Commercial Trucking Insurance

Primary Liability Insurance for a Commercial Truck Insurance Policy

Liability insurance is a mandatory for all commercial trucks. It will pay for bodily injury and property damages that your truck may cause to other people or property. Driving without any liability insurance can and will result in large fines and penalties. Never drive your truck without liability insurance.

Liability Requirements for Trucks

The minimum amount of primary liability insurance is set by the FMSCA. For trucks over 10,000 pounds GVWR you’ll need to the following minimums:

• $750,000–  Most trucks hauling most commodities are required to have a minimum of $750,000 of coverage. Many load brokers will require a minimum of $1,000,000.
•  $1,000,000– Auto haulers need a minimum of $1,000,000 in coverage. One million in coverage is becoming an industry standard across other hauled commodities too.
• $5,000,000– If you are hauling certain hazardous materials, you’ll need a minimum of $5,000,000 in coverage.

Primary Liability is often confused with General Liability Insurance. There is a big difference. General Liability covers you for accidents that happen off the road. An example something general liability would cover would be  be someone who slips and falls at your headquarters Primary liability insurance won’t cover you for that. It covers you while you are on the road.

General Liability Insurance (GL) for Trucking Companies

• Delivering your load to the wrong place
• A client slipping and falling in your office
• One of your drivers going berserk at a truck stop
• Slandering a load broker that later sues you

Limits for a Trucker’s GL policy

• Most GL policies for truckers start at a policy limit of $300,000.
• The most common limits, however, are $1,000,000 per occurrence with a $2,000,000 aggregate.
• Higher limits can be obtained if needed. Also, if you are hauling certain hazardous materials, you may want to add a pollution endorsement. When you talk to your agent, make sure you are adequately covered for your unique risks.

Physical Damage Truck Insurance

Buying or leasing a truck is a huge investment.  For many truckers, investing in a truck means putting up most or all of their savings.  Most people don’t have enough savings to replace their truck if it were to be totaled.  This is where physical damage insurance kicks in and replaces or fixes your truck if it’s wrecked in an accident.

Physical Damage Insurance covers your truck if it is damaged. It consists of two different parts, Collision and Comprehensive.

• Collision – This part of the coverage pays for damage to your truck when it collides with another vehicle or object.
• Comprehensive – This pays for almost every other peril your truck might face such as vandalism, fire and theft.

Endorsements

A basic trucking physical damage policy may have holes in it that can be covered through endorsements (extra premium for extra coverage). Some of the endorsements that you might consider are:

• Having a single deductible for your truck and your trailer
• Chains, Tarps, and other Binder coverage
• Personal belonging coverage
• Electronic Equipment coverage
• Paying for a rental truck while yours is getting fixed after a claim
• Increased towing limits

What is Motor Truck Cargo Insurance?

Motor truck cargo insurance, “cargo insurance” for short, is a type of inland marine insurance that covers losses arising from damage to goods while they are in transit via a truck. Cargo insurance is one of the 3 pillars that make up a trucking insurance policy, the other pillars being auto liability and physical damage.

As a for-hire trucker, it’s imperative to assure your client that their cargo will make it safely to the destination or that they will be reimbursed if it doesn’t. Any number of things can go wrong for motor carriers while goods are in transit, and you don’t want to ultimately bear the monetary consequences of legal liability for the lost property of others.

Commonly Overlooked Cargo Insurance Coverages

What does cargo insurance cover? A better question might be “What does cargo insurance NOT cover”?. There are usually exclusions on cargo polices that can be covered by adding specific endorsements. So, getting broad cargo coverage is a must!

You’ll want to make sure your cargo is covered for a wide variety of risks. It’s never fun to have some type of cargo loss and then find out there was an exclusion for that loss. Some scenarios to consider would be:

• Stolen or hijacked goods
• Water leaks in the trailer that damage the cargo
• Cargo damage during loading or unloading
• Refrigeration breakdown resulting in spoilage of your cargo
• Loss of freight charges for failure to deliver the cargo
• If your load is strewn about the highway after an accident, you’ll need to make sure you have debris removal (and associated removal expenses associated with pollutants) covered in the policy.

These are just a few perils that might happen to your cargo. Look for broad coverage without exclusions to best protect yourself.

