Thanks to a plethora of companies and advertising campaigns, we know plenty about car insurance. Many auto insurers also offer boat or motorcycle insurance. However, what about trucking insurance? What makes it different from other types of auto insurance, and how do you know you have the coverage you need? As a freight broker, driver, or shipper, you must be able to answer these questions, especially if your company is new.
Know the Law
When investigating trucking insurance, keep your legal requirements in mind. While trucking insurance is mandatory in all 50 states, specifics vary from state to state. Failure to meet even one requirement could result in heavy fines or even cost your trucking license. Check with the ICC/MC Authority about requirements in your state. If you still have questions, contact your Department of Transportation (DOT) representative.
Know the Costs
You can operate under your own authority, but requirements can be stringent. It’s also much more expensive than operating under the Federal Motor Carrier Safety Administration (FMCSA). FMCSA requires truckers hauling under their own authority to carry a minimum $1 million in liability and cargo insurance. Additionally, most shippers and carriers need at least a $100,000 cargo insurance limit. For new companies, it is best to obtain FMCSA authority and work directly with your state DOT.
As a trucker, you’ll need several forms of insurance. The first is primary liability insurance. You must have at least $750,000 worth of primary liability insurance at all times. This protects you in the event of an accident. It will cover at least $750,000 worth of damage to the other party’s vehicle, as well as that much in medical bills if personal injury occurs. If it is determined you were at fault, primary liability insurance keeps your company from going into major debt.
If you are found at fault for more than the $750,000 minimum, the other party’s lawyer may demand savings or personal wages to settle the debt. You can fight this in court, but further protection is the best way to avoid it. Always talk to your insurer about coverage for more than the minimum.
Depending on your carrier, you may need secondary liability insurance. This insurance covers accidents and other eventualities that happen while you are under a signed license with a particular carrier. You are only covered under that carrier. When your contract is up, speak to the next carrier about whether you need secondary liability insurance and how much.
As a trucker, you’ll also need general liability insurance. This insurance covers you while loading or unloading a delivery. It also protects you when you aren’t on the road, such as during a stopover at a hotel or truck stop. Vandalism, theft, and even assault can occur in these places, so it’s crucial to protect yourself.
Depending on your insurer, you may get one large general liability package or a few small ones. Talk to your insurer about what packages and amounts are best for your company. If your drivers usually work in the inner city, for instance, they may want a large package that covers several types of vandalism, theft, and other crimes. If you work in an area where certain crimes are more common than others, ask your insurer about those specifically.
All truckers need non-trucking liability insurance. When your truck is parked in your driveway, you are responsible for it. Thus, you must pay for all cosmetic damages, mechanical problems, and other unforeseen circumstances. Non-trucking liability insurance eases this financial burden, particularly if you’ve driven the same truck for several years or if you know certain vehicles are prone to special problems.
Handling Insurance Rates
Insurance rates often seem insurmountable. America’s recovering, yet sluggish, economy has also made most rates dramatically increase. However, insurers do not set out to make their rates impossible. Communicate regularly with your insurer. If you do your due diligence and have a great work history, you may be able to obtain lower rates. Additionally, tell your insurer what coverage you need most. He or she may be able to work with you on rates and premiums for specific coverage areas.
Obtaining trucking insurance isn’t the same as your everyday automobile insurance. It can be a complicated and expensive process. However, if you do your homework, you’ll be much more comfortable choosing an insurer and handling the intricacies of coverage.