Understanding Truck & Transport Insurance

Insurance is one of the largest fixed expenses that a trucker or trucking company faces today. It is one area that all individuals and companies need to revisit at least annually to make sure their needs are being met.

There are various factors that impact insurance costs, such driving records, age of the driver, age of equipment, commodities hauled, radius, vehicle location, loss history, years in business and the list goes on.

There are several types of trucking-related insurance coverages:

• Physical Damage insurance is coverage for your truck and trailer. Your premium is based on the value of your equipment. Usually a percentage of the value. This coverage is not required by law but if you finance your vehicle the lienholder will require it. It is important to insure your vehicle for the real value. Not over or under value the vehicle as the insurance company will only pay market value at the time of the loss.
• Primary Auto Liability insurance is required by federal regulations. Every carrier must carry liability insurance on every rig even on leased units. Liability insurance protects you when a third party is injured in an accident. Owner-operators should ask when leasing onto a company who will pay for their insurance - the company or from driver weekly settlements.
• General Liability insurance protects the business for any property damage or bodily injury that might occur which does not involve a truck. Typical examples of this would include the slip and fall exposure at your place of business, advertising related exposures, and/or contractual exposures you may get involved in.
• Non-Trucking Liability insurance pays for an accident when the driver/truck is not under dispatch. The coverage is sometimes referred to as deadhead coverage or bobtail liability.
• Non-Owned Trailer Liability coverage protects the trailer you are pulling for someone else.
• Non-Owned Trailer Physical Damage coverage insures the trailer you are pulling for someone else in the event of loss. $20,000 is somewhat standard for trailers.
• Trailer-Interchange Liability coverage protects a trailer you are pulling when there is a interchange agreement in force. For example with a steamship line.
• Cargo Insurance covers damage/loss to freight in transit. This coverage can have many exclusions such as unattended vehicle, maximum theft limitations on target commodities such as garments, liquor, electronics and a whole host of others. It is very important to read this policy closely in the event you think you may be covered for something and you are not.
• Terminal Coverage protects freight located at specified terminals in the event of loss. Usually there are time limitations related to this coverage. For example: 72 hours maximum per specified load. If the goods are stored longer than the terminal time you would most likely want to purchase Warehouse Legal coverage. Again very important to read your policy. This amount of coverage is dependent on the total amount of goods stored/docked/off-loaded at any one time.
• Warehouse Legal coverage protects goods stored at specified locations in the event of loss. For example as relates to theft, fire, sprinkler damage. This amount of coverage is dependent on the total amount of goods stored at the location at any one time.

Understanding Motor Truck Cargo Insurance

Motor Truck Cargo Insurance is an important, expensive and often times misunderstood coverage. Most carriers require the owner operator or company transporting their goods to have cargo insurance. This coverage protects the owner of the goods as well as the insured while the cargo is under the care, custody and control of the transporter.

• Cargo Limits and Premiums may vary depending on the average load, type of commodities hauled and where the goods are being transported to and from. Average cargo limits range from $20,0000 to $100,000. For example, a household goods mover in California is required by the state to carry a minimum of $20,000 to obtain his PUC authority. Another example might be a trucker hauling electronics and garments. This cargo limit may need to be $250,000. Limits are usually determined by the owner of the goods and this evidence is provided to them by a Certificate of Insurance from the insurance broker.
• Cargo Policies are often misunderstood because of various exclusions and limitations that may not have been discussed during the quoting process. Often times this is due to the fact that the insurance broker may not specialize in trucking and not understand the impact of various exclusions or limitations. This is why it is imperative to deal with a truck broker who knows the transportation business and understands your individual business as well. If a claim occurs there may not be coverage.
• Exclusions and Limitations may revolve around target commodities such as garments, electronics, and liquor. There may be a sub limit for these categories and higher deductibles. For example, your cargo limit is $50,000 while you haul cracker jacks but one day you took a load of computers and Guess jeans valued at $200,000. Your policy only covers target goods for a maximum loss of $25,000. Therefore, the claim would only pay $25,000 less your deductible of $1,000.
• Theft Coverage is often capped at lower amount than the cargo limit with a higher deductible. For example, your cargo limit is $100,000 but loss due to theft is limited to $25,000 with a $5,000 deductible not $1,000.
• Unattended Vehicle Exclusion is usually found in cargo policies and simply says that if you leave your loaded vehicle unattended and there is a loss there is no coverage. For example, a driver who left his truck loaded at his home or truck stop and a loss occurred would have no coverage.