3 questions to ask before getting your cargo policy

1. How much cargo insurance do I need?Limits, deductibles, and exclusions can be confusing. How much cargo insurance you need will depend on what you are hauling, as well as the freight coverage limits the shippers and freight brokers will require for the load. You never want to be in a situation where you are carrying cargo and commercial property that’s worth more than your policy limits. Always compare value of the cargo on your bill of lading to your policy cargo policy limits.
2. How easy is it to get certificates of your cargo insurance?The last thing you need is to secure a lucrative load but be unable to quickly produce a certificate of insurance to seal the deal. Make sure your insurer can get those to you quickly as part of their insurance services, or better yet, make sure you can get them 24/7 online.
3. Can you get new coverage quickly? If you stumble upon a great paying job that involves cargo outside the normal covered property you haul, will your insurance broker be able to help you get additional coverage in a pinch?

Motor Truck Cargo Limits

Insurance companies will only pay up to the maximum limit found in the insurance policy they wrote for you. The federal government only requires a cargo limit of $5,000. This was set a long time ago (1935!) and most policyholders and clients will find such minimum coverage to be unacceptable. Typically, today’s insurance policy limits range from $50,000 to $250,000.

The most common cargo limit is $100,000, and many load brokers will require this amount of coverage for the owner-operators they do business with. Limits above $250,000 are also written, depending on the value of the cargo being hauled. When you pick up the load, your client will want to see a copy of your cargo insurance certificate.  

What is Bobtail Insurance Coverage?

Definition: Bobtail insurance is a liability coverage for truckers that pays for property damage or injuries to others that you cause while the trailer is detached from your truck.

Who Needs Bobtail Insurance?  Bobtail insurance is for truck drivers that own their own truck, are leased onto a Motor Carrier, and drive sometimes without a trailer attached.  For example, you may drop off your load and trailer and while in transit to your next load have a collision. When you are driving this way without a trailer, it’s knows as “bobtailing”. Bobtail insurance is the coverage you need during these times.

What is Non-Trucking Liability Insurance?

Non-trucking liability insurance offers payments for property damage or injuries that you cause while the truck is not being used for business purposes.  Many truckers need this coverage because there will be times that the truck is driven for personal reasons. For instance you may drive the truck home or to the truck wash between hauling loads. Another use for this coverage is when you need temporary bobtail insurance. Instances where you might need a short term bobtail insurance would be when you bought a truck and need to drive it home before launching your business.

Bobtail Insurance vs Non-Trucking Liability

Non-trucking liability insurance and bobtail commercial insurance coverage are often confused with each other because of their similarities. Primary liability coverage is mandatory for all truckers and your Motor Carrier provides this.  These additional types of liability coverage can offer coverage for situations that fall between the cracks.  An accident in your truck could happen at anytime when it is in use.  Knowing how you will be using your truck will help determine how much of these coverages you will need. You don’t want to have an Achilles heel exposed that could take down your livelihood.

What is Trailer Interchange Insurance?

Sometimes a load needs to be transferred to a different trucker to complete the delivery to the final destination. What happens if that trailer is damaged when it not attached to the owner’s truck? Some truckers are unclear on the exact definition of trailer interchange insurance. Basically, it’s An insurance coverage that covers damage caused to a non-owned trailer under your care while you’re operating under a written trailer interchange agreement.

In most cases, if you are hauling someone else’s trailer full of goods under a written agreement, you’ll need to add this coverage. Sometimes, the trucking company that owns the trailer will have insurance to cover their trailer while it is under your care. In that case, you won’t need to cover this risk.

But a trailer interchange agreement is less common in the trucking industry these days. Oftentimes, a less formal agreement is made when a trucker needs to haul someone else’s trailer and goods. In these cases you would need a Non-Owned Trailer Physical Damage policy.

Who Needs Trailer Interchange Coverage?

Intermodal truckers

UIIA requires its members to have at least some amount of trailer interchange insurance. How much insurance is required depends on the equipment provider. This chart on trailer interchange limit requirements tells you exactly how much insurance each equipment provider requires.

Power only drivers pulling loadout trailers

Shippers will hire power-only drivers to haul an empty trailer as loadout. They will expect you to sign a trailer interchange agreement. They won’t do business with you if you don’t have the trailer interchange endorsement.

Leased Operators

Sometimes motor carriers and shippers will require their leased drivers to carry TI coverage. But this isn’t always the case. Ask your company what they require before you put trailer interchange on your policy.

