As a business owner, you probably already understand the importance of having insurance on every aspect of your business. Having insurance that covers injured workers, slip and falls on your company property, theft and natural disasters are only a small part of the insurance policies that you need to have to protect yourself and your company. As a commercial trucking company owner, it’s also important that you have insurance on the trucks that make up your fleet. Understanding how commercial trucking insurance works, the options available to you and how they can protect you is an important part of your business plan.
What is Commercial Trucking Insurance
If you drive a vehicle in your daily life, you already understand the basic principles of motor vehicle insurance. That foundation is the same foundation that applies to commercial trucking insurance. Primary liability truck is usually required for any of the drivers in your fleet as a part of their trucking license. This persona liability insurance, which is the responsibility of your driver helps to protect your business in the event that people or their property are harmed by one of the trucks in your fleet. Personal liability insurance basically protects the public in the event that one of your drivers has an accident.
While primary liability is the responsibility of your drivers, you will need general liability to get your trucks on the road. General liability covers your company against much more than accidents and driver negligence. As a business owner, you’re probably already keenly aware of the fact that you have to be covered against lawsuits against your company, no matter how frivolous they may be. A general liability policy helps ensure that you are protected against suits that involve slander, libel or false advertising. While you do everything you can to ensure that you’re only taking part in fair business practices and operating ethically, there are people out there who will look for the opportunity to press civil charges against you and your business in an attempt to make money. General liability policies help ensure that you don’t fall prey to such tactics.
Essentially, commercial trucking insurance is very similar to your standard motor vehicle insurance. Obviously, because of the fact that you’re operating a business, it simply protects you on a much larger scale. Having a solid commercial trucking insurance policy ensures that you do not lose your business or any of your personal assets in the event that one of your trucks is involved in an accident, even if they are at fault. Additionally, such policies help protect you against frivolous lawsuits from those who would seek to do damage to your company in the name of making a dishonest dollar.
What Are Legal Requirements for Commercial Trucking Insurance?
Since so much trucking takes place across state lines, there are federal laws that govern the insurance requirements for commercial trucking company. The Federal Motor Carrier Safety Administration, also known as the FMCSA, oversees and enforces the insurance requirements for commercial trucking companies.
The first step to determining the level of insurance that you are required to carry on your company is deciding what type of freight you will be hauling. According to FMCSA requirements, truckers and trucking companies are required to carry a minimum amount of coverage. For instance, if one of your truckers is in an accident that causes $750,000 worth of damage to a person or property, a policy that provides $300,000 worth of coverage simply won’t be enough. According to the FMCSA, freight-based coverage must meet the following requirements:
Non-hazardous freight being moved in vehicles under 10,001 pounds-$300,000
Non-hazardous freight being moved in vehicles over 10,001 pounds-$750,000
Oil being moved by private or for-hire carriers-$1,000,000
Other hazardous materials being moved by private or for-hire carriers-$5,000,000
It’s important to note that these are the bare minimum requirements that are set forth by the FMCSA. In many cases, shippers and brokers require trucking companies to carry $1,000,000 worth of insurance regardless of the weight of their truck or the type of cargo being shipped.
The FMCSA also requires that you carry physical damage insurance on your trucks if your trucks are financed. If you paid cash for your trucks or they are completely paid off, there is no legal requirement that you insure them against physical damage. However, it’s still a good financial decision to protect your trucks from damage that they may suffer in an accident through the fault of one of your drivers or another driver on the road.
How Much Does Commercial Truck Insurance Cost?
This is the type of question that actually has a variety of answers. There are a lot of variables that will come into play when you are trying to price commercial trucking insurance for your company. For instance, the average cost of insurance for a semi-truck for owner operators who have a permanent lease with a motor carrier falls somewhere between $3,000 and $5,000 per year. For owner operators who operate with their own authority, the price is significantly higher. On average, those prices can range anywhere between $9,000 and $12,000 annually. For new authorities, there has been a recent increase in the annual price of commercial trucking insurance prices. In fact, those prices range somewhere between $12,000 and $16,000 per year.
Obviously, different insurance companies have different prices based on which type of policy you choose. While your status with a motor carrier and whether or not you are a new authority will have an impact on the annual price of your commercial trucking insurance, there are other factors that will come into play when the insurance company that you choose calculates the annual fees for your insurance policy. Some of those factors include but are not limited to:
• The cost and value of the truck being insured
• The age of the driver
• The driving record of the driver
• Number of years of experience the driver has accrued
• The type of cargo that will be hauled by the truck
• Your credit history
• The number of miles that will be traveled by the truck
• The payment schedule that you agree to with the insurance company
Before you try to get a price for your annual commercial trucking insurance, you will need to decide what type of insurance you need. Once you have an outline of the type of coverage and the amount of insurance that you need for your company, you will be able to get a better understanding of what a reasonable annual amount is.
Will My Commercial Trucking Insurance Cover Me in Other States?
