Is Your Trailer Leasing EXPOSURE Covered?

Freight brokers stepping into trailer leasing face significant new liabilities beyond just arranging transportation. From critical maintenance issues to relying on inadequate insurance, the risks are substantial. Learn why dedicated coverage and robust processes are essential to protect your brokerage from unexpected exposures.

Freight brokers who lease trailers to build a pool for motor carrier customers are taking on liability exposure that their existing contingent insurance policies likely do not cover — and in many cases, neither the broker nor the leasing company has caught the gap. That is the warning from Andy Kuchar, President of Centerline Insurance Company, who said a recent audit of freight broker certificates of insurance at one trailer leasing company found that every single certificate on file failed to cover the leased trailers.

“Every single certificate of insurance that those freight brokers had did not cover those trailers and they didn’t know it,” Kuchar said. The brokers had cleared the leasing company’s onboarding process, but compliance staff — not insurance specialists — had accepted documentation tied to commercial auto policies never designed to cover leased trailer fleets.

“The last thing you want, I think, is that — is to have an accident, the leasing company gets pulled in, you get pulled in, and only then you find out you’re actually not in compliance with the lease.”

Kuchar outlined two primary reasons trailer leasing raises the liability stakes for brokers. First, maintenance obligations typically fall on the lessee, meaning a brake or bearing failure that causes an accident — something Kuchar said he personally witnessed twice on Interstate 24 near Chattanooga — could trace directly back to the broker. Second, providing equipment moves a broker out of the role of pure transportation arranger, adding a layer of legal exposure that arranging-only brokers do not carry.

On the insurance side, Kuchar urged brokers to avoid relying on motor carrier commercial auto policies, even when named as additional insureds. Carrier policies often require every trailer VIN to be listed, and a leased trailer’s VIN will not appear on the carrier’s policy. Premium-financed carrier policies can also lapse without the broker’s knowledge. He said brokers should instead obtain a dedicated policy specifically designed for the trailer-leasing exposure, and cautioned that any policy containing the word “contingent” warrants close scrutiny of its exclusions and conditions. Contingent policies are cheap, he noted, for the same reason a $25 U-Haul damage waiver is cheap — low limits and narrow coverage.

Beyond insurance, Kuchar stressed the need for a documented trailer maintenance schedule. Visual inspections by truck drivers can catch obvious defects such as rotted tires, but cannot detect imminent bearing failures. Some leasing companies bundle maintenance tiers into their agreements, which can help brokers demonstrate that equipment is being kept roadworthy.

Kuchar also flagged leasing companies themselves as an emerging risk category. In the three to four months prior to the interview, Centerline had issued roughly a half-dozen policies to protect lessors directly, not just the brokers leasing from them. He tied the trend to post-Montgomery ruling litigation, in which courts have increasingly sought to extend liability to shippers, brokers, and now equipment lessors. Leasing companies typically operate on five-year contracts, meaning insurance compliance must be re-verified at every annual renewal — a process that can fall through the cracks when compliance staff are managing hundreds or thousands of client files.

• Every freight broker certificate of insurance reviewed at one trailer leasing company failed to cover the leased trailers, according to Centerline’s Andy Kuhar.
• Brokers should obtain a dedicated trailer-leasing policy and avoid relying on motor carrier commercial auto coverage, which may exclude unlisted trailer VINs.
• Centerline issued roughly six lessor-side policies in the past three to four months as courts increasingly pull leasing companies into accident litigation post-Montgomery ruling.

This Summary is generated thanks to a transcription of the interview, for the full interview please enjoy the video above.