Whenever I see a truck hauling automobiles, I invariably have two thoughts: one, what kinds of vehicles is the transporter carrying, and two, does the motor carrier know how risky the auto hauling business can be?

I come by this reaction honestly. My uncle was an auto hauler who transported all brands, though he personally was fondest of Chevrolets and Toyotas. I’ve always been interested in cars, and I’ve worked in transportation insurance a long time, as the manager of a regional transportation and construction specialty broker and as an underwriter. I’ve seen a lot of ways things can go wrong —and the impact those have on a motor carrier’s business.

Some of the most severe types of cargo claims, from a dollar perspective, that I see in auto transporting are:

Fires. A big rig generates a lot of heat when braking, and brake dust can catch fire. Running on a flat tire also can cause enough friction to ignite the rubber. Either way, the result can be damage not only to the tractor but the entire cargo, in or on the trailer. This is a problem for open transporters as well as enclosed trailers. For that reason, some motor carriers outfit their trailers with high-end fire suppression systems.

Rollovers. Gravity is a powerful thing, and a semi doesn’t need to be moving very fast to reach a tipping point — whether going around a bend or just slightly off a paved surface. Best-case scenario for cargo in a rollover is partial damage, but that can mean big trouble if the manufacturer declares a constructive total loss. This fact might surprise you, but very few cargo policies cover constructive total loss, and motor carriers may have to pay the difference out of their own pocket.

Accidents involving other vehicles. With so much traffic on the road, it’s only a matter of time before an auto hauler has a close encounter. In 2016, auto transporters were involved in tow-away crashes at the rate of almost four a day. Not every crash requires a tow, of course, so the accident rate is actually higher. Would you believe that a fairly common claim is damage to the vehicle at the back of the transporter, closest to the road? These tend to hang off a little, and I’ve seen a number of claims where the rear end was damaged by another vehicle, and the transporter’s driver didn’t even know it.

Damage loading or unloading. How often have you seen an auto transporter parked in the center lane of a busy road as it loads or unloads vehicles? Happens all the time when the delivery destination is a dealership, and some of the time, the cargo gets damaged.

It’s easy to forget that these risks mainly involve cargo, which standard auto physical damage or auto liability policies do not cover. Not all cargo insurance is the same. Motor carriers should look carefully at their risks and make sure their coverage is appropriate. The worst time to find out there’s a coverage gap is when a cargo loss happens.

Auto transporting is an interesting business run by good, hard-working folks. The risks and exposures they face make it harder to grow and sustain their businesses. Having the right knowledge and protection to manage those risks makes their journey a whole lot smoother.

For more insights on auto transporting and cargo coverages, visit our product page.

About Author

David Lee,
Former Director, Inland Marine at Tokio Marine America
David Lee is the former Director of Inland Marine Transportation for Tokio Marine America. His insurance career spanned nearly four decades with experience in commercial insurance underwriting, MGU program management, and specialty insurance brokerage.

About Tokio Marine America

As part of our commercial inland marine product offering, the transportation industry is well served by unmatched financial strength, dedicated underwriting experts, and a suite of flexible and proprietary insurance products that can be tailored to fit your needs.

With over a 100-year history in the U.S., Tokio Marine America (TMA) offers tailored products to a diverse range of customers – from small to large-sized global businesses seeking traditional multi-line coverage, to larger private and public companies requiring full risk management solutions. Our commitment to providing the highest level of service is paramount. More than 93% of our customers recommend TMA based on our superior claims service. TMA is one of only three insurers with an A++ (Superior) XV rating from A.M. Best. With a solid foundation of financial stability, our strength lies in understanding your business and working in partnership to exceed your expectations.

By offering fully integrated solutions to meet our customer’s needs, we endeavor to deliver ANSHIN – safety, security and peace of mind to all our customers.

Tokio Marine America (TMA) is the marketing name for Tokio Marine America Insurance Company (TMAIC).