What is Commercial Truck Insurance?

What is Commercial Truck Insurance?

Are you a commercial trucker? Do you have the right insurance policy to cover your business activities? Commercial trucking insurance consists of specialized auto insurance policies to protect trucking companies and independent operators.

The policy typically focuses on primary liability protection and adds additional coverage onto that package. Primary liability trucking insurance is a requirement for application or receipt of your trucking license. It protects people from liability or damage caused by your vehicle.

Owner-operators of trucking companies must expand their policy to include general liability cover as well. This post looks at everything you need to know about commercial truck insurance.

What is Commercial Truck Insurance?

How Does Trucking Insurance Work?

Trucking insurance policies revolve around primary liability coverage. However, as an owner-operator, you’re going to need general liability cover added to your policy to get your trucks on the road. Primary liability only covers other parties in the event of an accident or property damage.

While the policy protects the general public, it leaves your business with a massive liability if things go wrong. Therefore, adding general liability insurance into your cover protects your company and assets in the case of an accident.

General liability is essential coverage for any tricking business. However, it won’t cover you against issues like lawsuits for slander, libel, or false advertising claims. According to national trucking regulations, all trucks on the road need at least a minimum of $750,000 in coverage to operate.

The Federal Motor Carrier Safety Administration (FMCSA) also requires certain trucking companies and operations to prove they have the necessary general liability insurance coverage. According to the Trusted Choice Group of independent agents, a commercial truck accident’s median cost is $59,000 in the United States.

The same research shows one in every three small businesses’ closures occur due to uninsured expenses relating to lawsuits or accidents. Therefore, ensuring you have the right cover for your trucking operations is critical to your company’s livelihood and success.

What Is Owner Operator Truck Insurance?

Owner-operators require specialized insurance cover for their business. It’s also important to note the differences in the types of cover based on leasing or ownership of the carrier vehicle. When an owner operator leases to a motor carrier, the trucking company’s policy covers them for any accidents or legal problems.

The owner-operator must understand that the coverage only applies when they are under dispatch or carrying loads. Typically, these policies only cover third-party liabilities. Therefore, the owner-operator must ensure they have separate owner-operator coverage. This insurance protects their assets and business from catastrophic loss. Typically, the trucking company mandates the policy for the owner-operator before leasing onto the company.

Owner-operators must consider acquiring additional policies to cover damage or trailer interchange coverage, and in many states, it’s a mandatory requirement.

All owner-operators working under their authority must purchase an auto liability cover (BMC 91-BMC-91X), based on requirements from FMCSA. Most owner operators must have a minimum policy cover of $750,00. However, brokers and freight forwarders often have a minimum coverage requirement of $1-million.

While auto-liability is important, owner-operators also need to consider cover for cargo, physical damage, and general liability. The owner-operator may also require additional add-ons to policies based on state law requirements or contracts.

Finding the right policy for your new trucking business is an expensive exercise. You must understand you’re your companies business objectives and future goals before opening your policy.

Why Do I Need Commercial Truck Insurance?

There are different insurance policy considerations for independent operators and those working under a lease agreement. Leased owners may want to consider the following policy coverage factors.

Owner-Operators Under Carrier Authorities

Non-trucking Liability – If you’re operating without monetary benefit to yourself or the carrier company, look for non-trucking liability insurance policies.

Bobtail Liability – Use this policy for coverage if you’re driving without a trailer.

Unladen Liability – This policy coverage protects you when driving with an empty trailer.

Physical Damages – This policy covers accidental damage to your truck or damage due to vandalism or fire.

Passenger Accidents – This policy covers you for carrying passengers that are not employees or co-drivers. This policy primarily covers medical expenses in the case of an accident.

In most cases, the carrier provides owner-operators with primary liability coverage and cargo cover when carrying loads under a carrier lease.

What is Commercial Truck Insurance?

What Your Commercial Truck Insurance Policy Won’t Cover

Here are the basics of what your commercial truck insurance policy won’t cover.

  • Any vehicles not classified as trucks.
  • Driver injury and medical costs.
  • Damage to the truck or trailer.
  • Lost inventory due to faulty or broken refrigeration systems.
  • Complete or partial cargo loss.
  • Loss of income due to the accident.

As mentioned, if you need cover for these specific occurrences, you’ll need to go with additional general policies tied into your primary liability coverage.

What are the Commercial Truck Insurance Requirements?

Many new owner-operators assume that applying for insurance is a challenging task that leads nowhere. However, getting the cover you need for your business doesn’t have to be frustrating. Hiring an agent helps you find the best policies and cover at the best prices. When things go wrong, an agent is an invaluable resource for assisting you with processing your claim.

When applying for quotes through your agent, it’s a great idea t give them as much information as possible to prevent them from coming back for more information or the lack of details affecting your policy premiums.

A Commercial Driver’s License (CDL) is necessary for all owner-operators hauling loads over 26,000-lbs. If you have your CDL for less than 2-years, the insurer sees you as high-risk, and you can expect to pay a higher premium.

Owner-Operators must also submit their DOT and MC numbers applicable to their business to the insurer to obtain a commercial policy. Insurers will also ask for vehicle details like the manufacturer, model, production year, and VINs.

The cost of your commercial trucking insurance policy varies depending on your needs, driver history, insurer, and past insurance history. However, owner-operators must understand that these policies are not cheap. Insurance is a big part of your business, and without it, you’re facing a huge risk to your company.

Typically, the owner-operator in need of primary liability coverage for their employees can expect to pay anywhere between $5,000-$7,000 a year in policy premiums. It’s important to note that this is the total cost paid to the insurer before your deductible).

Adding endorsements or extra coverage policies mentioned earlier increase these costs. Some of the other factors insurers take into account when assessing your risk profile include the following.

  • Your age.
  • Driver experience.
  • The vehicle condition and age.
  • The cargo you haul.
  • Your trip distances.
  • The state requirements where you operate.

It’s a smart idea to get your agent to give you three quotes from leading insurers and chose the one with the best balance of coverage and affordability.

What is Commercial Truck Insurance FAQ

Q: What kind of insurance do truckers need?  

A: In most cases, trucking companies only offer the following lines of insurance coverage for owner-operators.
Auto Liability.
Auto Physical Damage.
Cargo.
General Liability.
These four areas cover most of the risks you encounter as an owner-operator, regardless of you’re working under leases or operating independently. Cyber liability is also a popular new risk category for trucking insurance.

Q: How much does trucking insurance cost?

A: According to research, owner-operators typically pay between $8,000 to $14,000 for insurance coverage under their authority. Some states offer cheaper insurance rates than others.
The five lowest-cost states for insuring owner-operators are Mississippi, Iowa, Wyoming, Idaho, and Nebraska. Operating in these states can save you thousands on your annual insurance costs.

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