What Insurance Do I Need For My Trucking Business?

Insurance coverage for your trucking or transportation company is completely different from for personal auto insurance, there is no doubt about it.

Insurance can be helpful to truck drivers in many ways. The Federal Motor Carrier Safety Administration (FMCSA) will not let you operate without having insurance and the Department of Transportation (DOT) requires proof of liability insurance for your Operating Authority/MC Number application. Most shippers require proof of insurance before they will trust your company with their freight. As long as you have insurance, you have a working trucking business. Proof of coverage always needs to be handy for audits or in the event of an accident while on the road.

Insurance for trucking companies is expensive, simply put. The premiums require a large amount of upfront cash and the monthly payments can be in the thousands, but its important to have it as it protects not only your business but your customers’ as well. When a customer gives you a load to haul, they are trusting you with their business or even property. The customer needs that load to reach its final destination in the best possible condition because it typically represents their profits. Damaged goods could lead to one less customer for you as well. Having insurance shows that you are trustworthy and able to protect their interests in case of an accident. It also protects your interests since you will not have to pay for total damage costs out of pocket.

Types of Truck Insurance

There are several different options for coverage within commercial truck insurance. If you are hauling things like hazardous materials, or oversized loads the requirements can quickly grow. You want to make sure that you work with qualified and professional insurance providers that have knowledge of the trucking industry and can properly advise you of your needs. Some of the different coverage options out there may protect your truck, but not what you are hauling which could put you in a bad position if something didn’t go as planned.

Let’s take a look at some of the various types of trucking insurance policies that you may need depending on your situation.

1. Motor Truck Cargo Insurance – Covers freight or commodity and liability for cargo.
2. Motor Truck General Liability Insurance – This coverage protects truckers in claims for bodily injury, personal injury, property damage liability, advertising injury liability, medical payments, product and completed operations, and seven days or less coverage for damage to rented properties.
3. Non-Trucking Liability Insurance – Provides coverage for the use of a truck for non-business purposes.
4. Bobtail Insurance – This can often be confused with Non-Trucking Liability Insurance, which covers your vehicle when you are using it for personal use. This provides protection for a tractor when it is operated without a trailer, whether under dispatch or not.
5. Limited Depreciation Coverage – This policy will help to cover the gap between the fair market value that the insurance will likely pay out and what you owe on the vehicle, or the cost to replace the vehicle.
6. Mechanical Breakdown Insurance – This insurance coverage can be useful for out of pocket expenses for repairs.
7. On-Hook Coverage – Provides coverage of vehicles that are not owned by your business during towing or hauling.
8. Optional Downtime Coverage – Takes effect when your commercial truck undergoes downtime.
9. Trailer Interchange Agreement Insurance – Provides coverage for damage to non-owned trailers when they receive physical damage.
10. Passenger Accident Insurance – Provides coverage for the driver if an accident occurs while an uninsured passenger is in the vehicle.
11. Physical Damage Coverage – Protects your commercial vehicle when physical damage occurs.

Your insurance agent will be able to judge your needs and find you the best coverage options within that scope. The FMCSA requires interstate truckers to meet minimum limits of coverage. In other words, if a trucker is at fault in an accident that does $500,000 worth of damage, the FMCSA wants his insurance policy to cover at least $500,000. In this scenario, a policy that only covers up to $250,000 wouldn’t cut it.

Your minimum required limit depends on the type of freight you haul.

Many shippers and brokers require you to have at a liability limit of at least $1,000,000 regardless of what type of material you haul.

Commercial Truck Insurance Requirements

It is important that you make sure you provide as much information as possible for your company’s situation and how it operates so your insurance agent can effectively find the best fit policy for your needs. You will need to have your CDL if you are hauling over 26,000 pounds. If you have had your CDL for less than two years, you will end up paying substantially more as you are seen as more of a risk to most insurance agencies. You will also need to have an active authority, meaning your Motor Carrier and DOT numbers depending on what is applicable to your business to be able to obtain commercial insurance. You will also need to be able to provide the specifics of the trucks you are wanting to add to your policy including make, model, year, and the vin numbers.

What Is a Self Insured Company?

If a company is self insured, it means that they would not be attached to or related with any insurance companies. Because of this, self insured companies don’t have to follow certain insurance guidelines or regulations. This allows the company to accept drivers that typical insurance companies would not insure. Drivers with higher risk ratings due to tickets, accidents, or other notable incidents on their record are typically not given coverage from insurance companies. A self insured company can provide a higher risk driver with coverage, at the risk of their own investments. The company itself becomes a very small insurance provider to those they want, despite the driver’s history.

new drivers that have no driving record are also affected. Most insurance companies will not insure a driver that does not have at least two years of experience. The only way to gain those two years of experience may be for a company to be self insured and for a new driver to get insurance coverage through the self insured company. Generally, the amounts self-insured companies are required to set aside as premiums are higher than if they were to get insurance through insurance companies. This is to cover the higher risks they are accepting for covering new and more dangerous drivers.

Related Articles:

• FMCSA Updates Hazardous Materials Safety Permits Regulations
• Paperwork and Equipment to Carry in a Commercial Motor Vehicle (CMV)
• The Four Types of DOT Audits and How to Prepare for Them