Are you a new business owner who needs trucking insurance? Perhaps you’re an experienced owner-operator who is weighing insurance options.
An owner-operator should obtain a commercial trucking policy to protect their products and trucks. That said, there are different types of commercial truck insurance.
Moreover, not all of them provide equal coverage. For example, a general liability policy won’t provide the same type of coverage as a primary liability policy.
You must also consider add-ons in the form of bobtail and uninsured coverage. The add-ons depend on the nature of your business and your budgetary preferences.
This article will provide comprehensive insight into insurance trucking protections. Read further to know more.
Commercial Truck Insurance Basics
If you’re a lone truck driver, you must have a primary liability policy. A primary policy covers any damage to another vehicle or person. It doesn’t cover the truck itself.
If you need protection that will repair or replace equipment, consider a physical damage policy. A physical policy boils down to two types of coverage:
- Comprehensive Coverage: This type of coverage will cover damages unrelated to car accidents, such as theft or fire.
- Collision Coverage: This form of coverage is specific to car accidents.
Owner-operators should consider physical damage coverage to protect their investments, including owners who lease trucks. However, a physical damage policy won’t cover driver injuries.
If drivers sustain an injury while on the job, the owner-operator’s insurance company will provide compensation. The carrier will cover medical bills and lost wages. Workers’ comp is mandatory in most cases.
Additionally, truck company owners should take out a general liability policy that covers all drivers. A general liability policy will cover the company if a driver or worker causes harm in some way.
- Example: A loading worker may damage property while working on another company’s property. The actions of the worker would be protected under general liability coverage.
A general liability policy will also protect policyholders against lawsuits. Further, general liability will protect you during cases of slander, false advertising, or libel. Experts recommend a general liability policy, but it usually isn’t mandatory.
The following add-ons will enhance your policy:
- Bobtail Insurance: Bobtail insurance will provide coverage if you’re driving the truck without the trailer. In particular, a bobtail provision protects drivers who get into an accident while off the job.
- Uninsured/Underinsured Coverage: This policy is a good option if you only have liability coverage. If you’re involved in an accident with another driver who doesn’t have insurance, you could pay for all expenses out of pocket. However, an uninsured addition allows you to petition for compensation.
- Reefer Breakdown: This provision will cover products contained within the trailer. It will also cover product damage due to a collision or refrigeration breakdown. That said, certain items are excluded, such as tobacco goods, seafood, and frozen food.
Commercial Auto Policy Differences
Commercial trucking insurance is a form of commercial auto insurance. However, trucking insurance applies to the trucking industry alone. Truckers need a commercial trucking policy instead of a commercial auto policy.
This is because commercial auto plans aren’t enough to cover trucking accidents. Due to the risky nature of the trucking industry, you need a policy with higher liability protections.
Additionally, the Federal Motor Carrier Safety Administration (FMCSA) mandates that truckers maintain a minimum amount of trucking coverage. Truckers must have a minimum of $750K in insurance protections.
Cost of Coverage
Insurance carriers allow trucking professionals to create custom policies. Therefore, the prices can vary. Coverage can stretch anywhere from $8,000 to $14,000 a year. However, you must pay a deductible before your policy kicks in.
- Example: If you have a $2,000 deductible, and the damage amounts to $6,000, you’ll pay the $2,000 upfront. The insurance company will pay the remaining $4,000.
The deductible amount depends on the insurance company. If you choose to pay a higher deductible, you can get a lower payment.
The cost also depends on other factors, such as:
- Age of the Drivers: Your insurance carrier may increase or decrease rates based on the age of your drivers. If you have drivers in their twenties, for example, your insurance provider could raise rates since young drivers tend to take more risks. On the other hand, carriers could increase rates if your drivers are too old.
- Hauling Duties: Riskier cargo may come with higher rates. Insurance carriers could increase the premiums if your business hauls hazardous materials.
- Age of Equipment: Replace old equipment to get a better rate. Also, ensure that your current equipment remains in pristine condition.
- Driving Records: If you hired drivers with bad driving histories, the insurance company will charge you more.
How to Save Money on Insurance Premiums
When it comes to employees, only hire drivers with minimal driving infractions. Additionally, tell your drivers they should stay within the speed limit at all times. Speeding tickets can raise your rates.
You can teach your employees about safe driving classes. Insurance companies look favorably on trucking companies that prioritize safety.
Companies with a commercial trucking license can also get a discount. The discount standards depend on the insurance company’s guidelines.
For example, you can get a discount if you’ve been in business for at least three years or more. Other companies may give a discount if you’ve had a CDL for two years or longer.
Trucking Insurance Requirements
When it comes to trucking insurance, a primary liability policy is mandatory. A general liability policy is usually optional, but it’s a wise addition if you employ drivers.
There are other policy additions to consider: physical damage, bobtail, reefer, and uninsured policies. Physical damage will cover property damage, and workers’ comp claims will cover driver injuries.
Are you wondering what you should do after a car accident? Click here to learn more.