How Does Commercial Trucking Insurance Work?

It is essential to have insurance in the commercial truck industry – especially for small business owners or owner operators. As an owner-operator, without your own authority, you may likely be provided with either physical damage coverage, and/or liability coverage, but you will likely need your own non-trucking liability coverage.

Types of insurance for truckers

There are different types of insurance coverage depending on what kind of truck or trailer it is, the product being delivered, and who the insurer is.     

General Liability: General liability insurance is coverage that can protect you from a variety of claims including bodily injury, property damage, personal injury and others that can arise from your business operations. General liability insurance quotes usually include:

  • Bodily injury and property damage liability
  • Personal and advertising injury
  • Medical payments
  • Products completed operations
  • Damage to premises rented to you

Primary Liability: Liability insurance is 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. Primary liability insurance isn’t designed to cover you or your truck. It doesn’t cover theft, your bodily injury, or damage to your truck. It’s simply there to cover the damage you might do to other people or property. For example, you drop off a load in San Francisco and need to pick up another load in Vacaville for a different carrier. Bobtail insurance covers you for the time you are driving between loads, as well as when you drive home after dropping a load and trailer. 

Non-Trucking Liability: The best trucking insurance companies will offer non-trucking liability coverage as well. Non-Trucking Liability is insurance coverage for when you use your truck for non-business purposes. NTL offers you liability coverage for property damage or bodily injury to a third party. Any personal use between your return and next dispatch points will be covered under NTL. This insurance fills a potential gap for non-business use of the equipment and helps to protect the motor carriers primary liability policy. 

Bobtail: Bobtail insurance is a policy that covers the truck when a trailer or container is not being pulled, and covers the truck whether or not you are currently dispatched on the job. For example, if you are leaving one job and going to another with no trailer and get in an accident, bobtail insurance is going to cover the cost of that. However, if you just finished a job and you’re still carrying the trailer, bobtail insurance is not going to cover that.

Physical Damage: There are a lot of risks on the road. Your truck could be damaged in an accident or from fire, hail or other natural disasters. It could be stolen or vandalized. Any of these issues could put your truck out of commission. In order to protect against such occurrences, physical damage coverage or comprehensive coverage may insure you against unexpected events like these. Physical Damage coverage can also help pay for towing and storage expenses incurred after a covered accident subject to a certain limit. If you have a loan on your vehicle, or if you want to fully protect your vehicle, you should choose Physical Damage insurance. For Physical Damage insurance, you must choose a deductible. The deductible is the amount that you agree to pay out of pocket when you have a claim. Choosing a higher deductible is an easy way to lower the price of your insurance. Be sure you choose a deductible that you can afford to pay out of pocket at any time.

Motor Truck Cargo: Motor Truck Cargo Legal Liability Insurance, more commonly referred to as “Cargo Insurance” covers losses or damage to the commodities the trucker is hauling while they are being transported. Carriers are responsible for the cargo they control while it is in their possession. In the event that a loss occurs while the cargo is in transit, the policyholder will be covered as long as there are no perils or cause of loss specifically excluded in the policy. Motor truck cargo insurance costs vary from $5,000 to $20,000 with extra insurance also being offered.

Uninsured Motorist: If someone were to hit your commercial truck and they don’t have liability coverage, uninsured motorists’ policies can cover what needs repairing in this case. In some states, uninsured and underinsured motorist coverages are bundled together as a single coverage on your auto policy.

Each state defines “underinsured” a bit differently. Typically, it’s a driver who doesn’t have enough insurance to cover someone else’s damages if he or she is found at fault in an accident. For instance, an underinsured driver might have auto liability insurance but either: insufficient liability limits to cover your bills after an accident or liability limits less than or equal to your underinsured motorist coverage limit.

Choosing insurance plans is one of the first things you’ll need to consider when opening your trucking business. Making sure you also pick a good insurance provider is important. When investing in insurance, you want to get superior service in return. A policy may seem affordable but it’s also important to consider the cost of managing your relationship with your carrier. Choosing the right commercial truck insurance company will give you protection and peace of mind.

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