Insurance, Investing

4 Reasons Investing In Commercial Truck Insurance Is Essential

Written By: Megan Miller
Reviewed by: Mike Reyes
Last Updated July 4, 2023
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green and white vintage truck

The trucking industry is responsible for transporting roughly 72.2% of the US’s freight by weight. Powered by over 38.9 million registered business trucks, commercial trucks are necessary for transporting goods on land.

They’re an indispensable part of an economy’s supply chain but are a huge expense for trucking companies. They’re not just expensive but also cost them dearly in case of collisions, theft, and vandalism, wiping away their profits. This is why it’s necessary for such companies to invest in commercial truck insurance.

What is commercial truck insurance, and why is it necessary in 2023?

Trucking companies operate commercial trucks to generate revenue. They shoulder the high costs of buying a large truck and only hire drivers who possess a commercial driver’s license. Though all these investments go down the drain the minute they incur any damages and losses associated with roadside crashes.

Roadside accidents and crashes put a huge dent in a trucking company’s profit margins since they’ve to shell out money to repair the truck and pay the medical bills of the injured parties—their drivers and other individuals involved in the accident. Sometimes, they even have to bear property damage costs.

Moreover, the added burden of legal fees and the cost of lost or damaged cargo drain their coffers. Unfortunately, the number of truck accidents is rising every year, with approximately 117,300 large trucks involved in roadside crashes in 2021 alone.

This makes it necessary for the trucking companies to adopt the prevention is better than cure strategy and bubble wrap their assets. So to minimize their liabilities and reduce losses, trucking companies must choose and invest in a suitable commercial truck insurance policy in 2023 based on their business needs.

4 Reasons why commercial truck insurance is essential in 2023

The trucking industry is the backbone of an economy’s commerce and trade, but commercial trucks are also prone to accidents on the road. So here are the top  four reasons why such companies should invest in commercial truck insurance in 2023:

Safeguard your assets to grow your business

Commercial trucks are expensive, and so are their repair and replacement costs. Your trucks can get into several accidents while on the road and need extensive repairs, setting you back financially.

Moreover, you’ll lose time on getting your damaged truck repaired. You’ll also lose the money you could’ve earned if the truck had been in working condition. But if it’s unsalvageable, you’ll have to bear the replacement costs.

Additionally, you need protection against theft, vandalism, and natural disasters to minimize your out-of-pocket expenses. So it’s vital to get your commercial trucks insured and choose an insurance type that can protect your assets and revenue.

Choose an insurance policy that’s ideal for your business

You have the flexibility to choose one or more commercial truck insurance types from the myriad of options available. For instance, if you’re in the logging industry and work hauling logs, you need insurance for log trucks.

Insurance for log trucks is a commercial insurance type specifically designed for log trucks. It considers the heavy load log trucks carry and how easily they can roll over if they get into an accident. It even considers the rough terrain these trucks have to navigate to reach their destination.

This insurance covers drivers, trucks, and collateral damage to other drivers or automobiles if the log trucks topple over or the logs loosen and hit other vehicles and individuals.

Given the risks associated, insurance for log trucks provides the following types of insurance coverage: 

  • general liability coverage,
  • commercial auto coverage,
  • cargo insurance,
  • bobtail insurance, and
  • non-trucking liability insurance.

You can choose one based on your business needs or spring for a comprehensive cover to protect your business against all unforeseen circumstances. The best part? You can get free online quotes for log truck insurance within minutes. Or you can confer with an expert insurance advisor for customized support.

After you’ve compared the quotes and chosen the type of insurance you’d like for your logging business, you can immediately insure your business and choose from a wide range of payment options to pay online using the method you’re most comfortable with. 

You’ll also get your certificate of insurance (COI) within a day, so no more reminding insurance agents to send you the certificate or checking your mail daily to see if your insurance provider finally sent you a copy.

Your insurance needs will vary depending on your business needs and the types of goods you transport. It also depends on whether you’re an independent contractor, a leased owner-operator, or both. 

Having a comprehensive insurance policy will help you be prepared for any eventuality and minimize your expenses, allowing you to fund your business expansion.

Legal requirement

Motor carriers and freight forwarders must comply with the FMCSA’s (Federal Motor Carrier Safety Administration) insurance filing requirements to receive their motor carrier numbers. The insurance type you choose and your policy limit will be based on the goods you transport.

