Motor Carrier Insurance Coverage
If you’re an owner-operator, you already know the routine because it happens every year. You sit down with an agent, select a company to insure your truck, settle on a policy that can meet your needs, and sign a check that guarantees coverage.
Of course before you sign the check, you should do your homework to make sure you are buying the right insurance or the right price. Unfortunately, the trucking lifestyle doesn’t come with much spare time. So take 10 minutes right now and review the following points on buying truck insurance. You’ll save hours of research and probably a good amount of money as well.
The Right Insurance Company
Companies that insure motor carriers, trucks and drivers are not all the same. Some sell through independent agents, while others go through their own sales staff. Some specialize in commercial truck insurance, and others sell it as one of a secondary line of coverage. Some companies specialize in specific niches within the motor-carrier industry, such as large fleets, temperature-controlled equipment, or owner-operators. Some cover thousands of small customers, while others only handle a few big ones.
The most important part of looking for the right insurance company is to buy from a company that specializes in truck insurance. If you go through a non-specialist, they may overlook certain details in your coverage. For example, a non-specialist might not know that owner-operators may have to upgrade their coverage on a temporary or single-trip basis to qualify for a lucrative back-haul delivering a commodity they don’t normally carry. A specialist would know to ask whether you need this coverage and could recommend a policy that provides it at a price an owner-operator can afford. Also, a non-specialist may not be able to provide you with certificates of insurance in a timely manner or they may not know how to post the coverage you have with the Federal Motor Carrier Safety Administration (FMCSA), both of which can have serious negative impacts on your business.
Specialists and non-specialists differ greatly in the way they investigate and verify claims. Because specialists understand that when your truck is out of service, you’re closed for business, so they’ll get an experienced truck claims adjuster to an accident scene at 2 a.m., if needed. The adjuster will immediately take photos, interview witnesses and public safety officials, and expedite removal of your damaged unit to a qualified repair shop. Whereas a non-specialist may see no harm in waiting until the next day, after witnesses have disappeared, skid marks have faded or become obscured, and the responding officers are off-duty.
Five Fundamentals to Choosing Insurance
Once you’ve found several insurers who specialize in trucking, compare how each scores with these five fundamentals.
- Experience – How long has the company been in business? How long has it specialized in truck insurance?
- Financial strength – Does the company have sufficient reserves to cover many expensive claims at one time?
- Coverage – What kinds of contingencies and damages are covered by the basic policies? Do these policies offer options that could be adapted to your needs?
- Cost – What is the cost of basic coverage? What is the cost of additional coverage or optional types of coverage? Costs will vary by region, commodity, radius driven, and other factors, but should be comparable to other bids for your business.
- Value – What is the total value in time, money, and convenience of the products and services you provided? Can they quickly get you a certificate of insurance 24/7? Are their claim procedures easy to follow? Are their employees knowledgeable, helpful, and accessible? Do they respond promptly when you need help? Do they provide skilled assistance in reducing accidents and passing DOT audits? If so, are there additional charges for such assistance? Placing a total value on the policy and your relationship with an insurer takes some effort, but you owe it to yourself to take the time so you can get the best value for your money.
What You Need Covered
Knowing what coverage to buy and how much to pay can be difficult if you don’t know what to look for or what questions to ask.
Some of the coverages you buy are required by the USDOT regulations. For example, you must carry liability insurance to pay for damage you cause to another persons property or for medical care given to a person for an injury you caused. Other types of coverage required by state authorities, or by shippers, include physical damage to the cargo and workers’ compensation. If you are an owner-operator, you normally don’t need workers’ compensation because you have no employees, but you may need accident and health insurance as well as disability coverage on yourself as a self-employed professional.
You may also need uninsured-motorist (UIM) coverage and personal-injury protection (PIP) as well as bobtail insurance to cover accidents that occur during “non-trucking use” when your truck is not hauling a revenue load. Unless you own a terminal, you will not need terminal insurance, but if you maintain your own vehicle, you’ll want to insure the garage where you do the work.
If you are an owner-operator, the coverages you need will depend on whether you run under your own authority or under someone else’s authority on a permanent or trip lease. If you’re operating under your own authority, you’ll need, at a minimum, the following:
- Primary liability coverage
- Physical damage coverage, which also covers your electronic equipment, tarps, chains, etc.
- Cargo coverage, which insures the contents of the trailer, temperature-control machinery, and other appliances or accessories that keep cargo secure. Coverage should be tailored to the type of commodities hauled and the requirements of the shipper. “All-risk” cargo coverage normally is not available.
If you operate under another’s authority, don’t accept an assignment until you’ve read the lease carefully to determine who is responsible to provide insurance coverage. If you don’t have a copy of the lease, demand it. In most cases, the motor carrier to whom you are leased will carry primary liability coverage. However, few leases carry physical damage coverage for the owner-operator. You will need this coverage because you may be liable for damage to trailers you pull but do not own.
Insurance may be a hassle, but the law requires it for all drivers. Talking with a qualified insurance agent will help you get the best possible coverage at the best possible cost. Follow the five fundamentals of finding insurance and you’ll be on your way to quality insurance in no time.