This is another commonly asked question about commercial trucking insurance that varies from policy to policy. If you have no intention of ever crossing state lines with your commercial truck, you can find commercial trucking insurance that protects you as long as you are within the borders of your state. However, since so much commercial trucking work takes place on America’s interstate system, it is generally advised that you choose an insurance policy that covers you in multiple states.
It is important to note that some states have their own standards for commercial trucking insurance. Fortunately, the FMCSA has set strict insurance guidelines that must be met by any commercial trucking company that hauls across state lines. This is a great thing as it keeps you from having to purchase different insurance policies in each state your trucks may pass through or deliver in. The minimum requirements set forth by FMCSA ensure that you and your company are covered in every state that you operate in.
The Top Commercial Trucking Insurance Companies
If you do a Google search for commercial trucking insurance companies, you will probably be overwhelmed by the number of results that come up. In an effort to help you streamline the process, we’ve compiled information some of the best commercial trucking insurance companies for you. While every insurance company comes with their own list of pros and cons, these are some of the top names on the market that can help protect you and your trucking company against accidents, lawsuits and any other issues that may come up during the life of your business.
Progressive
Progressive is one of the most recognizable names in the world of auto insurance, and they offer coverage to commercial trucking companies as well. In fact, they are the top insurer of commercial vehicles in the United States. Thanks to the size of their company, they are able to offer coverage to companies based in all 50 states and have policies that meet the FMCSA requirements. The biggest issue with choosing Progressive is the fact that they do have limitations when it comes to fleet size. Also, you will have to work with an agent when setting up your policy. However, that agent can help guide you through the limitations that Progressive has in place that regulate the number of trucks in a fleet that they will insure.
Sentry
It’s important to note that Sentry is a much smaller company than Progressive. However, Sentry is still available in all 50 states, offering the coverage that is required by FMCSA. In fact, Sentry has been specializing in commercial trucking insurance since 1907! With such a long history, it’s obvious that Sentry is a trusted and reputable insurance company for commercial truck owners. The biggest knock against Sentry is the fact that they only offer coverage for a single truck. However, if you are an upstart commercial trucking company who only has one truck, Sentry is a wonderful choice. There are currently more than 37,000 commercial trucks that rely on Sentry for their insurance needs, so they are far from a “small company.” If you’re not looking to insure a fleet of trucks, Sentry has affordable and customizable options that can meet the needs that you have for your new venture into commercial trucking.
The Hartford
The Hartford has been one of the most trusted names in auto insurance since 1810 making it one of the most long-tenured companies on our list. The Hartford prides itself on the fact that they offer special risk engineering for fleets, meaning that your coverage can grow with your business. However, there are very limited options when it comes to single-truck companies. Also available in all 50 states, The Hartford not only offers insurance policies for multi-truck fleets, but they have free additions that you can tag onto your coverage at your discretion. If you’re looking for a fully customizable insurance policy that meets your needs and can be amended in the future, The Hartford is a great option for commercial truck owners and operators.
State Farm
State Farm is another one of those companies whose name is synonymous with auto insurance in the United States. With some of the highest customer satisfaction scores on the market, State Farm is one of the favorites when it comes to commercial trucking insurance. While you can’t get commercial trucking insurance quotes online, the company does offer rates based on the number of trucks that you’re looking to insure with a single policy, so it’s worth working with a State Farm agent. While all of the companies listed here have a favorable rating, it’s worth pointing out that State Farm received an A++ (the highest rating possible) financial strength rating through AM Best. If you’re a single-truck owner who has plans of expanding your company over the next few years, State Farm is a great choice, as agents there are often willing to give favorable rates to established customers.
CoverWallet
CoverWallet is the one company on our list who is not an actual insurance company. Instead, they are an aggregator that allows you to use their website to shop for insurance quotes for your commercial trucking company. Since the CoverWallet website compiles information from a host of commercial truck insurance companies, you can go to their website to compare quotes from some of the top names in truck insurance while also looking at boutique companies that may have not made our list. The interface on the CoverWallet website is easy to use which means you will be able to get access to quotes in a matter of minutes. It’s also worth noting that CoverWallet is a favorite website for drivers who may have a less than stellar driving record. With access to so many insurance companies, you can find some rates that start for as low as $125 per month, so it’s definitely worth visiting the CoverWallet website.
Trucking companies are at the heart of the American economy. As the men and women who are responsible for transporting goods from point A to point B in our great country, the truckers who travel our interstates help ensure that we have access to all of the goods and services that we need. As a commercial trucking owner, whether you own one truck or a fleet of 12, you are the backbone of that system. Having the insurance that you need to protect yourself, your drivers, your trucks and your business is paramount.
Understanding how to choose the best commercial trucking insurance plan for your company can be a difficult task. Fortunately, once you understand the federal standards that have to be met in order to operate within the framework of the law you are ready to start up your trucks and keep America running.
