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Avoiding the Top 10 Brokerage Traps

In today's litigious society, we have to do all we can to minimize our exposure from a lawsuit and still run our business. This becomes increasingly more difficult each year. The following are deemed as our top 10 "best practices" to implement when feasible.          

  1. A separate corporation, profit and loss statement, phone line, employee and property lease is the best insulation from the motor carrier. This gives credibility that the brokerage is a totally separate business from the trucking.
    1. Broker's name (and especially Trucker's name) should not appear on the BOL. At the time of a lawsuit, the plaintiff will utilize the BOL to establish potential liability.
    2. Broker should confirm that Trucker has a satisfactory DOT rating, acceptable SafeStat (soon to be CSA2010) scores, and that the insurance remains in force on Safersys.org. Failure to do so could result in the Broker being named in a suit citing negligent brokerage or predictability of unsafe acts.
    3. Broker should secure a certificate of insurance from Trucker verifying that the limits of insurance are adequate for the freight being brokered. Broker should also request (contractually) that the Trucker name the Broker as Additional Insured for Auto Liability and Cargo.
    4. Brokers assume liability contractually, make sure you fully understand what you are assuming in your shipper agreement. Contracts can override federal law and hold broker responsible. Stay away from warranting carrier behavior.
    5. Every broker should have a written protocol regarding reasonable entrustment of freight and predictability of unsafe acts (unsafe motor carriers). If you are named in suit, your protocol (in your actions and in writing) will go to your defense that you are acting as a prudently and not turning a blind eye to public safety.
    6. Broker should exercise great caution when brokering freight to a motor carrier who also has a brokerage authority as this could result in the load being double brokered.
    7. Broker should not exercise too much control over the driver. If you specify “driver must,” it could be argued that the Broker was acting as a trucker and not a broker. Broker should also avoid direct contact with the driver.
    8. Broker should make sure all marketing materials, website and other materials make it clear that you are a Broker. Avoid such statements as "operating in partnership" with the servicing motor carrier. 
    9. CSA2010 will drastically change the landscape of brokerage and will place a far greater burden on brokers. Brokers may need to change their agreements with shippers to address "disqualification" to broker freight to trucker.
                      Topics: Transportation