Freight companies & businesses that use commercial trucks have lot of expenses to consider. There are fuel & maintenance costs. You must also make loan or lease payments if youre financing vehicles. One of most crucial expenses in commercial trucking is insurance. available commercial truck insurance companies & policies are as diverse as businesses that use them.
Insurance costs can run high & eat into your profits.. especially if youre carrying unnecessary coverage. On other hand.. being underinsured can cause massive expenses in case of damage or theft. Selecting right insurance policy for your commercial truck or fleet requires understanding available products & your most significant risks. This guide examines available commercial truck insurance policies & coverage.. best commercial truck insurance providers & pros & cons.Truck Insurance
What is Commercial Truck Insurance?
Commercial truck insurance refers to various auto insurance products for trucking businesses.. companies that use trucks.. or independent truck drivers. Unlike commercial auto insurance.. trucking insurance coverage protects large vehicles used in shipping & transportation.. construction & agriculture.
Insurance policies consider type of vehicle.. cargo.. average miles & truck size. There are various companies & policies available.
Most trucking companies are legally required to carry commercial truck insurance for liability. Adding protection against damage.. theft & maintenance could help your company save money.. but your monthly premium would be higher.
There are three types of organizations that purchase commercial truck insurance:
Motor Carriers: For hire trucking companies that own fleet of vehicles. These companies are responsible for insuring fleet.
Owner Operators: Business owners who operate their own trucking business. In most cases.. owner operator is an individual who owns truck. Sometimes.. owner operator will lease truck from motor carrier.
Private Carriers: People who use privately owned vehicles to transport goods on their employers behalf. Private carriers might purchase their own insurance or receive compensation from their employer.
How does Commercial Truck Insurance work?
The trucking company usually acquires & pays for insurance policy. For owner operators.. that means cost comes from your overhead.
You can insure an individual truck or fleet of vehicles. Most insurance policies cover vehicles owner & any authorized individual who operates trucks for business purposes.
When you apply for truck insurance.. you & company will determine specific factors about your policy. components of commercial trucking insurance policy include following.
Coverage trucking insurance
Coverage defines vehicles.. drivers.. damage.. incidents & expenses policy covers.
Deductible
Your deductible is out of pocket amount for damages before insurance policy is enacted. higher deductible usually lowers costs.. while low deductible increases costs.
Policy Limit
The policy limit is predefined maximum that insurance company will pay out toward claim.
Monthly Premium
This is amount you pay per month to maintain policy. Your total coverage.. deductible & policy limit all factor into how much your monthly premium will cost.
The policyholder pays monthly premium. policy agreement specifies coverage.. including vehicle(s).. driver(s) & definition of covered incident.
In most policies.. covered incidents must involve covered driver using covered vehicle for business purposes. If an incident occurs.. policyholder files claim with insurance company.
The policyholder pays for any expenses up to deductible amount & insurance company covers expenses over deductible up to policy limit. Most claims will involve claims adjuster evaluating incident & associated costs.
Insurance companies differ in how they handle payouts. Some will write check directly to policyholder or company. Others will pay repair shop or medical facility directly.
Whats covered under Commercial Truck Insurance policies?
The exact coverage depends on your policy & liability coverage. Lets review available policies.
Primary Liability
Commercial truck drivers.. like consumer drivers.. must carry insurance to protect people & property injured or damaged due to an accident or driver negligence. Primary liability coverage is minimum requirement for any commercial trucking insurance policy.
In event of covered incident where driver caused bodily injury or property damage.. insurance company covers those damages up to policy limit. It will pay for whatever repairs or medical expenses are necessary.
However.. these policies do not cover driver or any damage to truck. Thats why many trucking companies opt for expanded coverage.
Physical Damage
Physical damage is policy add on that covers costs of damages to policyholders vehicle. This policy includes collision & comprehensive coverage.. including non collision damages such as vandalism or theft.
Uninsured/Underinsured Motorists
Your truck may be involved in an accident caused by an uninsured motorist. In this case.. person who caused accident doesnt have liability coverage to pay for damage to your truck.
With an uninsured/underinsured policy.. your insurance company will pay for repairs to get you back out on road & driving revenue. insurance company might require you to sue uninsured motorist to recoup its coverage.
Medical Payments
While primary liability coverage pays for other partys medical expenses.. medical payments policy covers any medical expenses for driver or any passengers injured in vehicle.
Motor Truck Cargo Coverage
This policy is available to cover cost of cargo for specific truck drivers. It protects cargo from incidents like collision or fire.
