Insurance for Trucking Companies: How Do You Know Which Policy Is Right for You?

Commercial auto insurance isn’t just an optional purchase. It’s legally required of any motor carrier before a Federal Motor Carrier Safety Administration (FMCSA) application is approved. Proof of liability and cargo insurance must be provided to the FMCSA by the insurance company’s home office. The type of insurance and limits depend on the type of registration filed with the FMCSA.

BMC-91/BMC-91X:

The bodily injury, environmental restoration, and property damage limits on public liability insurance must meet the following limits:

  • Freight: $300,000 to $5,000,000 depending on what is being transported ($300,000 if the freight is non-hazardous and the truck and trailer are less than 10,001 pounds up to $5 million for hazardous materials)
  • Passengers: $5,000,000 ($1,500,000 if the seating capacity is no more than 15 passengers)

BMC-34 or BMC-83:

Public liability insurance coverage is required as listed above, plus:

  • Cargo Insurance: $5,000 per vehicle
  • $10,000 per occurrence

Those are the required insurance coverages for the federal government, but there are state requirements, too. If you lease or have a loan for your trucks, your bank may have additional requirements until you’ve paid it off. Plus, those required coverages may not be enough for your business. It’s important to fully understand the ins and outs of insurance for trucking companies and why it’s so important to have the right policy.

What Do the Different Types of Commercial Auto Insurance Cover?

Before you can choose the right policy for your trucking business, you need to understand the different types of insurance coverage.

Liability Insurance

Liability insurance protects your driver and anyone injured in a crash. It also covers damage to the surroundings through property damage and environmental coverage. Not only is it mandated by the FMCSA, but states also require general liability coverage that protects against any property or bodily damage caused by your driver. 

Physical Damage Insurance

With physical damage insurance, any repairs your commercial trucks and trailers need after a collision, a natural disaster, theft, or vandalism are covered by the physical damage insurance. If the truck or trailer is totaled, physical damage insurance covers the value of the loss so that you can replace it.

Add-On Options:

Those are the two main types of insurance, but there are a lot of add-on coverages you can get to protect your trucking business.

Bobtail Coverage: This type of insurance covers situations where the driver is not working but driving the truck for personal reasons. Damage to the truck or property caused by an accident wouldn’t be covered if the truck was being used for personal use. Bobtail coverage kicks in as long as the driver is using the truck for personal use.

Medical Payment: If your driver or a passenger is injured in a collision, medical payment insurance covers the cost of medical care. 

Motor Truck Cargo: Protect your cargo with this type of commercial truck insurance. If a load is lost or damaged, the insurance coverage protects against financial loss. There are two types of cargo insurance: All Risk and Named or Specified Perils. All Risk covers all types of risks, while Named Perils focuses on specific issues such as bridge collapses, trailer overturns, and high winds.

Reefer Breakdown Coverage: Reefer breakdown coverage pays for the loss of goods if a refrigerated trailer breaks down. It also covers the cost of damaged goods in a collision. There can be exclusions to this coverage so make sure you know what frozen or fresh items are and are not covered.

Rental Reimbursement: If your truck is in a collision or accident that will take time to repair, rental reimbursement coverage pays for a rental. There’s usually a daily limit on how much the insurance company covers, and it may not be enough for more than a base model.

Trailer Interchange: If your driver is pulling a trailer that doesn’t belong to your company, you need insurance that protects against damage from a collision, explosion, fire, theft, or vandalism. If damage does occur on a trailer that’s part of a trailer interchange agreement, this insurance protects you.

Uninsured/Underinsured Drivers: If your truck driver is in an accident and the at-fault driver doesn’t have insurance or enough insurance, it can be a financial blow. Underinsured and uninsured insurance protects against these situations. There are states with no-fault car insurance laws, so it helps to work with a commercial auto insurance agent to ensure you have coverage that matches the states your drivers drive in or pass through.

Analyze Your Business’s Needs

Before you start shopping for commercial truck insurance, you need to look at what your business needs. Answer these questions.

  • How many trucks are in your fleet? How many drivers for those trucks?
  • Do you own your trailers?
  • Are your drivers ever allowed to use the trucks for personal use?
  • What cargo do you transport? Do you handle hazardous materials?
  • Where do your drivers go? What states do they pass through?
  • How long have your drivers had their CDLs?

Key Factors to Consider When Choosing Insurance Coverage

By answering the questions above, you have a starting point for shopping for the coverage you need. You have to find an affordable policy, but it also needs to meet the current laws and your company’s needs. You can’t go for the cheapest policy if it doesn’t provide the coverage that protects you from financial ruin in case of an accident.

Consider Deductibles

Any policy has deductibles and coverage limits. Make sure that the coverage meets your needs and that the deductibles are affordable. If your driver backs into a loading dock and causes $20,000 in damage to your company’s reefer trailer, a high deductible of $10,000 may seem affordable when it comes to the monthly premiums, but when it comes to the repairs, do you have the cash flow to cover the $10,000 or would it make it hard to cover the cost of repairs?

If the insurance covers a limit of $10,000 for non-hazardous freight and the loss is $15,000, can you afford that extra $5,000 that won’t be covered? You also have to consider that angle.

Exclusions Limit Coverage

Any insurance policy may have exclusions that can void your policy’s coverage. It’s important to carefully read the fine print. Some of the exclusions that trucking companies don’t often realize can happen include coverage when loading and unloading a trailer, reefer truck breakdowns caused by poor maintenance, or earned freight charges.

Look for Bundling Opportunities

It’s possible to save money by bundling insurance policies. If you own your trucking company’s warehouse or garage bays, you could bundle the building insurance and commercial truck insurance to get a lower rate. 

Read Consumer Reviews and Industry Ratings

Check reviews and ratings of an insurance company before you make a choice. If you see a lot of reviews about people being denied claims, you may want to avoid that company.

Shop Around

Don’t go with the first insurance company you find. Compare rates with at least a half dozen companies. Rates aren’t the only factor to consider, make sure the agent or company is easy to reach and is responsive to your questions. If it’s hard to reach an agent before you’re a customer, is it going to get easier when you sign a policy?

It can be challenging to find the best commercial insurance for a trucking company. We’re here to make it easier to navigate. TBS works with a large selection of insurance agencies that match trucking company owners and owner-operators with competitive pricing on the best match to your insurance needs. 

Let us know more about your company and what you’re looking for. If you’re not sure, we can help you determine the best insurance coverage and any add-ons that protect your business from accidents and the unexpected.

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