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Commercial truck insurance essentials

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Whether you own a massive fleet or a single truck, you’re taking on risks. The right insurance coverage can help you manage those risks and protect your business. As an owner operator or motor carrier, make sure you’re covered with the commercial truck insurance essentials you need.

What type of insurance do commercial trucks need?

Commercial truck insurance actually consists of multiple types of auto insurance and business insurance products. The coverage options you need will depend on your specific circumstances and risk factors. Common commercial trucking insurance products include the following:

  • Physical Damage Insurance: Downtime costs your business money. Physical damage insurance can cover damage to your trucks, so you can get the repairs done as soon as possible – and get your commercial vehicle back on the road and making money. Coverage can include collision as well as other perils, such as theft and fire. Check the policy terms for details.
  • Liability Insurance: Liability insurance provides coverage for certain losses experienced by third parties, such as bodily injury and property damage. Commercial fleets have many liability exposures, so multiple types of liability coverage may be needed. These insurance products can include commercial general liability and motor carrier liability. Independent owner operators may also benefit from non-trucking use liability insurance, sometimes called Bobtail Coverage, which provides protection for certain accidents that may not be covered under the motor carrier liability policy.
  • Motor Truck Cargo Insurance: Your customers count on you to deliver their freight. However, a lot of things can go wrong on the road. Motor truck cargo insurance provides protection for the freight in your care, custody and control. This helps you meet your contractual obligations and keep your clients happy.
  • Workers’ Compensation Insurance: If one of your truck drivers is injured on the job, you can expect to face a workers’ compensation insurance claim. Workers’ compensation is an important type of insurance for business owners who are employers.
  • Umbrella Insurance: When it comes to liability insurance, it’s hard to say how much is enough. Umbrella insurance provides an additional layer of excess liability coverage to shield your business from costly lawsuits.

Is commercial truck insurance required?

Commercial truck insurance isn’t just a smart idea. In many situations, it’s a requirement.

Certain types of commercial truck insurance coverage may be required, either by a contract that you have signed or by the laws where you operate.

For example, in many states, employers are typically required to carry workers’ compensation insurance. As far as auto insurance requirements are concerned, the FMCSA has insurance requirements for interstate truckers, and states have their own auto insurance requirements.

Also, if you have a loan for your trucks, your lender will likely have insurance coverage requirements, so you will need to purchase and maintain sufficient coverage to meet these terms. You may also be obligated to carry insurance based on the contracts you sign with partners and clients.

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How much commercial truck insurance do you need?

As discussed in the previous section, commercial trucks may be obligated to carry insurance through federal and state law and various contracts. Therefore, when determining the minimum amount of insurance coverage you need for your fleet, you’ll need to look at relevant laws, as well as your contracts with lenders, partners and clients.

However, these requirements only tell you the minimum amount of insurance that you need. You may decide that it is in your best interest to carry additional coverage, especially when it comes to liability coverage. This is because lawsuits can be for millions of dollars, and the trucking industry is particularly vulnerable to large jury verdicts.

According to CNBC, jury awards for crashes have been skyrocketing. A study from the American Transportation Research Institute looked at verdicts of at least $1 million and found that the average size increased nearly 1,000 percent between 2010 and 2018.

Jury verdicts of at least $10 million are often called “nuclear verdicts,” and there appears to be no limit to how high they can go. FreightWaves says that a Florida jury may have set a record with a $1 billion verdict in a case involving a fatal crash.

Given this risk, fleets may need to consider raising their liability limits. Commercial Carrier Journal warns that smaller fleets may be tempted to risk going without high limits, but this could result in bankruptcy if they’re hit with a nuclear verdict that exceeds their insurance limits. In one example, Transport Topics says that a carrier based in Arkansas was forced to close after it was hit with a multimillion-dollar verdict over a crash involving one of its trailers.

How much does commercial truck insurance cost?

Your commercial truck insurance rates will depend on many factors, including your loss history and the risk management programs you have in place. The size of your fleet will also have a significant impact on your rates, as will the amount of coverage that you need. Different insurance companies may offer you different premiums and coverage terms, as well. These and other factors mean that the premium amount one fleet pays might be quite different from the premium amount that another fleet pays.

Overall, commercial truck insurance rates have been increasing in response to the impact of nuclear verdicts, as well as a rise in traffic fatalities, an increase in severe weather and other factors that are causing commercial insurance rates in general to increase.

Securing the Best Commercial Truck Insurance for Your Fleet

Going without the right insurance can be a costly mistake. If you’re shopping for commercial auto insurance, or if your coverage will be up for renewal soon, the following tips can help you secure appropriate coverage at a reasonable price:

  • Implement safety programs designed to keep your drivers safe and your insurance rates low.
  • Assess your liability limits in light of the nuclear verdict trend and consider raising your limits.
  • Work with an insurance broker who understands the commercial trucking industry. A broker with industry knowledge can help you review your coverage for possible gaps that could leave your trucking business exposed.

Transportation and Fleet Insurance

Higginbotham’s commercial fleet insurance and risk management professionals provide transportation and fleet coverage as unique as the cargo you haul.

But we don’t stop there.

In addition to insurance, we also provide safety and loss prevention services to reduce your costs over the long haul. Contact us for a review of your commercial truck insurance program.

Not sure where to start? Talk to someone who wants to listen.

A great plan starts with a conversation. Let’s talk about what you need.

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