For instance, you need public liability insurance or commercial auto liability insurance (covers injuries to people and damages to property) if you transport goods, non-hazardous goods, and passengers. The policy limit varies on the goods transported and their weight, such as transporting:

  • non-hazardous goods weighing less than 10,001 lbs, your insurance limit should be $3,00,000.
  • goods weighing more than 10,000 lbs, your policy must cover between $7,50,000 to $5,000,000. The exact amount will be based on the transported commodities.
  • passengers in a truck with a seating capacity of 15 or less, your insurance limit must be at least $1,500,000. In case the truck can accommodate more passengers, the policy limit amount should be $5,000,000.

Similarly, if you operate a motor carrier transporting household goods, you need cargo insurance—the policy limit should be at least $5,000 per vehicle. If you’re a household goods freight forwarder, you need to be insured for $10,000 per occurrence.

You’ll have to spring for other requirements based on your business. You might also have to fulfill some other insurance requirements per your state’s regulations.

Covers medical bills

Vehicle collisions on the road often spell disaster for the parties involved—the truck driver, the driver of the other motor vehicle, and the trucking company. You’ll have to cover the medical bills for the injuries of everyone involved in the accident, which can be quite expensive. Moreover, you’ll have to keep paying the driver on your payroll.

But you’ll be all set if you’ve got commercial truck insurance. It’ll cover the injuries and damages sustained by people, property, and legal fees should one of the injured parties bring a lawsuit to your door. It’ll even cover the medical bills and wages for your drivers.

Protection beyond roadside accidents

Though trucking businesses mostly need insurance to pay for damages caused due to roadside accidents, you need it when someone sues you for libel or for slipping and falling on your property too. You also need insurance in case you or one of the drivers gets in an accident when operating a truck for non-business purposes.

In such circumstances, high medical bills, legal fees, and property damage costs can burn a hole in your pocket and wipe away your savings and profit. But you can invest in insurance that covers these incidents to protect your assets and revenue beyond roadside accidents.

Though purchasing insurance might feel like an unnecessary addition to your overhead expenses, it’ll be worth it in the long run. However, you must choose the ideal commercial insurance type for your business to make the most of your insurance premiums.

Types of commercial truck insurance

There are various types of auto insurance policies designed specifically for trucking companies. So you need to know the insurance policies available to get optimal protection for your trucks and business.

The key types of commercial truck insurance are as follows:

  • Commercial auto liability insurance: covers injuries and damages sustained by individuals and properties if one of your trucks gets involved in an accident. It covers medical bills and the costs of repairs and replacement. 

It may even cover legal fees if a personal injury lawyer helps an accident victim. Note that trucking businesses must invest in this insurance scheme per federal regulations.

  • Motor truck general liability insurance: covers injuries and damages sustained due to business activities not directly related to your truck’s functioning. 

It covers instances such as someone slipping and falling on your property, delivery of damaged goods, libel and slander issues, your driver’s abominable behavior at a loading dock or truck stop, fire on one of your rental properties due to your fault, and more. Note that this insurance is limited to a 500-mile radius.

  • Physical liability insurance: protects your trucks against theft, vandalism, natural disasters, and crashes. It’ll also cover the costs of repairs and replacement.
  • Bobtail or non-trucking liability insurance: if one of your truck drivers gets involved in and is responsible for an accident while driving the truck for personal reasons, this insurance will cover medical expenses for injuries and legal and settlement fees. Note that it won’t cover any damages to the truck involved.
  • Motor truck cargo insurance: covers the items transported in a commercial vehicle. Note that this insurance doesn’t cover the truck or driver. It only covers the goods in-transit that are damaged due to collision, fire, or incorrect loading measures.
  • Medical payments insurance: will cover the medical bills in case you or other members inside your vehicle get injured in a crash.
  • Uninsured or underinsured motorist insurance: this insurance will come in handy if someone damages your truck or assists in its explosion but doesn’t have insurance or enough coverage to pay you for the damages.
  • Trailer interchange insurance: this covers damages, such as fire, collision, theft, collision, and vandalism, sustained by truck trailers being hauled under a trailer interchange agreement.
  • On-hook towing insurance: this covers damages, including collision, fire, vandalism, and theft, sustained by a truck while it’s towed.
  • Rental reimbursement with downtime coverage: if one of your trucks gets involved in a collision and its repairs take too long, you can ask for some financial assistance to compensate for the time and money lost. 

