There are alot of new owner-operators in the industry that have questions about commercial truck insurance requirements. You came to the right place. Here we will be taking a deeper look at the world of trucking insurance. Insurance coverage for your trucking business is a different ball game from for business owners than for your personal auto insurance.
Simply put, Insurance is a truck drivers best friend in a lot of ways. The Federal Motor Carrier Safety Administration will not let you operate without it. Infact, the FMCSA and DOT require 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 your insurance is in place, you have a working trucking company. Proof of coverage always needs to be handy for inspections or in the event of an accident.
Insurance is one of the most expensive purchases for a trucking company. The premiums require a large amount of upfront cash and the monthly payments can be in the thousands. So why do you need something that is going to cut into your profits? Protection. Insurance protects not only your business but your customers’ as well.
When a customer gives you freight to haul, they are trusting you with their business. Your customer needs that freight to reach its final destination in pristine condition because that freight represents their profits. Damaged freight could put your customer out of business. Having insurance shows your customers that you are able to protect their interests in case of an accident. It also protects yours since you will not have to pay for total damage costs out of pocket.
In this industry it is not as simple as having your own authority and holding a policy for primary liability or liability coverage and being good to go to get on the highway with other motorists. So what type of insurance do you need? There are many different coverage options within commercial truck insurance when it comes to insurance coverage. If you are hauling things like hazardous materials, the requirements can grow quickly. You want to make sure that you are working with a quality professional insurance provider that can properly advise you of your needs to protect you in the trucking industry. Some of the different coverage options out there may protect your truck but not the load that you are hauling which could leave you in a bad spot if something goes wrong. It is very wise as professional drivers to keep your driving records as clean as you possibly can as that will play a huge factor in ability to obtain coverage and the overall insurance costs.
Let’s take a look at some of the various types of trucking insurance policies that you may need depending on your situation:
Bobtail Insurance: This provides protection for a tractor when it is operated without a trailer, whether under dispatch or not. This can often be confused with Non-Trucking Liability Insurance, which covers your vehicle when you are using it for personal use.
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.
Mechanical Breakdown Insurance: Coverage to assist in with out of pocket expenses for repairs.
Motor Truck Cargo Insurance: Covers freight or commodity and liability for cargo.
Motor Truck General Liability Insurance: This coverage protects motor carriers or for-hire truckers in claims for bodily injury, personal injury, property damage liability, advertising injury liability, medical payments, product & completed operations, and seven days or less coverage for damage to rented properties.
Non-Trucking Liability Insurance: Provides coverage for the use of a truck for non-business purposes when using your truck on days off.
On-Hook Coverage: Provides coverage of vehicles that are not owned by your business during towing or hauling.
Optional Downtime Coverage: Takes effect when your commercial truck undergoes downtime.
Passenger Accident Insurance: Provides coverage for the driver if an accident occurs while an uninsured passenger is in the vehicle.
Physical Damage Coverage: Protects your commercial vehicle when physical damage occurs.
Trailer Interchange Agreement Insurance: Provides coverage for damage to non-owned trailers when they receive physical damage.
These needs and requirements can often change as you haul for different carries that hold different expectations of coverage. Your insurance agent will be able to judge your needs and find you the best coverage options within that scope.
The requirements to obtain commercial truck insurance are not as daunting as you may think; however you want to make sure you can provide as much information as possible for your company’s situation so your agent can effectively find the best fit policy for your needs. Here are some of the items you may need to get started:
First off you will need to have your CDL if you are hauling over 26,000 pounds. Also, you will want to keep in mind that if you have had your CDL for less than two yeas time, you will end up paying substantially more as you are seen as more of a risk. You will also need to have an active authority, meaning your MC and DOT numbers depending on what is applicable to your business to be able to obtain commercial insurance. Additionally to this you will need to be able to provide the specifics of the vehicles you are wanting to add to the policy including make, model, year, and the vin numbers.
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