Truckers have legal requirement to insure cargo in transit. policy applies from when cargo is loaded until it is signed for at destination.
Certain trucks.. like passenger vehicles.. ice cream trucks & garbage trucks.. are not eligible for cargo coverage. Certain types of cargo.. like hazardous materials.. pharmaceuticals & live animals.. require separate insurance policy & arent eligible for standard cargo coverage.
General Liability
General liability covers injuries or property damage that occurs while not driving truck. Drivers under this policy are limited to 500 mile radius.
Motor truck general liability generally covers following:
Bodily injury & property damage: Provides liability protection when covered incident causes physical injuries or property damage. Examples include slip & fall at truck depot or injuries sustained during vehicle maintenance.
Personal injury & advertising injury liability: Covers non physical injuries to person or entity resulting from motor carriers negligence.
Medical Payments: Provides payments for medical costs from covered incident that resulted in physical injuries or death.
Products/Completed Operations: This insurance policy covers costs of delivering another persons goods to wrong location.
Damage to Premises Rented to You: This policy covers damages motor carrier causes to temporary rental property.. usually seven days or less.
Non Trucking Liability
This policy is for owner operators with permanent lease to motor carrier. It covers injuries or property damage when using truck for non business purposes. Any claims for incidents that occurred during business use are covered under primary liability.
Rental Reimbursement with Downtime
Purchasing this insurance policy provides truckers with rental truck or compensation for lost income while their primary truck is unusable following collision. It helps ensure your trucking company maintains consistent income should you not be able to drive due to truck being out of commission.
The policy limit determines amount insurance company will pay for rental truck. reimbursement is for maximum of 30 days to cover rental truck cost. Some insurance companies will also help you find rental truck to use.
This type of coverage is usually one combined policy.. but some companies issue two separate policies. One policy covers cost of rental truck.. while other covers any lost income.
Only certain types of commercial trucks are eligible for rental reimbursement & downtime coverage. Eligible trucks include following:
Dually pickup trucks.- Flatbed trucks with gross weight of over 16k lbs.
- Refrigerated trucks with weight over 16k lbs.
- Stake trucks with weight over 16k lbs.
- Tank trucks carrying over 1..400 gallons.
- Dump trucks with weight over 16k lbs.
- Front loaders with weight of over 45k lbs.
- Roll On vehicles with weight over 45k lbs.
- Straight trucks with weight over 16k lbs.
- Tractors.
Tractor Interchange
Semi trucks or tractors sometimes haul trailers that belong to another company under “trailer interchange agreement.” This is contract that allows one driver to complete shipment for different company.
In most cases.. driver hauling trailer is responsible for damages.. but these agreements are not covered under primary coverage policy. Truckers need supplemental insurance to cover any trailer or cargo damage. Note: These policies are not available in Virginia.
What are best Commercial Truck Insurance companies?
Finding best commercial truck insurance company depends on your unique needs & budget. Heres our list of top insurance companies to help you get started.
Progressive Commercial Truck Insurance
Progressive is one of most recognized insurance companies in country. Its also most prominent commercial insurance provider in market.
In addition to legally required primary coverage option.. Progressive offers multiple commercial insurance policies unique to trucking industry. It insures motor carriers.. owner operators & private carriers in all 50 states.
Truck insurance policies include motor truck cargo.. general liability.. non trucking liability.. rental reimbursement with downtime.. on hook towing & trailer interchange. available policies make Progressive one stop shop for your commercial auto insurance needs.
Berkshire Hathaway
Berkshire Hathaway owns three different insurance companies that could benefit commercial truck drivers. Its Geico brand is most well known for low cost consumer auto insurance but also offers some small business insurance policies.
The company also owns biBERK.. which launched in 2015. This subsidiary provides customized insurance for small businesses.
The company is also behind THREE.. which aims to simplify insurance process for small businesses. company offers simple three page policy covering all business needs.
State Farm
State Farm is Fortune 500 company with an excellent reputation among its customers. widely recognized company is nations largest provider of home & auto insurance policies.
It includes all commercial trucking insurance policies you would expect.. such as primary coverage.. general coverage.. non trucking liability.. etc. In addition.. you can get motor truck cargo & transportation coverage under its inland marine policies. State Farm also offers uncommon policies.. such as rideshare insurance.
The only drawback to company is that it doesnt offer an online quote tool. You must ask your local agent for quote & set up policy. However.. once you have policy.. State Farm offers convenient online claim tool.
OOIDA
The Owner Operator Independent Drivers Association (OOIDA) is an international trade association that advocates for truckers & trucking policies. It also provides customized insurance policies.
