Finding the right insurance is crucial for owner-operators. Not only do the trucks have to be protected, but O/O’s need to pick the right insurance at the best prices or suffer skyrocketing premiums.
The Federal Motor Carrier Safety Administration (FMCSA) has specific insurance requirements that must be met by all carriers.
Primary Liability coverage is required for all active carriers (PL) to cover property damages and bodily injuries. The annual price change for PL insurance depends on the type of cargo a carrier hauls (hazardous material is more expensive) or the operating radius. According to the FMCSA, owner-operators need to have at least $750,000 in coverage, while some shippers and brokers require $1M.
Beyond PL, physical damage insurance is extremely important to protect owner-operators. It can cover a variety of losses such as fire, flooding, collusion or theft.
One key difference with this policy is that a deductible has to be paid in full before the insurance company pays anything.
Also, motor carriers need commercial general liability (CGL) insurance. CGL’s cover losses or property damage caused by a stationary truck such as a crane or a bucket truck that hit something else. The insurance also includes damages caused by loading or unloading trailers.
Cargo insurance is not always legally required but most shippers and brokers require that loads be insured. We as a factoring company always require cargo insurance to protect against possible claims.
The non-trucking liability (NTL) insurance and the bobtail insurance protect from non-business purposes or “under dispatch”. Each state defines what “under dispatch” means. This includes trips from truck servicing or truck wash stations.
It is extremely important to know which insurance is suitable for your trucking business and what is legally required. We recommend checking the Federal Motor Carrier Safety Administration website to read more about insurance requirements.
Once you know what insurance coverage is needed you can think about savings.
We compiled a list to help you save on trucking insurance.
- Pay premiums annually instead of monthly. While paying a lump sum can seem like a big hurdle, several insurance companies offer 10%- 15% discounts for paying the insurance all at once vs paying monthly.
- Consider increasing deductibles. Higher deductibles will lead to lower premiums. Make sure you understand the details of your insurance policy. Have an agent help make sure you are not over- or under-insured.
- Have a good credit score. Maintaining a good credit score is important to keep the premiums low. This also includes having a good credit history.
- Enforce road safety within your company. Having truckers that understand the importance of careful, safe driving should decrease the likelihood of accidents. Stay loss free and avoid speeding tickets. Check driving records and employment history for your truckers.
- Maintain good CSA scores. CSA scores are used by the FMCSA and help identify high risk drivers. The score is based on performance data, roadside inspection violations and reported crashes. It will highlight areas of need and a good score will reduce insurance costs. CSA scores can be checked on the USDOT website.
- Do your research. Do not rush into purchasing insurance. Know the companies prices and reviews and know what’s important for your business.