There are almost 3 million semi-trucks registered to be on the road. That's a lot of very large and heavy vehicles out traveling on America's highways. This increases the risk of one of them getting into an accident.
As a freight carrier, you could lose everything from one collision. So just as any other business, you need protection. Semi-truck insurance is the answer.
But buying insurance for your transport business isn't like buying personal car insurance. Use this guide to learn about all of the different types of insurance you'll need.
The Requirements
If you want to operate as a motor carrier, broker, or freight forwarder, then you'll need to register through the Federal Motor Carrier Safety Administration (FMCSA). As a part of this application, you'll need to show that you have the proper amount of insurance.
If your company owns and operates vehicles, then you will have to get public liability insurance that includes bodily injury, property damage, and environmental restoration. If you plan to be a non-vehicle broker, then you can get a waiver for this requirement.
The required amount of liability can range from $750,000 to $5,000,000, depending on what commodities you'll transport.
Coverage Minimums
You need to have the minimum amount of commercial trucking insurance coverage required by the FMCSA if you plan to do interstate transport. It's best to consult with an insurance broker ore review the federal regulation to ensure the minimum requirements haven't changed.
You'll need at least $300,000 if you plan to transport non-hazardous freight in a truck that weighs less than 10,001 pounds. If your vehicles weigh more than 10,001 pounds, then you'll need $750,000.
If you plan to move oil, then the minimum increases to $1,000,000. Other hazardous cargo has an even higher minimum of $5,000,000.
Keep in mind that these are only the minimums. You can and probably should have more than this to ensure you are fully protected.
General Liability Insurance
This is the most basic and mandatory insurance that every truck must carry. It covers both carriers and for-hire trucks. It provides coverage for these areas:
- Personal injury and advertising injury liability
- Bodily injury and property damage liability
- Products / completed operations
- Medical payments
- Damage to premises rented to you
Since most carriers transport goods owned by someone else, they must have insurance to protect these goods. This is where cargo insurance comes into play.
The amount of coverage your company carries will depend on the type of cargo your trucks transport. Policies can range from $50,000 to as high as you need. The price of your insurance will depend on the value of your coverage.
The policy will describe your coverage as a maximum load limit per vehicle. Carefully consider your policy before you buy. If you under-insure, then your company can be held liable for the difference in the value of the cargo versus your coverage.
Bobtail Insurance
Most of the insurance on this list covers the trailer and cargo. But what happens when you drive the truck without a trailer? Bobtail insurance will cover your vehicle during this type of drive.
Most truckers or companies won't need this insurance. After all, you're in business to transport, so you need the trucks to pull trailers full of cargo.
If you only need this insurance for a single run, then look into a temporary policy.
Non-Trucking Liability
Do not confuse bobtail and non-trucking liability insurance. Bobtail insurance covers the vehicle when there is no trailer, but still driving for a commercial purpose.
Non-trucking liability covers your truck when it's driven for non-business or personal use. It won't cover you when driving without a trailer.
This coverage also doesn't apply when it's in transit to maintenance, driven during layovers, getting washed, or driving to and from the terminal.
Physical Damage Insurance
Physical damage insurance covers comprehensive and collision. It's the coverage that protects you from the unexpected.
Comprehensive insurance covers events like fire, theft, vandalism, and weather events. As you can see, it works similar to the comprehensive insurance for passenger vehicles.
Collision covers damage that occurs when there is an accident with another vehicle.
Add-Ons
There are a few optional add-ons that you can use to round out your policy for complete protection. This includes things like towing, storage, and GAP coverage.
If you have a new truck, consider adding Federal Excise Tax Coverage. This will reimburse the taxes you paid on a new vehicle if the loss occurs within a year of purchase.
Personal effects coverage will cover the personal items kept in the truck. This is useful if the drive keeps personal belongings in the vehicle.
If you have a lot of extra electronic equipment in the truck, then electronic equipment coverage is a useful add-on. This coverage will ensure you can replace this equipment should it get damaged.
Finally, downtime/rental reimbursement helps cover your loss should your truck be out of commission for more than seven days. This can limit your losses.
Trailer Interchange Coverage
This coverage protects your company and the driver when in possession of a non-owned vehicle. If your trucks pull trailers that you don't own, you need this coverage. This coverage will protect you from personal liability in the event of a collision, theft, vandalism, explosion, or fire.
Do You Have the Right Semi-Truck Insurance?
Making sure you have the right semi-truck insurance in place can be a tricky process. You need to balance having enough coverage, but not wasting money on being over-insured. Then there are the federal and state regulations you need to follow.
If you are unsure of what coverage you need, the best thing to do is speak with a broker. They can help you shop around and create a complete trucker insurance coverage package.
For more money-saving tips and other insurance advice, be sure to check out the insurance section of our blog. Keep on trucking!
