Insuring a truck or a semi-truck is very different when compared to the insurance on a car, motorcycle, boat or another type of vehicle for personal use. The following will all play a role in determining the type of insurance policy you choose:
- The type of products you will be transporting,
- The type of ownership model of the vehicle (such as an owner-operator or a motor carrier), and
- The distances that the truck will travel.
When looking to insure your financed truck, you will also be met with many different options and additional coverage options. You could choose to insure the cargo you are transporting, for example, or you can opt to insure your legal liability for damage to a trailer by means of trailer interchange insurance. If the truck is owned by a driver and the driver transports products for a company, then the driver could opt for ‘bobtail insurance’, which means that the company who has contracted him is responsible for the insurance as soon as the driver is hauling cargo for them.
Making sure that you are insured for the right type of coverage will take some careful consideration. A truck that is traveling between states, for example, will benefit from a different type of coverage to a truck that travels across state borders.
Understanding Commercial Truck Insurance
If you offer trucking services, you are required to have commercial truck insurance by law. Whether you have one truck that you drive yourself or whether you manage a fleet of vehicles, there will be an insurance policy that is tailored to your specific needs. There is also a variety of specialized insurance coverage available. So, you can cherry pick the type of insurance that makes the most sense for your business.
The insurance policy you choose will have a variety of options. Understanding how the different options work, and what you are insured for, will help you to identify which policy will be the best suited to your business.
Types of Commercial Truck Insurance
These are the most common types of commercial truck insurance:
- Non-Trucking Cover:
Bobtail insurance is a type of non-trucking coverage that applies to a driver who owns a commercial truck. Another type of non-trucking coverage is occupational accident. This cover will apply in the event of dismemberment or an accidental death that takes place while the truck is on the road.
- Basic Cover:
The basic coverage for commercial trucks includes collision and comprehensive insurance. Much like normal car insurance, collision coverage will cover the cost of the damages to another vehicle if your truck is involved in an accident. Comprehensive coverage will cover the cost of repairs to your vehicle up to a predetermined value.
- Commercial Auto Liability:
This is a type of specialized insurance for commercial trucks. It will cover the cost of the damage to other people’s property as well as bodily injuries that have been sustained as a result of an accident that the commercial truck was involved in.
- Cargo Insurance:
A commercial trucking company or the owner-operator of the truck can opt to insure the cargo that is being hauled against damage or theft.
Truck Fleet Insurance Options
Running a fleet will open you to more possibilities and options for your insurance. The way that a fleet manager will structure their insurance will depend on the size of their fleet. They will typically choose a fleet insurance policy based on the gross revenue, the mileage, and/or the schedule of vehicles.
- Gross Revenue:
With a gross revenue policy, a small premium will be applied to the revenue that the business generates. With this option, an operator can easily add more vehicles to the fleet and insurance cover without increasing the monthly insurance premium.
An insurance premium based on the mileage that the trucks drive is advantageous if the operator can adequately estimate how far the trucks drive per month. Similar to a gross revenue policy, additional trucks can be added to the policy without increasing the premium significantly.
- Scheduled Vehicles:
A scheduled vehicles policy doesn’t have as much flexibility in terms of adding trucks to the fleet without increasing the premium cost. However, it works well for smaller fleets of fewer than 75 trucks. With this option, a monthly premium is established per vehicle.
Owner operator truck insurance
It can be a bit tougher for an owner operator to get a good deal on truck insurance. The main reason for this is the same one that many business owners face: if you’re too busy working ‘inside’ your business, then it’s tough to work ‘on’ your business.
If you are faced with the challenges of financing a truck and trailer, driving, booking loads, and delivering cargo, then the time you have to research truck insurance deals can be significantly diminished. Things that you need to keep in mind when researching truck insurance options include your role and responsibility towards freight brokers, motor carriers, shippers as well as clients. Some of the types of insurance that an owner operator should invest in include bobtail insurance (non-trucking liability), occupational insurance, accident insurance, as well as automobile physical damage insurance that will pay for your truck’s repairs if it is ever involved in an accident.
Commercial truck insurance companies
Commercial truck insurance companies are adept at packaging different types of insurance coverage into policies to suit a commercial business’ needs. Many times, they also offer optional extras such as truck hire, credit shortfall, passenger liability, loss of fuel and deposit cover, for example. The policy you choose will depend on the type of cargo you haul, the distances you travel and how many trucks you need covered.
Understanding Your Truck Insurance Payment Options
There are different ways to pay for your truck insurance. Interstate Capital is a factoring company which can assist you with cash flow so that your payments don’t fall behind. Here are the most common and efficient ways to pay your insurance bill:
- Direct Bill:
This option doesn’t involve an insurance broker. This means that the client will be billed by the insurance company directly. At the end or beginning of each month, the client will receive a bill from the insurance company and the payment is made directly to this company.
- Premium Financing:
With this option, the insurance broker pays the insurance company the full amount and the client pays a down payment plus fees, followed by the outstanding balance over the following months. This insurance option is viable but the client will have to pay interest charges as part of the agreement.
Understanding Truck Cargo Insurance
Truck cargo insurance can be a large expense for owner-operators. The majority of motor carriers require a company or an owner-operator that is transporting cargo to have this type of insurance. Truck cargo insurance protects the client (the owner of the cargo that is being hauled) against damages, theft or loss while the cargo is under the control of the person transporting the goods.
Cargo Limits and Premiums will vary depending on the following:
- The type of cargo that is being hauled,
- Where the goods are being hauled to, and
- The average load that is being transported.
It is crucial to understand the limits and exclusions on cargo policies because if a claim occurs, you want to be sure that you are covered by your insurance. Theft coverage, for example, is usually capped at a lower amount than the cargo limit with a higher deductible. Many policies also have an ‘unattended vehicle exclusion’ which stipulates that a driver or owner-operator may not leave the truck unattended for a period of time.
Commercial truck insurance is a significant cost for motor carriers, drivers and owner-operators. If you want to enhance your cash flow to make sure that you are always able to keep your trucks fully insured, consider invoice factoring. With invoice factoring, you will receive upfront cash for your outstanding invoices.