Why is it that every expense mandated by law seems to be very difficult to understand?
I’ve been a licensed driver for 14 years now and I still have no idea how my annual car registration fees are calculated. Taxes? Forget about it. I have to pay someone else just to figure out how much I have to pay the IRS.
The world of commercial truck insurance is unfortunately just about as confusing as itemizing your tax deductions, but while there are tons of technical terms and varying regulations state to state, truck insurance doesn’t have to be as complicated as it seems.
The fact that insurance for trucks is a variable commodity is something you can use to your advantage. If you’re looking to take some of the confusion out of insuring your 18-wheeled livelihood and save a few bucks while doing it, than you’ve come to the right place: Read on to clear up some of the common technical terms associated with commercial truck insurance and learn some helpful money-saving tips.
Breaking Down Insurance for Trucks
While there are TONS of specialized coverages, (about as many as there are specialized commercial vehicles), there are really only 4 basic categories of truck insurance: policies to protect your actual truck, policies to protect your trailers, policies to protect your cargo and policies to protect your business.
While these are the only real categories of insurance mandated by law, not every truck driver will necessarily even need all 4: an independent owner/operator for example, may only need the first type of policy and only in a limited capacity.
Bobtail insurance is a term that’s used to refer to liability coverage for trucks owned by independents during the times they aren’t commissioned by a motor carrier and under the motor carrier’s insurance. Unless the independent makes independent deals with vendors, they probably won’t ever need to insure their trailers or cargo at all.
This is the basic form of truck insurance that every driver is required to have by law-it’s actually extremely similar to auto insurance. Primary liability protects drivers and other motorists against accidents on the road in terms of property damage and personal injury that results because of an accident.
Comprehensive coverage is usually not required by law, but it’s something every driver should consider, as it protects your own losses in the event accidents were your fault, as well as losses you may incur due to disasters, theft or vandalism when other motorists aren’t even involved.
These two types of policies are really the only ones you’ll need as a truck driver in order to work. Just make sure you’re getting the proper coverage based on the state you’re in and vehicle you drive-dump truck drivers and tow truck drivers will need different coverage amounts than semi truck haulers.
Breaking Down Trailer Insurance
Trailers are interchanged fairly regularly in the world of commercial trucking, so oftentimes the policies listed above don’t cover them. If you’re a motor carrier that owns and uses several trailers, chances are you’ll need some type of trailer insurance to cover your equipment.
Trailer interchange agreements, or finishing hauls for other company’s trailers, exist very commonly in commercial trucking, so trailer interchange insurance will cover your assets or the assets of the company you’re hauling for if you have such an agreement.
Breaking Down Cargo Insurance
Cargo insurance is another one for the motor carriers-if you’re operating under someone else’s authority, this is another type of insurance you don’t need to worry about.
Even for motor carriers it’s not something that’s mandated by law, but many customers will demand it to protect their goods before signing shipping contracts with your carrier.
Breaking Down the Rest
Most of the other types of commercial truck insurance have to do with running an actual motor carrier. Workers compensation or primary liability for a business may be necessary by law and protects your company and employees from incidents and accidents while operating.
An independent trucker generally doesn’t need these coverages, but it’s always good to be aware of them so you can ask the right questions to prospective employers.
Tips when Shopping for Truck Insurance
Usually your agent is your friend-ask them to be sure you have the right amount of coverage for your needs and that you’re meeting state minimums. Since regulations vary countrywide, it’s important to be sure your insurance provider is licensed and experienced in your state of origin.
Also, shop around. There are many commercial insurance providers, so use them to your advantage. Find the lowest rates you can by obtaining a handful of free quotes. When you decide which provider to use, ask them outright if they can beat the quotes you’ve received.
Finally, know your business. You know what you usually haul and what problems have arrived during hauls in the past. Ask your agent if the coverage they’re suggesting will protect you against similar incidents in the future.