Managing Your Risks When Hiring Subhaulers

For organizations that operate vehicles, hiring safe, experienced, qualified drivers is essential. This is also true if you hire subhaulers to work on your behalf. Even though a subhauler typically operates their own vehicle, your company can be exposed to substantial risks if you hire an unsafe or unqualified subhauler.

A subhauler is generally an independent contractor hired to transport cargo. Like a general contractor hiring a subcontractor to perform specific work on a project, subhaulers are typically hired to supplement a portion of an organization’s transportation needs.

Using subhaulers can be an efficient way to handle excess work in a timely and cost-effective manner. However, it’s important that subhaulers have the required licensing, operating authority, insurance, experience, equipment and safety record to complete the contracted task without risking your company’s success. Without these qualifications, subhaulers can expose your company to significant reputational and financial consequences as a result of poor service and preventable crashes.

Subhauler qualification best practices

Here is a list of checks to help you ensure that subhaulers can safely and legally operate on your organization’s behalf.

Review the subhauler’s operating authority

Subhaulers should have the type of operating authority and permits required for the job. The Safety Measurement System (SMS) report from the Federal Motor Carrier Safety Administration (FMCSA) can help you confirm the subhauler's operating authority type and status.

Verify their certificate of insurance

Verify that the subhauler has auto liability coverage with adequate limits of insurance by contacting the company’s agent or insurance provider. Obtain an updated certificate of insurance at least annually to help confirm ongoing insurance requirements, as policies are typically renewed each year.

Request an SMS report from the FMCSA

The FMCSA’s SMS reports can provide important information about the subhauler’s experience, qualifications and past safety record, including:

Driver quality

The subhauler’s SMS report can be a valuable source of information about the company’s drivers and how they are managed. Watch for red flags, like safety violations, DOT-recordable accidents, drug and alcohol violations and hours-of-service violations. These are possible indicators that the subhauler’s driver hiring and retention procedures, safety policies, performance management and driver training are lacking.

Equipment

Subhaulers should have the right equipment for the job, and it should be well maintained. The subhauler’s SMS report can provide information about the company’s fleet, including type, size and inspection history. A high equipment violation rate may indicate that the subhauler is not inspecting or repairing its vehicles effectively.

Create a written subhauler agreement 

When hiring a subhauler, use a written agreement with indemnification provisions and clear insurance requirements. Your organization’s legal counsel should review the written agreement to ensure it is appropriate for its purpose and is consistent with state and federal requirements.

Review these procedures with key staff to confirm that those involved in managing subhaulers understand your requirements. Perform periodic audits to assure that all subhaulers are being properly screened.

Benefits of properly screening subhaulers

Working with qualified subhaulers can help add efficiency to your operations. The benefits of using experienced, qualified subhaulers can include:

• Reduced risk to your organization if the subhauler is involved in an accident.
• Products delivered to your customers in a timely fashion.
• Goods undamaged during the delivery process.
• A positive customer delivery experience because of the expertise of your subhauler.
• A completed project without costly delays. 

If your organization uses subhaulers or third-party carriers, make sure you’re protected from any potential claims of negligent hiring with a commercial auto insurance policy.

Learn more about commercial auto coverage by contacting your agent or a Travelers representative.