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9 Must-Know Facts about Commercial Trucking Insurance

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Commercial Trucking Insurance is a very important requirement to get your MC authority legalized.

Commercial Trucking Insurance is a vital requirement for a trucking business. Whether you are operating under a permanent lease to a motor carrier or under your authority.

What are some things an owner-operator should know and do before shopping for insurance?

  • Consult with a Commercial Trucking Insurance agent who offers insurance from multiple insurance companies.
  • Select a good insurance company
  • Select good underwriters. Good underwriters come with a good Commercial Trucking Insurance company (underwriters work with the insurance company they are the ones who evaluate risk, and decide on the insurance premium)
  • Find your deductible: that is what you will have to pay after a loss before your Commercial Trucking Insurance kicks in to pick up the rest.

FMCSA and DOT basic requirements for insurance:

FMCSA and DOT want you to have a policy that covers $750,000 in a combined single limit.

Say if you injure a person, or group of persons, or injure a person’s property then you have a bucket of 750,000 to indemnify persons you have hurt.

It doesn’t take a lot more money in premiums to go up to 1000,000 in liability coverage.
Cargo insurance is not required for MC authority, but freight brokers may ask for 100,000 dollars cargo coverage from you.

What happens to Commercial Trucking Insurance premiums when you haul hazardous materials :

If you are hauling (HazMat) hazardous materials you are required to have specific filings with FMCSA. It’s an add-on with cargo and liability insurance.

If you are hauling oversize or overweight there are specific filings for that as add ons. It doesn’t cost much to have these addons

The coverage and premiums depend on the loads you are hauling and brokers you are going to work with etc,

How to comply with Hazmat filing requirements?

What drives the cost of insurance?

If you see the breakdown of the policy premiums, 60 to 70% of your premium is going to come from the liability portion of your insurance.

Physical damage is important because it covers your equipment, trailer, or power unit from unforeseen accidents, theft, fire, vandalism, collisions, and rollovers. Whether it's owned, leased, or rented equipment.

One of the ways to control your cost of insurance is by looking at certain deductible options. Higher deductibles help you maintain a lower cost of physical damage.

What do mean by deductibles in commercial truck insurance?

You need to understand what deductibles are in your policy. A deductible is a sum of money you as an owner-operator need to contribute to the insurance payout before your insurance company’s payout kicks in.

Lower or non-separate deductible means you save more money while your insurance coverage kicks in.

Let’s assess the situation using an example: Say for a policy you have a $1000 deductible, which means if you incur a loss of $5000, you have to firstly pay $1000 before your insurance company pays the rest of the amount that is $4000.

Say for instance you have a policy with a 3 separate deductible for cargo, tractor, and uninsured motorist this means if you are involved in an accident. You will have to pay $3000 i.e. $1000 each to cover damages before your insurance policy kicks in.

Work with a insurer that understands your industry:

Select the right insurance partner who understands your niche in trucking. Because if you, unfortunately, get involved in an accident, there should be a protocol that should be followed. If an insurer doesn't know the industry, there may be an insurance payout delay or some other issue.

An insurance adjuster should know what to do, who to call and how much or when to pay out for. The adjuster will make sure the proper steps are followed so that the loss is handled quickly and effectively.

If you suffer a cargo loss, your insurer should be able to send experts who can make sure anything is still usable after the accident is transferred safely.

Imagine you are involved in an incident that results in a diesel fuel spill. If your insurer has experience dealing with trucking losses, it can send a claims adjuster who understands the process for cleaning up that spill.

Important questions to ask before zeroing in on an insurer :

1. Is your insurance company rated?
Rating agencies issue financial strength ratings, designed to measure insurance companies' abilities to meet insurance payment obligations to policyholders.
2. What kind of policy is it limited/unlimited?
Taking unlimited policy is better, such policies cover almost all hazards or losses which comes under a particular type of insurance
3. Is it a broad form or specific peril cargo form policy?
4. Are there any additional deductibles you have to worry about?
5. Is your insurance company specializing in trucking, what does it prefer local radius, or long haul?
6. Does your selected insurance provider have 24/7 claims reporting capabilities? Because the faster your claim is addressed, the better chance is there for you to resolve it quickly.
7. Ask your owner operator friends for reference, experience, reviews, and results of engagement with a commercial trucking insurance company?

8. What do your friends think about a company’s service, expertise, and overall value? Are your friends ready to recommend an insurance company or a specific insurance policy?

Once I get the insurance done what are the next steps?

Your insurance company provides filings to FMCSA notifying that the owner operator has got insurance coverage. Then your insurance record binds with your MC/DOT number and you can use the MC number to look for loads from a broker/shipper who accepts you.

Other urgent requirements for a owner operator

Firstly, there are a few operational adjustments an owner operator should make while he/she is in nascent stages of operation. Like enlisting a dispatcher to help you get good and well-paid loads.

Secondly, you need a good insurance agency/provider covering you for various circumstances/policy types. You need to take 3rd party liability, cargo, uninsured motorist, trailer/equipment insurance.

You need to enlist a factor who has competitive rates and above par service quality to make your business financial bottleneck-free. This will help you to have a good cash flow and working capital.

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2 thoughts on “9 Must-Know Facts about Commercial Trucking Insurance”

  1. I like your suggestion about hiring an insurer that’s familiar with the same industry as your business. That should really be helpful as someone in that industry would understand the issues at hand and be more receptive to you claiming and sometimes even knowing how much your insurance is compared to if it was someone from outside of it. My father is planning on running a trucking service of his own and I fear that with winter coming and how old he is, he might get into an accident or break down on the road. I’ll be sure to suggest he get trucking insurance just to be on the safe side. https://russellagencyal.com/landers/tennessee/

  2. We have introduce a pay-per-day insurance model that really helps make insurance more affordable for owner operators. If a truck is on the road for 220 days a year, why pay insurance on the full 365. Would recommend your readers check us out at lulatrucking.com

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