You must be member of organization to get an insurance policy.. but membership only costs $45 per year. cost might be worth it to help you get an insurance policy from an organization that knows ins & outs of trucking industry.
OOIDA members can also get medical & dental coverage. This is an excellent option to provide insurance for your truck diver employees.
Policies include primary liability.. general liability.. unladen liability.. passenger accident & physical damage coverage. trade association also pushes for fair business policies & highway safety for truckers.
Hartford
The Hartford brings over two centuries of experience to its personal & commercial lines of insurance. Fortune 500 company is most well known for property insurance but insures most business verticals.
In addition to standard commercial truck policies.. Hartford offers coverages for on hook towing.. livestock transit.. property in transit.. motor truck cargo.. trailer interchange & more. You can customize your policy to include specialized coverage for your particular industry or business.
The company offers convenient online tool to get quote within minutes & secure your assets same day. Hartford has an excellent customer reputation with over one million small business clients.
Nationwide
Founded in 1926.. Nationwide is one of oldest auto insurers in America. As its name states.. it offers insurance policies in all 50 states.
The biggest drawback to Nationwide is that it doesnt insure semi trucks or tractors. However.. it offers comprehensive coverage policies for other commercial trucks.
Nationwide also offers an additional policy for farm truck insurance. While it mostly has good reviews.. its customer ratings are slightly lower than other commercial truck insurers.
National Independent Truckers Insurance Company
The National Independent Truckers Insurance Company (NITIC) has provided commercial trucking insurance for over 30 years. While not as big as some competitors.. NITIC has an excellent reputation for its fast claims settlement process.
The company provides most diverse range of commercial auto insurance policies on market. NITIC insures most truck types & offers reasonable prices with customization options & several discounted rates.
One of primary benefits of company is its online quote tool. You can access sample quotes & get quote for your needs.
NITIC has excellent customer reviews & is well known for its customer service. It also offers more focused approach since it only works with trucking insurance.
Sentry
Founded in 1904.. Sentry is mutual insurance company that offers specialized insurance products for businesses & individuals. It provides standard commercial trucking insurance policies such as primary liability & general liability.
The company also offers specialized programs for non trucking liability insurance & cyber liability insurance. latter protects companies & company assets in case of cyberattack.
Sentry has solid customer reviews & agents specializing in commercial trucking insurance. only drawback is that you cant get quote online. You must contact an agent to get quote.
What are advantages of Commercial Truck Insurance?
Commercial trucking insurance is an excellent way to protect your assets. Insuring your company against liability reduces potential for lawsuits. Adding medical & property damage insurance minimizes risk of losing your most valuable assets.
Many commercial trucking companies offer discount opportunities. You could potentially get tracking discount if you allow insurance company to install tracking device.
The insurance company uses data to improve its risk assessment model. safer you drive.. lower your premium becomes.
Another common driver discount is based on experience & certification. Truckers with commercial drivers license (CDL).. completed coursework from trucking school.. or years of experience can typically qualify for discount.
Many insurance companies provide customizable plans so you can get coverage that best suits your business needs. All trucking companies are required to carry primary coverage but you can get supplemental policies that help support your business.
What are disadvantages of Commercial Truck Insurance?
The number of commercial truck insurance companies & policies can make it difficult to determine best options for your business. Most plans require supplemental insurance to protect assets from theft or other damages.
Monthly premium costs can run high for business truck insurance. exact costs depend on type of truck(s) you are insuring.. cargo you carry & other risk factors. Sometimes.. truckers end up paying for coverage they dont actually need.
In addition to high monthly premiums.. some companies tack on insurance fees. You might come across an insurance company offering lower monthly premium only to get hit with fees that make policy more expensive.
Claim adjusters can sometimes misguide claimants during settlement process. Look for companies that have good reputation for claims & customer service.
Commercial Truck Insurance Pros & Cons
Here is an at a glance summary of benefits & drawbacks of commercial truck insurance.
Pros:
It helps trucking companies protect their assets.- Customizable programs allow you to select coverage you need.
- Tracking discounts are available.
- Driver discounts are available.
Cons:
Often requires standalone or supplemental policies.- Higher monthly premiums add to your business expenses.
- Insurance fees can increase your costs.
- Claim adjusters might try to prevent you from getting full insured amount.
Frequently Asked Questions trucking insurance.
Am I required to have Commercial Truck Insurance?
Yes.. businesses that use commercial trucks are required to carry liability insurance. Federal Motor Carrier Safety Administration (FMCSA) mandates that commercial truck drivers maintain an insurance policy in case of an accident.
