Alonso & Andrade writes all forms of coverage needed by transportation companies, including but not limited to Trucker’s Liability, Physical Damage, Cargo and Bobtail Liability.
Primary Liability coverage is mandatory for all commercial trucking operations. Minimum amounts of primary liability insurance for transportation companies is set by the Federal Motor Carrier Safety Administration (FMCSA), an agency in the United States Department of Transportation that regulates the trucking industry in the United States. The primary mission of the FMCSA is to reduce crashes, injuries and fatalities involving large trucks and buses.
The FMSCA has an established requirement for trucks over 10,000 pounds GVWR at the following limits:
• $750,000 – required limit for most trucks hauling general commodities,
• $1,000,000 – the required minimum by most brokers and shippers, with this amount being an industry standard, and
• $5,000,000 – required minimum for the hauling of most hazardous materials
A basic policy provides coverage for Bodily Injury and Property Damage. Bobtail and Non-Trucking Liability coverage gives the owner operator liability coverage when driving without a trailer attached. An example of this would be if a driver drops off a trailer off at a customer’s yard and has an accident with no trailer attached. This is known as bobtailing and is when Bobtail Liability coverage is needed. The typical cost for Bobtail Liability coverage can run anywhere from $30 to $60 a month.
After equipment payments and fuel costs, insurance is the highest cost coverage secured by trucking companies that can run anywhere from several thousand dollars to $15,000 or higher, per power unit. These costs can vary according to the coverage limits, deductibles, and the company’s overall operation. In addition to the commercial auto liability coverage, trucking companies also need General Liability coverage, which provides coverage to a trucking business when exposures occur outside of a power unit. It can cover things as simple as a customer falling in your office or yard, or in the case of being sued by a company or competitor due to slandering them. Policies start at a liability limit of $300,000, with most policies commonly being written at a $1,000,000 limit of liability. Higher limits can be secured and should be when hauling certain hazardous materials. And it’s critical to include a pollution endorsement to the policy when hauling hazardous materials since an uninsured claim in this area could prove to be costly to the uninsured carrier.
The most important factor is having a clean driving record. There is no one factor more important than this.
Another area every company owner and driver should be knowledgeable about is Uninsured/Underinsured Motorists coverage. According to a recent study, approximately 15% of drivers have no liability insurance. If you have ever been involved in an accident where the at fault driver was uninsured, you understand how important the UM/UIM coverage can be to you. Since many drivers on the road today buy only minimum limits of liability, it will be well worth it for you to add this extra protection for your injuries and damage to your vehicle, when you have an unfortunate encounter with an uninsured or underinsured driver.
The Owner Operator’s cost of semi-truck insurance can vary according to the authority they have and their driving record. Factors affecting the premium, in addition to what they haul, are years of driving experience, the radius of their operation, how much their equipment is worth, (for physical damage coverage), the driver’s age, years of experience and credit history. The premium cost per power unit for fleets is usually always less since it is easier for underwriters to predict losses as the number of power units increases. This goes hand in hand with driver selection, the quality of the safety program, past loss experience, management’s experience, age of the fleet, commodities hauled, maintenance program, hiring procedures, drug and alcohol testing, (both pre-employment and pos-accident) along with several other factors. Some insurance carriers give discounts for paying the annual premium in advance. This is a good way to save 7-8% by not financing the premium.
What do transportation underwriters offer that can reduce premium an individual owner operator or fleet pays?
The most important factor is having a clean driving record. There is no one factor more important than this. A driver with CDL experience and a clean record gets the lowest discounts available anywhere. Next to the driving record, choosing a deductible that is manageable, but not too high, can also reduce the premium. The limits chosen can also affect pricing. While most transportation companies carry a $1 million limit, it is sometimes possible to carry lower limits. This is usually dictated by commodities hauled and regulatory requirements.