Planning on starting your own trucking business? Truck driving is one of the most dangerous professions today. In fact, surveys show that more than 5,000 people die from large truck-related crashes annually. That’s why safety through insurance protection should be a priority. A truck insurance policy can cover payments for a wide range of issues, from crash-related injury treatments to unexpected vehicle maintenance and repairs.
Unfortunately, truck insurance is quite complex. Many newbie owner-operators commit mistakes during the application process because they’re unsure of what to do and decide to let their agent do all the work. This isn’t the best approach. They’ll likely just recommend their own brand since their goal is to sell you an insurance product, not protect your business.
To prevent these types of mishaps, we’ve created a simple guide to help newbie truckers get started on finding the right insurance policy for their trucking business. Here are 10 things every trucker needs to know about trucking insurance:
1. Trucking Insurance is an Essential Expense
Starting your own trucking business is not cheap. The paperwork and registration alone would already set you back by around $6,000 to $15,000. Plus, if you’re planning on purchasing a brand-new truck, you’ll have to set aside an extra $5,000 for the downpayment.
Considering all the fees, charges, and equipment costs, an individual owner-operator might have to shell out around $30,000 to $50,000, so it’s understandable why some business owners might want to skip getting a trucking insurance policy. However, operating without insurance is not advisable.
Not only does the law require truck owner-operators to insure their vehicles, but trucking is an especially dangerous, high-risk profession. Driving without protection endangers both your business and the lives of your truck drivers.
Trust us, neglecting truck insurance is a recipe for failure. Sure, you might save a couple of thousand bucks now, but long-term business performance and continuity won’t be an option if you do not have the necessary insurance policy and paperwork backing your business.
2. Consider Financing Your Policy
A common misconception about insurance is you have to pay the full premium amount right from the get-go. Policy owners can finance the amount. In most cases, the brokerage firm will ask you for a 10% to 20% downpayment then divide the remaining amount into 10 to 12 equal monthly payments—plus interest, of course.
Should you finance your policy? The answer heavily depends on how you’re approaching your trucking business’ finances. If you’re not comfortable letting go of tens of thousands of dollars for business operations, consider financing all business expenses (e.g., trucks, hauling equipment). The difference between revenue and your monthly dues will be your profit.
On the other hand, those who have enough funds to support their business without downgrading their current quality of life can opt to pay for all the expenses in cash. This involves an exponentially higher startup cost, but you’ll be able to get a return on investment (ROI) much faster since you won’t have to pay for any extra fees, charges, or interest rates.
3. Understand What Physical Damage Covers
If you’re running a full-time trucking business and are planning to expand quickly, we suggest getting the full trucking physical damage insurance add-on. This clause provides the following coverage:
- Fire Damages: Vehicle fire is more common than one would assume. The top two leading causes of vehicle fires in the U.S. are road collisions and mechanical failure.
- Theft Loss: Cargo theft is a major global issue. In fact, reports indicate that annual cargo theft losses amount to $35 billion in the U.S. alone.
- Collison: Truckers need collision insurance coverage to ensure they get compensated for their vehicle in the event of a road accident. Otherwise, their policy would only cover the damages of the vehicle they crashed into.
- Comprehensive: Comprehensive insurance provides coverage for non-collision damages such as theft and vandalism, among others.
Note: Bear in mind that physical damage insurance does not cover cargo, personal items, electronic upgrades, and other non-permanently attached items.
4. Get Cargo Insurance if You Transfer Goods and Products
A common misconception about trucking insurance is that it also covers cargo damages. Unfortunately, it doesn’t. Physical damage does not provide compensation for anything that is not permanently installed onto the cargo or tractor.
So if you regularly haul cargo, we strongly suggest getting cargo insurance. As the name suggests, cargo insurance provides coverage for all the items, goods, and products the policy owner transports. You can file a claim if they’re ever damaged or stolen.