The US Code of Federal Regulations specifies exact minimum liability coverage amounts by vehicle weight & cargo type. Here are legal insurance requirements for minimum liability:
Non hazardous freight trucks under 10..001 pounds: $300k.- Non hazardous freight trucks over 10..001 pounds: $750k.
- Oil trucks (for hire & private carriers): $1 million.
- Hazardous materials or explosives: $5 million.
Some commercial trucks are also subject to state regulations. Check with your insurance agent to see if youre required to carry insurance beyond minimum federal requirements.
What types of commercial trucks can I insure?
You can insure most types of commercial vehicles. Here are some of most commonly insured types of trucks.
Pickup Trucks
Pickups can be covered under personal insurance policy.. business auto policy.. or commercial truck insurance policy.. depending on how its used. Construction workers.. landscapers & other professionals using truck for business will likely need commercial truck policy.
Cement Mixers
Easily recognizable due to spinning drum.. cement mixers transport liquid cement to various construction job sites. These vehicles carry higher risk factor & usually need additional insurance policies beyond primary liability coverage.
Tow Trucks
Most tow trucks need primary coverage liability & physical damage coverage. They can also benefit from on hook towing insurance.. which not every company offers.
Box Trucks
Also called straight trucks.. companies use box trucks to transport goods & cargo. Theyre recognizable by large box like cargo hold.
Companies using box trucks should have primary liability.. physical damage & motor truck cargo coverage. It might also be good idea to get non trucking liability coverage.
Dump Trucks
Construction & other companies use dump trucks to transport loose material to job sites. Dump trucks should have primary liability.. physical damage.. motor truck cargo & non trucking liability.. along with rental reimbursement & downtime coverage.
Tractors
Farms use tractors for planting.. plowing & other purposes. Unlike most trucks listed in this guide that transport cargo from one location to another.. tractors usually stay on farm.
But.. these pieces of equipment are essential to agriculture. As such.. most farmers want to insure them. Some insurance companies include tractors as part of their agricultural insurance programs. Its best to check with your agent on right policy for your tractor.
Semi trucks
Tractor trailers.. 18 wheelers.. big rigswhatever you call them.. semi trucks ship goods & cargo nationwide. Insuring truck & cargo is essential to help prevent any losses due to accidents.
Owner operators & trucking companies should get primary liability.. physical damage.. motor truck cargo & trailer interchange coverage. exact coverage depends on how you use your semi truck.
Other Trucks
You can also use trucking insurance to cover following vehicles:
Agricultural trucks.- Bucket trucks.
- Car carriers or Rollback trucks.
- Catering trucks & vans.
- Delivery vans.
- Flatbed trucks.
- Front loaders.
- Garbage trucks.
- Pump trucks.
- Refrigerated trucks.
- Roll on vehicles.
- Stake body truck.
- Step vans.
- Street sweepers.
- Tank trucks.
What are costs for Commercial Truck Insurance?
The costs include commercial truck insurance premiums & insurance fees. You can also consider deductible cost.. but it only becomes factor when you file claim.
The amounts can vary significantly. Monthly premiums can range from few hundred dollars to few thousand dollars per truck.
Lets look at what determines your commercial truck insurance cost.
Types of Vehicles
Heavier trucks usually carry higher premiums because they can do more damage in collision or accident. Newer trucks also tend to carry higher rates. number of vehicles in your fleet also increases your costs.
Location & Average Distance
Rates vary from state to state.. so location of your truck(s) makes difference. Carrying theft insurance in high risk area can also increase costs.
Insurance companies also closely examine your operating radius. Local trucking companies use fewer miles & carry lower risk. Long haul truckers will typically have higher insurance costs.
Storage
Where & how you store your vehicles impacts your insurance costs. secured garage protects vehicles from elements & theft or vandalism.. lowering your costs. Conversely.. storing your vehicle on public street will increase insurance costs.
Cargo
The type of cargo you transport impacts your costs. Heavier or dangerous cargo will carry higher premiums. Some cargo.. like livestock.. oil/gas & hazardous materials.. require specialized insurance policies.
Driving History
Just like with private auto insurance.. your driving history plays role in determining your costs. Insurance companies set costs based on risk.
Drivers with history of tickets or accidents are riskier than drivers with clean driving record.. so their costs are more. Using tracking devices or driving for certain period without incident can allow you to access good driver discounts.
Deductible
The more you can pay out of pocket.. lower risk for insurance company. Low deductibles will carry higher premiums.
