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Trailer Interchange Agreements: What Every Power-Only Carrier Must Know

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  • GLI Dispatch Services
  • July 29, 2025

Trailer Interchange Agreements: What Every Power-Only Carrier Must Know

In today’s competitive freight landscape, power-only trucking has become an efficient and flexible solution for shippers and carriers. This model allows carriers to focus solely on providing tractor units, while trailers are supplied by brokers, shippers, or third-party logistics companies. However, operating without ownership of the trailer introduces legal and financial risks. That’s where trailer interchange agreements (TIAs) play a critical role.

A trailer interchange agreement is a legally binding contract that outlines the terms under which one carrier temporarily takes possession of a trailer owned by another party. These agreements are essential in power-only, drop-and-hook, and intermodal operations. They clarify responsibilities and liabilities, define the period of custody, and mandate proper insurance coverage, helping carriers operate with confidence and compliance.

Understanding the Trailer Interchange Agreement

At its core, a trailer interchange agreement defines who is responsible for the trailer at different stages of transport. It specifies when custody begins and ends, what condition the trailer should be in, who is liable for damage, and how insurance coverage is handled. Without this agreement in place, power-only carriers run the risk of being financially liable for damages to trailers they don’t own—an exposure that can be devastating without proper protection.

In operations where the carrier provides only the tractor, these contracts are not just helpful—they’re critical. They ensure that when a trailer is handed over, both parties understand their responsibilities, minimizing disputes and confusion.

What Should Be Included in a Trailer Interchange Agreement?

A well-written TIA should cover key elements that protect all parties involved. These include the exact timeframe during which the carrier is responsible for the trailer; inspection protocols before and after use; and clearly defined liability in case of damage, theft, or accidents. Insurance coverage is a core component—most agreements will require proof of trailer interchange insurance before any equipment is exchanged. Additionally, return procedures must be outlined to avoid disputes over late drop-offs or incorrect locations.

Some agreements include clauses for penalties in the event of delayed returns, improper documentation, or poor trailer condition. These clauses are legally enforceable and must be reviewed carefully before signing.

Trailer Interchange Insurance: What It Is and Why It Matters

Even with a signed agreement in place, carriers must protect themselves with trailer interchange insurance. This specific type of policy provides coverage for physical damage to a trailer while it is in the carrier’s possession under a formal TIA. Unlike liability insurance, which covers third-party injuries or damages, this policy covers the trailer itself.

Coverage typically includes collision, fire, vandalism, theft, and damage caused by weather or natural disasters. Without this coverage, carriers may have to pay out-of-pocket for damages, even if they aren’t at fault. Moreover, many shippers and brokers won’t even release a trailer unless valid insurance proof is provided.

Standard policy limits range from $20,000 to $50,000, although some contracts—particularly those involving specialized equipment—may require higher coverage amounts. Carriers must ensure their policy matches or exceeds the requirements specified in the interchange agreement.

Trailer Interchange vs. Non-Owned Trailer Coverage

It’s easy to confuse trailer interchange insurance with non-owned trailer coverage, but they serve different purposes and are not interchangeable.

Trailer interchange insurance is valid only when there’s a signed trailer interchange agreement in place. It covers the trailer during the custody period as legally defined in the contract. This insurance is often required by brokers and shippers because it clearly defines coverage responsibilities.

Non-owned trailer coverage, on the other hand, applies more generally when a trailer is attached to a tractor, regardless of whether a formal agreement exists. While helpful in some scenarios, it does not satisfy the requirements set by most trailer interchange agreements. Carriers who rely on non-owned trailer coverage alone may find themselves exposed to denied claims or liability disputes.

The Dangers of Operating Without a Trailer Interchange Agreement

Power-only carriers who haul trailers without a proper agreement or insurance coverage open themselves up to serious risks. If a trailer sustains damage and there’s no formal agreement in place, determining who is responsible can quickly escalate into a legal battle. Even worse, insurance providers may deny claims if the trailer was under the carrier’s control without the necessary documentation.

Carriers also risk being blacklisted by brokers and shippers who expect strict compliance with their contract terms. Not having a TIA or valid insurance during a DOT audit can also trigger compliance issues—even if the FMCSA doesn’t mandate it directly, failure to provide documentation raises red flags.

Reviewing or Drafting a Trailer Interchange Agreement

Power-only carriers should approach trailer interchange agreements with attention to detail. First, the agreement must clearly define when responsibility for the trailer starts and ends. Carriers should watch for clauses that may extend their liability even after the trailer has been returned or dropped off.

Insurance requirements must also be reviewed carefully. Some agreements may require not only proof of trailer interchange insurance but also that the trailer owner be listed as an additional insured party.

Before taking possession of any trailer, a full inspection must be conducted. Carriers should document all visible damage, take photos, and share them with the other party to prevent disputes. A standard checklist is a helpful tool during this process.

The agreement should also state when and where the trailer must be returned. Failing to meet these expectations can lead to penalties or affect future business relationships. All agreements, insurance documentation, inspection checklists, and communications should be saved both digitally and in physical files for reference.

Who Typically Uses These Agreements?

Trailer interchange agreements are common in intermodal freight, where trailers shift between truck, rail, and maritime transport. They’re also used in drop-and-hook operations, where carriers collect pre-loaded trailers and deliver them without direct interaction with the shipper. Dedicated contract freight and 3PL-managed logistics often involve these agreements as well, especially when a shipper owns a large fleet of trailers and uses multiple power-only carriers.

Best Practices for Power-Only Carriers

To protect your business and reputation, you should never haul a trailer without a written trailer interchange agreement. Relying on a handshake deal or verbal terms is a recipe for legal trouble. Insurance should be reviewed and renewed regularly to ensure you remain compliant. Always carry proof of coverage.

Educating drivers is also essential. Many claims arise from improperly documented inspections or mishandled trailer conditions. Drivers should know how to spot potential issues, log trailer conditions, and report them promptly.

Staying organized is just as important. Keep records of all agreements, photos, communication, and inspection logs in an easily accessible format. In the event of a claim, delay, or legal challenge, this documentation can be the difference between a quick resolution and a costly lawsuit.

Final Thoughts

For power-only carriers, trailer interchange agreements are more than just paperwork—they are your first line of defense in a complex, high-liability industry. Paired with the right insurance coverage, these agreements help you manage risk, build trust with partners, and operate more efficiently. In a world where equipment ownership and transport are often separated, knowing how to navigate these agreements isn’t just smart—it’s essential.

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