Trailer interchange insurance: who pays when someone else’s trailer is damaged on your watch

Carriers swap trailers. A power-only load, a drop-and-hook with a shipper's trailer, a pool of intermodal chassis and containers: in each case you are pulling equipment you do not own, and the agreement you signed almost always says you are responsible for loss to it while you have it. IRMI puts it simply: under an interchange agreement, the carrier in possession of the trailer is responsible for damage to it, whether or not the trailer is hitched to a tractor.

Your regular policies do not cover that responsibility:

• Your auto liability excludes damage to property in your care, custody or control. A trailer you are pulling is in your care.
• Your physical damage covers autos you own (and, for hired auto physical damage, autos you rent without a driver). It is not built for someone else's trailer under an interchange agreement.

Trailer interchange coverage pays the sums you legally must pay as damages because of loss to a trailer you do not own, or its equipment, and the insurer defends you against a suit for those damages.

Motor Carrier Coverage Form (CA 00 20). Trailer interchange is Section III of the form. It is available in the same three flavors as physical damage: comprehensive, specified causes of loss, and collision. It is triggered by symbols:

• Symbol 69: trailers you do not own while in your possession under a written trailer or equipment interchange agreement in which you assume liability for loss to the trailers.
• Symbol 70: trailers you own or hire while in the possession of anyone else under a written trailer interchange agreement. When symbol 70 is shown next to a physical damage coverage, the exclusion for your trailer in someone else's possession does not apply.

The motor carrier form says its trailer interchange coverage is primary for any covered auto. For trailer interchange only, "trailer" also includes a container.

Business auto form (CA 00 01). Trailer interchange can be added with CA 23 98 (Trailer Interchange Coverage) or through the trailer interchange schedule in the Motor Carrier Endorsement (CA 23 30). Under CA 23 30, interchange losses are valued at the least of actual cash value, cost of repair, or the stated limit, less a per-trailer deductible.

Truckers Coverage Form (CA 00 12). On the older, withdrawn form, the trailer interchange symbols were 48 and 49. You may still see those numbers on old quotes or certificates.

Drayage carriers pulling containers and chassis from ports and rail ramps generally sign the Uniform Intermodal Interchange and Facilities Access Agreement (UIIA), administered by the Intermodal Association of North America (IANA). The UIIA includes an indemnity in which the motor carrier defends and indemnifies the equipment provider and facility operator for claims tied to its use of the equipment and presence on the facility, with exceptions.

ISO's CA 23 17 (Uniform Intermodal Interchange Endorsement Form UIIE-1) extends auto liability to cover the liability you assume as a motor carrier participant under that indemnity, and requires the insurer to file a certificate with IANA and give it at least 30 days' notice of cancellation. It does not cover physical damage to the container or chassis. That is trailer interchange. A drayage carrier usually needs both. See drayage trucking insurance.

No written agreement. The ISO symbol 69 requires a written trailer or equipment interchange agreement in which you assume liability. If you pull a shipper's trailer on a handshake or under a broker's rate confirmation that does not address the trailer, ask whether your coverage applies. Some insurers offer a separate non-owned trailer physical damage coverage for this; its terms vary. See trailer interchange vs non-owned trailer.

Limit too low. Trailer interchange is often written with a per-trailer limit. A new reefer trailer costs far more than an old dry van. Match the limit to the most expensive trailer you realistically pull.

Wrong coverage selected. If you bought only specified causes of loss, a collision with a bridge or an overturn is not covered. Most carriers want collision on interchange.

Contract terms beyond the policy. Some interchange agreements make you responsible for loss of use, per diem or administrative charges in addition to repair. The trailer interchange section of the ISO motor carrier form says plainly that it will not pay for loss of use, and it excludes loss due and confined to wear and tear or mechanical breakdown. Those contract charges can land on you. Have an attorney review the agreement and compare it to your declarations. See broker-carrier agreement insurance requirements.