large deductible program, the insurer pays claims up front but bills the insured for amounts within the deductible layer, requiring strong cash flow and loss reserves to manage the retained risk effectively.

Question 5

A shipper client discovers that the carrier they hired lacks adequate cargo insurance. Under what doctrine might the shipper face liability exposure from this arrangement?

Accepted Answer

Negligent entrustment, if the shipper failed to verify the carrier's qualifications and insurance adequacy

Answer

Shippers can face negligent entrustment claims if they hire carriers without verifying credentials and insurance, making due diligence in carrier selection a key risk management practice.

(TRIP) Transportation Risk and Insurance Professional Practice Test

(TRIP) Transportation Risk and Insurance Professional Practice Test

TRIP Client Advisory & Consultation 3