Posted by: jmwilsonmga | July 17, 2012

Which Does Your Insured Need? Trailer Interchange Versus Non-Owned Trailer Coverage

When working on new submissions, one of the most common requests I see is for trailer interchange.  This term has become very popular in the trucking industry and is used synonymously with non-owned trailer coverage.  However, these are different coverages with different requirements.  It is critical to make sure the insured knows exactly what kind of coverage they need, so in the event of claim, they have the coverage they need and think they have.

The definition of trailer interchange is an agreement among common carriers whereby one trucker will transfer a trailer containing a shipment to a second trucker to transport the trailer to its destination or to a point of interchange with yet another trucker.  The arrangement continues until the cargo reaches its destination.  The effect of such an arrangement, which must be in writing, is that the trucker will be hauling trailers of others. (Northland Insurance Product News T-27R March 2007)

What this means is that trailer interchange is truly third party liability coverage, not first-party physical damage coverage.   Trailer interchange does not provide coverage to the average trucker who may be using a third party trailer while transporting goods.

In order to be a trailer interchange agreement three things need to be made clear in the agreement.

  1. Points of interchange,
  2. How the equipment is to be used and
  3. The compensation for such use.

The most common statement I encounter is “My insured is using the shipper’s trailer so they need trailer interchange.”  While this may be true if the insured is hauling for the UIIA, JB Hunt, Landstar or other common shippers who have their own written trailer interchange agreements, the majority of the time the insured is hauling for XYZ Company and simply responsible for the coverage of that trailer.

In these instances, the coverage can be taken care of by simply scheduling a non-owned trailer with physical damage.  Depending on what the max value of that trailer may be, we can use that stated amount so the insured is always covered.   The main thing I try to point out to agents is that if no written agreement is in place, then non-owned trailer coverage is what the insured needs.  If the situation arises when the shipper is asking for non-owned trailer coverage and they do not have a written agreement in place, the situation can usually be handled by receiving a copy of the contract the insured has with the shipper and working it out with the company.

During my five years of underwriting, many unique carrier requirements have arisen.   Feel free to pick up the phone and give me a call.  We can help you get what the insured needs and keep them on the road.

About The Author : Leon Hilaski, Transportation Supervisor

Leon Hilaski joined J.M. Wilson in 2007 and currently serves as the Transportation Underwriting Manager for Michigan and the Southern Region. He is responsible for the day to day operations of the transportation team, as well as underwriting risks himself. Leon loves working with his J.M. Wilson teammates and agents. It is the bonds that he has formed with his co-workers and agents that is the most rewarding for him. In his spare time, Leon loves to participate in sports, golf, and spend time with his family.

Disclaimer :  This article is for informational purposes only.  There is no legal advice being suggested or proffered.  The author assumes no responsibility or liability for the actions taken or not taken by the readers based upon such information.  This article is the opinion of the author and is not supported or endorsed by J.M. Wilson.  It should not be relied upon and may contain inaccuracies or content may have changed over time, contact your underwriter for the most current and accurate information.  Any comments or responses are the opinions of their authors.  Content on this site is believed to be covered under Fair Use.

Copyright 2013 J.M. Wilson Corporation

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