Amount of Coverage
What you get covered also impacts your premium. Most trucking companies are required to carry primary liability insurance. However.. liability amounts can vary. larger your insured liability amount is.. higher your monthly premium.
Adding coverage beyond required primary liability can also increase your costs. Adding physical damage.. medical.. cargo insurance.. etc… will incur higher monthly premium.
How can I reduce costs for Commercial Truck Insurance?
Here are some tips on reducing costs of your truck insurance coverage.
Keep Clean Driving Record
As mentioned.. negative incidents on your driving record can increase your costs. Whether youre an individual owner operator or have team of employees.. keeping accidents & tickets off driving records is important to keeping costs low.
Shop for Discounts
Many insurance companies offer safe driver & tracking discounts. Research what companies offer discounts youre most likely to get & compare their costs to other insurers.
Hire Drivers with Experience
New truck drivers will likely get higher insurance rates since they dont have driving record. Experienced drivers usually get lower rates. This is especially true for truck drivers with over decade of experience.
Compare Quotes
Its good idea to get several quotes from multiple insurance companies. You can compare costs & decide on best option for your needs. word of caution.. though: carefully consider companys reputation & claims process. Saving money is good.. but you dont want to get stuck with cut rate policy that doesnt deliver when you have claim.
Pay for an Annual Premium
Most insurance companies charge monthly premium for trucking insurance. However.. some will offer six month or twelve month premiums. You typically get lower rate when you pay for entire year in advance.
Get Trucks with Modern Safety Features
Newer trucks tend to carry higher premiums because value of vehicle youre insuring is higher. However.. vehicles with modern safety features.. such as anti theft devices.. can lower insurance companys risk.. thus lowering your costs.
Plan Your Routes
Many insurance companies consider total mileage when evaluating risk & premiums. Carefully planning your routes reduces miles you log and.. in turn.. lowers your insurance costs.
What isnt covered under Commercial Truck Insurance?
Commercial truck insurance policies will also list exceptions for costs policy wont cover. Each policy is different.. but here are some of most common exceptions.
Intentional Damages
Insurance companies wont cover costs incurred from purposefully harming others or causing property damage. Intentionally causing damage & then trying to claim it on an insurance policy falsely is insurance fraud. Committing insurance fraud can lead to serious financial & criminal penalties.
Property of Others
Most insurance policies exclude damage to property.. vehicles.. or personal items belonging to others. You might consider cargo insurance or another supplemental policy if your business regularly transports cars or property to others.
Claims Exceeding Policy Limits
Your policy limit sets cap on costs insurance company will cover. For example.. your primary liability policy might set limit of $300..000 for medical expenses for an injured party.
Claims that go beyond your policy limit wont be covered. For example.. if you caused an accident that incurred $325..000 in medical expenses for injured party.. company would cover $300..000. Youd be personally responsible for remaining $25..000.
High Risk Cargo
Motor carrier cargo policies typically exclude certain types of cargo. Most policies wont cover money.. jewelry.. or drugs like tobacco.. alcohol.. pharmaceuticals.. firearms.. or animals.
You will need to get specialized supplemental insurance to cover these cargo types. Many insurance companies offer HazMat or livestock insurance policy add ons.
Do I need insurance to get Commercial Truck financing?Truck Insurance
Commercial truck financing allows you to acquire truck or fleet of vehicles on credit. Most lenders offer both auto loans & leases.. depending on your needs.
Some lenders structure commercial truck financing like auto loans.. while others use equipment financing. Most semi truck financing lenders require insurance for approval regardless of financing structure.
Some lenders might process loan without proof of insurance.. but youll need insurance to register & use vehicles. Not being insured prevents you from using truck to drive revenue.. which impacts your ability to repay loan.
Final Thoughts
If you use commercial trucks to conduct business.. you must carry insurance. However.. there are many companies & policies that offer commercial truck insurance.
Selecting best policy or company for your business depends on type of truck(s) youre using.. cargo youre transporting & distance you travel. All companies are required to carry primary liability insurance.
Small business owners might want to consider additional coverage.. such as physical damage or medical.. to cover their trucks & drivers. Freight trucks should consider motor carrier cargo insurance to protect their cargo.
Some trucking businesses require unique insurance products.. such as on hook liability insurance for tow trucks. Consider working with an insurance company that has experience with trucking industry if you need more customized policies.
Contact us if you have more questions on commercial truck insurance or want to apply for an equipment loan to purchase commercial vehicle. Our loan executives can help you find best financing options for your business needs.