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Over the past year we have witnessed many external changes which are putting additional pressure on the classification of direct employees versus independent contractors. Not only do we see increased IRS focus to audit over 6000 companies with transportation as one of their targeted industries, but state revenue shortages are also adding state tax regulators to look for additional revenue streams. Class action cases against large haulers in the local delivery market and CSA score changes are causing many to question the historical model of an independent contractor hauling under the prime carrier authority towards a business model shift to a contract carrier model in which the contractor has his own authority and own insurance coverage. To that end we have developed new insurance products for the Last Mile Delivery industry, who due to their local nature, are in immediate need of program insurance changes.

truckdivider Also in this newsletter, we will provide additional information on the Surface Transportation Board Valuation which becomes effective May 15, 2012. Lastly, Zurich Loss Control Service Team is on the road again hosting seminars throughout the country and enclosed are the dates and locations near you.

Paul Hanson Partner’s mission is to dedicate ourselves to providing the best insurance products and services to our customers, brokers, and underwriting partners.

We are pleased to announce that Paul Hanson Partners recently received “The Spirit of Excellence Award” from Zurich North American Insurance Programs Division. Receiving this award for a second time in 3 years is a tribute to our excellent employees, brokers, vendors and customers that help us achieve this prestigious award. As an organization we will continue to strive to provide the highest level of products and service to our customers.

All of the employees are very proud of this accomplishment and want to thank all of our customers for continuing to allowing us to provide your insurance needs.

Lisa R. Paul


Paul Hanson Partners



Over the past several years some significant changes are putting additional pressures on the correct classification between direct employee drivers versus the independent contractor.. We believe three specific areas have attributed to a push for change in the current independent contractor model whereby the contractor hauls under the authority of the prime carrier and is often insured under the master policy of the motor carrier:

  1. CSA 2010 Legislation – this legislation requires all CSA Scores become attached to drivers, compliance and ultimately part of the Motor Carrier’s overall score. We have seen a push from motor carriers to have independent contractors get their own Federal &State Authority.
  2. Federal IRS Renewed Commitment to Audit this class of business – a slow-down in the US economy has increased the pressure for additional tax revenue. Common Law 530 (Evidence of Control &Independence) is a review of the independent contractor versus employee relationship based on behavior, financial and specific classification type. In 2010, IRS launched its first major audit effort in 25 years for the “misclassification” of workers. The IRS plans to audit over 6000 employers in the transportation and construction industry over a 3 year period.
  3. State renewed efforts to penalizing misclassification of employees – Similar to the Federal government many State governments are having difficulty with the economic times and are searching for new and additional revenue streams. A recent law in California is an example that other states will be following soon: Effective January 1st 2012, California has a new law, Senate Bill 459, which drastically increases the penalties that will be assessed against employers who willfully misclassify independent contractors who should be treated as employees.


These external pressures and the ability to now provide affordable individual issued insurance policies will eventually move the current independent contractor model from what we are defining as Independent Contractor to Contract Carrier as defined as follows:

  • An “Independent Contractor” is defined as a contractor who hauls under the operating authority of the prime motor carrier. Typically the Independent Contractor insurance is being provided under a master prime motor carrier policy.
  • A “Contract Carrier” is defined as a contract driver who hauls under their own operating authority with their own individually issued insurance coverage.

By moving to a contract carrier model moving companies can distinctly define the role of their contract drivers and help prevent additional IRS auditing exposure and reduce external CSA scoring. Call us today about moving your local contractors to this contract carrier model.



The Surface Transportation Board (STB) new shipment valuation requires most interstate movers to change their shipment documentation to comply with this regulation. The proposed change is an effort to reduce shipper confusion over liability limits and consumers will be afforded enhanced protection levels which are more consistent with typical homeowner’s coverage on their possessions.

The hope is the industry will benefit from simplified paperwork and more straight forward valuation declaration process by providing different value levels and deductibles. In addition, it is designed to provide clarity in documentation, interstate estimates must provide customer’s Full Value Protection ($6 per pound) in the initial cost of the move. Upon request by the shipper, lower levels of valuation protection (i.e. 60-cent pound level) can be provided.

It is important to note that unless the shipper waives the Full Value Protection in writing and specifically chooses a lower level valuation, the shipment will be transported at the Full Value Protection Level. Please keep in mind the Movers Choice Program’s insurance policy provides insurance to the full value protection level or whatever you become legally liable for up to your company’s individual limit.

In addition, at the annual review of your current policy it will be determined if this required change will individually effect your company’s overall insurable interest exposure and premium. For some samples of how you can comply with this new statute ask your broker for a copy of our Advise of Coverage form or find it on our website.



“Drug and Alcohol Testing: Many choices, Many risks”

This seminar, brought to you by Zurich Services Corporation and FightReady, focuses on services that can provide this state-specific compliance and assist with reducing risk and cost associated with these complex issues in the workplace. This information-packed training has been designed to give senior management and safety professional the tools to help control and minimize these exposures and ultimately, protect your company’s bottom line. This seminar will be offered nationally and are free to our insured’s – for more information please download our free guide


Zurich Safety Video Program

Hot off the press is the ERI Safety Videos for 2012 Catalog. Mover’s Choice/Zurich Customers have access to well over 300 safety videos and training material to support their loss control program while taking advantage of preferred pricing for our valued customers. More specific information is available on the Movers Choice Website.



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