Hazmat transporters are getting forced out of the standard market, and many insurance brokers are losing the accounts they once thought were safe. “A lot of them are getting transitioned to the E&S market, which is not a fun place to be,” said Michael Sutton (pictured), commercial insurance specialist at Roark & Sutton, LLC. “The biggest thing they can do is just get educated on what it takes to stay in the standard market.”
As carriers pull back and underwriters tighten their appetite, pricing is only part of the pain. Deductibles are rising, exclusions are stacking up, and the coverage that remains is increasingly unstable. Brokers who fail to anticipate these shifts are leaving clients exposed – and themselves vulnerable.
Staying in the standard market is about more than just chasing a better rate. Sutton stressed that clients win not just on price but on structure, service, and long-term viability. “Staying with those standard carriers is a substantial price differentiator... but also the coverage is a lot better.” he said.
Still, too many haulers are letting budget pressure dictate risk decisions. “If their expenses are so tight that they just don’t have any profit left over, it influences their decision making,” Sutton said. “Sometimes it influences their decision making to buy a product that is inferior... just because it fits their budget.”
That short-term thinking can have long-term costs. “That’s probably going to bite you at some point,” he said.
Another blind spot for brokers is how hazmat-related claims are handled – particularly environmental remediation. When a spill occurs, costs can spike fast, and insurers often assign adjusters who lack the experience to manage cleanup vendors effectively. “These environmental remediation companies can really take these insurance companies to the cleaners,” Sutton said.
If that claim is mismanaged, it inflates the insured’s loss history, and future premiums follow suit. Sutton sees it happen often: “That goes on the client’s loss history,” he said. “Their rates are determined on what their loss ratio is.”
Rather than leave outcomes to chance, his team urges clients to take more control upfront by putting cleanup contractors on retainer. “You need to find somebody that knows that business and keep them on retainer,” he said. Pre-negotiating rates helps clients avoid getting gouged mid-crisis, and guarantees response times that satisfy regulators. “You’re not playing defense, you’re playing more offense,” he said.
As the market hardens, brokers need to step beyond the transactional. “We spend a lot of time and we make a lot of progress finding new clients because we’re fixing problems that other brokers don’t even know are there,” Sutton said. That competitive advantage has become a key differentiator – especially as exclusions grow more aggressive.
Many E&S excess policies arrive incomplete or intentionally vague, he said, and brokers must fight to get the terms right. “They’ll send you a bindable quote, and you have to really dig into that thing,” Sutton said. “Oftentimes, they just send the declarations page. They don’t even send the policy language.”
Pollution exclusions are among the most common and costly issues. Many excess policies come with total pollution exclusions, and even when coverage is added, it may only apply to specific triggers. “You’ve really got to read those pages,” Sutton said. “They’ll send it to you without any pollution coverage first... then they may send you one that only covers half the pollution coverage that you need.”
One overlooked risk? Aggregate pollution limits on auto policies in the E&S space. Unlike standard policies, which reload limits per claim, E&S carriers often cap pollution coverage at $1 million per year – regardless of frequency. “To have a million dollars worth of pollution claims in a year, it is not inconceivable,” Sutton said. “Bad news early is better than bad news late.”
Some brokers, eager to win business, are rushing clients into captives without fully understanding the implications. “Everybody wants to talk about all the money you can get back,” he said. “But if you have more claims than you pay in premium... they will send you a bill for your assessment.”
Captives may work well for well-capitalized, long-tenured haulers, but they require upfront investment and long exit timelines. “They’re easy to get into and hard to get out of,” Sutton said. “They’re going to hold on to your money for a while.”
For smaller operators, he often recommends self-insured retentions (SIRs) as a more manageable alternative. Because liability coverage represents the majority of premium in trucking, SIRs offer more meaningful front-end savings than simply raising physical damage deductibles. “That can result in a net positive for the trucking company,” he said.
In some cases, Sutton’s team has removed pollution coverage from the primary auto policy altogether, replacing it with a standalone transportation pollution liability policy. “That makes the primary auto carrier happy,” he said. “At times... it might provide a little bit more broad coverage.”
The bottom line for brokers? Expertise and transparency matter more now than ever. If you're not educating your clients about exclusions, retentions, and policy structure – someone else is. “Being a consultant instead of just a price provider really will do agents dividends,” Sutton said. “And the ones who aren’t evolving? They’re already losing the next account.”