This coverage might be a bit pricey, but trust us, having one in place is extremely beneficial if you’re handling third-party cargo. As a logistics service provider, the worst you can do is damage your client’s property.
Note: Make sure you specify what type of cargo you often transport. Some providers might not want to cover items that are too large, expensive, or generally hazardous.
5. Get Bobtail Insurance for Coverage Outside of Business Hours
A loophole in most truck insurance policies is they only provide coverage if the cargo is attached to the rig. If you get into an accident while operating only the rig, your policy might not provide coverage.
Normally, this wouldn’t be an issue for fleet owners who have drivers to park the cargo trucks and rigs in a large parking lot or storage facility. However, if you’re a solo owner-operator who has to take their rig home, you’ll be at risk.
If you want non-trucking liability coverage, opt to get bobtail insurance coverage as well. This provides compensation for damages and accidents that occur on times that your truck isn’t being used for business operations.
6. Document Road Accidents
How the driver or operator acts following a road accident is crucial to how well the insurance claims process will go. First, if you are conscious and safe, stop driving right away and take a minute to catch your breath.
Afterward, call the police. Once you’ve regained your senses, get down from the truck and start taking pictures of the incident. These images will help speed up the claims processing. Finally, get in touch with your insurance provider and wait for further instructions on how to proceed.
7. Fleet Owners Should Opt for Roadside Assistance Packages
Fleet owners who run multiple trucks and vehicles would benefit greatly from roadside assistance packages. These are inexpensive add-ons that provide support on various accidents. Having one in place can be very cost-efficient as you won’t have to build your own emergency response and rescue team anymore.
Different policies have varying guidelines on roadside assistance packages, but most offer the following:
- Battery Replacement and Jump Starts
- Emergency Locksmith Services
- Emergency Towing
- Flat Tire Replacement
- Fuel Delivery
- General Roadside Assistance
- Trucker Concierge Services
- Truck Mechanic Rescue Services
8. Familiarize Yourself With Institution Guidelines on Insurance
Different institutions have varying guidelines on what type of coverage truckers should have when driving on the road. Familiarize yourself with what you need to abide by.
For example, getting comprehensive insurance is not legally mandated. You can drive around the country without the cops pulling you over if you do not have this type of coverage. However, most credit unions, dealerships, and financing firms would require clients who’ll be borrowing funds to start a trucking business to have comprehensive insurance coverage as well.
9. Don’t Skimp on Add-Ons and Extra Coverage
Add-ons and extra coverage are not a waste of money. Don’t neglect them. Take your time exploring the possible ways to revamp your insurance policy and boost protection. Remember: there is no one-size-fits-all policy. You’ll have to customize your plan yourself based on what you, your business, and your drivers need.
Pro Tip: Reach out to truck operators who offer the same logistics and hauling services as you do. Ask what the most common issues they encounter on the road are, assess how you can effectively reduce the risk of said issues happening to you, and check if there’s an insurance provider that can support your special coverage needs.
10. Get Policy Recommendations Online
There are dozens of buyer guides and comparison reviews on popular truck insurance policies. You can check these out for reference. Feel free to join social media groups, forums, and discussion boards about trucking as well since these are great places to get legitimate reviews and testimonials.
Pro Tip: Not sure where to start looking for policies? Let the experts at Assured Standard do the work for you. They are insurance experts—not company brokers or agents—who provide objective recommendations on truck insurance policies.
Whether you run a large fleet or are an independent owner-operator, a truck insurance policy is a must. Your policy will cover the expenses of unforeseen road accidents, vehicle defects, and similar mishaps. Don’t let your drivers hit the road until your policy is in place.
Also, go beyond sales agent recommendations. Remember: the main goal of a sales agent is to sell their brand’s insurance product. You cannot rely on them for objective product reviews. Do your own research on what the best truck insurance policies are on the market, go through the benefits each policy offers, and assess what type of coverage best suits your business needs.
Where do you plan on getting your new trucking company’s insurance policy? Share your thoughts with us in the comments section below!