Moreover, if you get a truck on rent to keep your business running, this policy will reimburse you for the rental truck charges for a maximum of 30 days.

  • Limited depreciation coverage: if your truck can’t be salvaged after a collision, this policy will cover vehicle replacement costs.
  • Worker’s compensation insurance: covers medical expenses and lost wages if one of your workers gets injured in the line of duty.

Generally, an insurance policy includes a combination of these types of insurance to offer the best protection for your trucking business’s needs. However, it’s crucial to keep in mind that commercial truck insurance won’t cover your personal assets. 

Additionally, it won’t cover any intentional damage done to the truck in the hopes of cashing in the policy. Also, accidents caused due to reckless driving and racing won’t be considered. Similarly, if your fleet gets damaged due to certain natural disasters, such as earthquakes, your insurance policy won’t cover these unless specified.

How do you choose a dependable insurance provider to help you make the most of your insurance policy?

Factors to consider when choosing an insurance provider

A supportive and reliable insurance provider will differentiate between your business thriving and going under. So ensure you choose a provider who would happily weather the bad times with you rather than tying your claims up in red tape.

A few factors to be considered are:

  • Experience and expertise: choose an insurance provider specializing in the trucking industry who can guide you well. If they’ve been a key player in the industry and have in-depth knowledge of the state mandates, they’ll steer you in the right direction.
  • Track record: selecting an insurance provider who has a good reputation in the market and a proven track record of high settlements, given a claim’s legitimacy, is essential. You must also check their financial statements to ensure they’ve enough reserves to pay the claims. Check independent ratings and that of rating companies to back your research.
  • Policy coverage: go with a provider who can accommodate all your coverage needs, including special protection plans. Go through the fine print to know their terms and conditions. If you’re looking for a comprehensive plan to combine multiple types of insurance together, check if they offer an umbrella policy or if you will have to pay separately for each one.
  • Cost of insurance premium: after you’re satisfied that your other criteria are met, determine the cost of the policy. A low price, though attractive, will offer limited coverage and increase your out-of-pocket expenses.
  • Customer service: you might not think much of it, but your provider’s customer service and dedication to helping their customers after the sale will play a big role in how much support you receive from them when you need it the most. 

Compare different vendors and conduct a cost vs benefit analysis before shortlisting a few. After you’ve narrowed your options, it’s time to understand the factors affecting your commercial truck insurance cost.

How much will commercial truck insurance cost you?

Your commercial truck insurance premiums will depend on the following factors:

  • Coverage needs: the damages and incidents you’d like to protect your business from and the expenses a specific policy covers. Moreover, you must decide on the vehicles and drivers you’d like insured. The higher your coverage needs, the higher your insurance premiums will be.
  • Business’s location: insurance cost varies from region to region. Additionally, if you transport goods across borders, your insurance premiums will increase since your business’s exposure will be more.
  • Type of cargo transported: your insurance premium will also depend on the weight of the freight you transport. If you deliver heavy cargo, your premiums will be higher, given their ability to damage the vehicle more than lighter cargo.
  • Vehicle type: you’ll have to pay higher premiums for bigger and newer vehicles since they’re more difficult to repair.
  • Driving history: your driver’s driving records and the number of accidents your fleet has sustained over the past few years will also impact on your premium amount.
  • Deductible costs: decide if you’d like your policy provider to do the heavy lifting when it comes time to cough up money for the damages. Now, determine the percentage you’d be comfortable with paying before the policy kicks in.
  • Policy limit: it’s a predefined amount that determines the maximum amount the insurance provider would’ve to pay to settle a claim.

Note that these factors will determine your monthly premium amounts. There might be some other variables at play, too. 

Commercial truck insurance is essential for trucking businesses

Insuring your business assets and being prepared for any eventuality are investments that will give you peace of mind and allow you to focus more on growing your business. Besides protecting your assets, proof of insurance can help you comply with federal regulations and gain the trust of your consumers and clients.

To ensure that you receive the required financial assistance in case of an accident, send your insurance provider a detailed report of the accident immediately. Don’t forget to attach any images and witness statements if possible.

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