How much does insurance cost for freight brokers?

Freight brokers and forwarders pay an average of $846 per month, or $10,157 per year, for commercial auto insurance.

If a truck owned by your freight brokerage is involved in an accident, commercial auto insurance would help cover legal costs, medical bills, and any damage it caused. Cargo insurance would cover any cargo loss or damage.

Most freight brokers and forwarders don't own the trucks used by their business, but they still buy auto insurance. Contingent auto liability insurance and contingent cargo insurance protect your business if the motor carrier's own policy isn't sufficient for a claim.

Most states require commercial auto insurance for vehicles owned by a business. Each state has its own requirements for how much auto liability coverage you need.

State laws, the Federal Motor Carrier Safety Administration (FMCSA), and shippers may require you to carry other types of insurance as well. For example, you'll need $750,000 in liability insurance for cargo loss or damage to get a freight broker license in California, along with a good credit score. The FMCSA requires a $75,000 freight broker surety bond and a USDOT number to operate legally.

For a comprehensive risk management strategy, you should consider optional coverages, such as physical damage insurance, as well.

Commercial auto insurance premiums are determined by several factors, including your policy limits and deductible, the value of your vehicles, your employees' driving records, and the coverage options you choose. For cargo insurance, the premium is often a percentage of the cargo's value, usually between 0.5% and 3%.

Freight broker businesses and freight forwarders pay an average of $146 per month, or $1,752 per year, for general liability insurance.

General liability insurance covers common accidents at your office that result in a bodily injury or property damage. For example, if a client trips on a loose rug and suffers a concussion, a general liability policy would pay for their medical bills or legal defense costs if they sue.

This policy can also pay for lawsuits related to copyright infringement and defamation, including slander and libel. That makes it important for small businesses that have a website or promote their services on social media.

Most often, freight brokers need general liability insurance coverage to sign a contract, lease a commercial space, or take out a business loan. It shows your clients and partners that they're protected against financial losses in the event of an accident.

Below is the average general liability policy for freight brokers and forwarders who buy from TechInsurance:

Premium: $146 per month
Policy limits: $1 million per occurrence; $2 million aggregate
Deductible: $1,000

If your business is small and low-risk, TechInsurance's licensed agents usually recommend a business owner’s policy (BOP). A BOP bundles general liability insurance with commercial property insurance at a lower cost than buying these policies separately.

The cost of general liability insurance is based on numerous factors, including your business operations, the policy limits and deductible you choose, the size and location of your business, the number of employees you have, and any exclusions or endorsements on your policy, such as an additional insured.

Trucking companies pay an average of $650 per month, or $7,795 annually, for workers' compensation insurance.

Workers' compensation covers medical costs and disability benefits when you or an employee suffers a work-related injury or illness. For example, if an employee falls and breaks their wrist during a freight broker training session, this policy would pay for their medical bills and lost income while they recover.

Most workers' comp policies include employer's liability insurance, which pays for legal defense costs in the event of a lawsuit related to a work injury.

To comply with state laws and avoid penalties, freight forwarders and brokers that have one or more employees typically must purchase this policy. Workers' comp isn't usually required for sole proprietors or independent contractors, but it's still recommended since most health insurance plans can deny claims for injuries that happen on the job.

The cost of workers' compensation insurance is based on several factors, primarily the number of employees you have and their occupational risks. Other factors, such as the cost of medical treatment in your state, can also affect your premium.