Welcome back and thanks for reading The Bottom Line! Today I want to talk about the BMC 32 Cargo Filing elimination and its effect on our industry.
Previously there was a difference between a common carrier and a contract carrier. Common carriers filed a BMC 32 to prove a posted $5000 cargo bond to satisfy the public interest. Today we don’t have a difference between common and contract carriers…every trucker is a motor carrier.
For the most part, carriers and shippers check other carrier’s insurance qualifications by utilizing the soon-to-be-outdated SafeStat system. The FMCSA has historically collected cargo filings and posted them as a public record. Anyone checking SafeStat could determine whether or not a carrier had insurance simply by checking the BMC 32 because the bond filing was always attached to a cargo policy. Even though the filing isn’t proof of the quality of the coverage or of the cargo limits, typically collecting a certificate and a quick check of the SafeStat record was enough to make most shippers comfortable with a carrier’s cargo insurance.
This is all changing by March, 2011. The FMCSA will no longer require the BMC 32 and the SafeStat system will not be a resource for checking that a carrier’s cargo insurance is, in fact, currently enforce.
What does this mean? In the most basic sense, it means a shipper will need to better vette its carriers. Simply collecting a certificate of insurance should not be enough proof that a carrier’s cargo insurance is sufficient or current. Cargo policies are notoriously restrictive and a certificate only mentions that coverage was placed as of a certain date and what limits were purchased at that time…no mention of all of the exclusions! A carrier could have a policy that excludes coverage on every day but Sunday, but the certificate will only say: Coverage—Check; Limit—Check.
The only solution is better vetting of carriers. The best way to understand what your carriers are sending you is educating yourself on cargo companies and their typical coverage. If necessary, try to request a copy of the policy. Though this might seem tedious, it could save you a lot of trouble and money if there’s a claim. A decent insurance agent should help you understand what policies to be comfortable with and which ones to look at more closely.
The Bottom Line: When you agree to take or arrange a load for your customer, your customer will look to you to replace the load if it’s lost, stolen, or damaged. You can point your finger at the carrier, but when the carrier’s limits are insufficient or coverage is excluded, ultimately the burden will fall on you. Learn about the different cargo insurance carriers and make the ‘checking’ process more fool proof than it has been before, because the FMCSA SafeStat fallback is going away. More than even the burden of verification is on you.
Hopefully you’ll check back soon to see our weekly updates. And always, if you have any questions for the Truck Insurance Pro…please just let us know and we’ll get back to you ASAP!
Keep on Rollin’!
Jason Stevenson
Truck Insurance Pro
a division of
The Hoffman Group
800.826.4006
jstevenson@thehoffmangrp.com