Independent owner operators using trailer interchange agreements

There are countless scenarios where an o/o will have to pull an exchanged trailer under a TI agreement. Normal physical damage insurance does not protect any trailer that is not your own. It’s a smart idea then to get trailer interchange coverage.

What is Uninsured Motorist Coverage?

Uninsured motorist coverage offers payments for damages to your truck caused by another vehicle that does not have any insurance or does not have enough insurance to cover all of the bills.

This coverage is mandatory in New York, Illinois, Maryland and many other States.  Accidents involving “hit and run” incidents are usually considered to be an uninsured motorist accident according to insurance law in many States.

Why should Truckers raise their Uninsured Motorist Limits?

1)  13.8% of drivers don’t have insurance

According to a 2011 study, 1 out 7 drivers are uninsured. If you have never been involved in an uninsured motorist accident, it may be hard to see the need for the coverage. But the fact remains that you have a 1 in 7 chance of that happening. This leaves a high amount of risk that  if you were in an accident, it would be with an uninsured driver. That’s not a risk any trucker should take.

So don’t skimp on your uninsured motorist limits. With higher limits you lower your chances of being left in the lurch should you get hit by a driver without insurance.

2) Underinsured Drivers

Also, many drivers are underinsured and have opted to take out the cheapest insurance possible. These underinsured drivers only buy insurance up to the minimum limits required by their state. Most of these policies would not be sufficient to cover extensive damage to your truck.

Uninsured motorist coverage would kick in after the limit on the other insurance was paid out.  You don’t want to gamble with your truck insurance coverage;  you want to be protected.  Talk to your truck insurance broker about Uninsured Motorist coverage when you are shopping for semi truck insurance quotes.

Who needs Workers comp?

• Injuries sustained in an accident
• Injuries loading or unloading freight
• Injuries making roadside repairs on the truck
• Slip and Fall entering or exiting the truck

Workers Compensation Codes for Transportation Companies

• 7219 – Local and Long Haul Truckers Workers Comp – In the past, see below, the truckers were classified based on radius. No longer! 7219 is a catchall for all most types of truckers.
• 7228 – Local / Short Haul Trucking Workers Comp – (Old Code) If you haul goods for other people and travel less than 200 miles, then this is most likely going to be your code. Drive away operations, dump trucks, towing operations can also fall under this code.
• 7229 – Long Haul Trucking Workers Comp – (Old Code) If you haul goods for other people (for-hire) and travel over 200 miles from your garaging location, then this is most likely going to be your code. Interstate trucking workers comp is almost always this code. Long distance drive away operations would also be here.
• 7230 – Trucking: Package or Parcel / Delivery Drivers Workers Comp – This class covers most operations that deliver goods from retail stores directly to consumers. These are company owned goods. Think furniture stores.
• 7231 – Mail Deliver and Couriers Workers Comp

What does Umbrella insurance cover?

If you are a trucking company, you may have gaps (uncovered exposures) between your policies or you primary liability insurance limits are too low.

Umbrella insurance is an inexpensive way to cover these holes and increase your limits of liability. Make sure you read the policy details carefully to see what it covers. Some policies may exclude key risks in your operation.

Do you need Umbrella/Excess Liability Insurance?

Just do a quick google search for “truck accident” and see how many truck lawyers there are that are ready to litigate. You need this coverage to defend against lawsuits that can easily outstrip your current policy maximums.

According to Chubb Insurance nearly 10%  of firms have had a multi-million judgment awarded against them.

Semi trucks are heavy and can cause an extraordinary amount of damage. Umbrella insurance kicks in and pays out when you exceed the limits of your existing policies. When lawsuits can easily exceed your policy limits, this coverage is a must.

Protect your assets with an umbrella policy, because they will be liquidated to pay damages if a jury award is above your insurance policy limits and you can’t pay the difference out of pocket.

Trucking Umbrella Limits and Rates

Umbrella coverage is sold in $1,000,000 increments.

Some companies write umbrella policies up to $50,000,000. You should talk to a competent truck insurance agent that can help your evaluate and cover your various exposures.

Because increased jury awards, the rates for Trucker’s Umbrella insurance has increased dramatically over the last 10 years. A trucking umbrella insurance policy starts around $2,500/year.