Broker Errors & Omissions

What it actually covers

Errors and omissions — professional liability — covers your brokerage when the allegation is that you did your job badly. Not that a truck crashed, not that freight was stolen, but that you made a mistake: you selected a carrier you should have screened out, you tendered the load to the wrong one, the bill of lading was wrong, the delivery window was missed because of how you scheduled it, you told a shipper coverage was in place when it was not.

These claims rarely arrive labelled. They arrive attached to a cargo loss or an accident, as the second and third counts of a complaint, which is why E&O is usually written on the same policy as contingent cargo and contingent auto liability rather than bought in isolation.

Negligent selection is the claim to plan for

The theory is straightforward: as the broker, you chose the carrier, and a reasonable broker exercising ordinary care would not have chosen that one. The facts that decide it are all facts you control before the loss — what you checked, when you checked it, what you did when a screen came back marginal, and whether any of it was written down.

Two brokerages with identical revenue and identical loss runs will be underwritten very differently on this question. The one with a written carrier selection policy, a named person or team who approves exceptions, documented exception approvals, and a defined record retention period gets better terms — and, far more importantly, defends the claim better.

Where the line sits with general liability

General liability handles bodily injury and property damage arising from your premises and operations — a visitor injured in your office. It does not reach professional judgment. If your shipper contract requires both, they are two coverages, and a certificate showing only GL will not satisfy an E&O requirement.

The questions that set your premium

• Do you have a written carrier selection and vetting policy, and are exceptions to it subject to documented approval?
• Who can approve a new motor carrier — a central compliance or risk function, an individual broker, or operations staff?
• How long do you retain records? Under a year, one to three, three to five, five or more — this maps directly onto how defensible a three-year-old claim will be.
• What percentage of your loads are co-brokered? Co-brokering adds a party and a set of exposures underwriters price separately.
• Do you issue the bill of lading?
• Do you have shared ownership or a financial interest in any motor carrier, and what share of your loads goes to it?

What we need to quote it

Trailing and projected gross freight revenue, your vetting and exception governance, record retention period, co-brokering share, whether you issue the BOL, any affiliated carrier relationships, five years of loss runs valued within 60 days, and your broker–carrier agreement.