What Every New Trucking Business Needs to Know About Insurance
While getting into the trucking business can be a lucrative move, it is far from an ideal business to go out on a limb doing so as compensation for accidents, cargo loss and liability claims are significantly high. Simple Tips for Choosing the Right Commercial Truck Insurance One of the most crucial factors in running a profitable trucking operation is making sure that you get proper insurance coverage. Assessing your insurance requirements early on can help avoid catastrophic financial loss for the long-term and steward over scrutiny from state and federal regulations.
1. Everything Your New Trucking Business Should Know About Insurance
Risks on the Road for Trucking Companies You will need to get insurance for your trucks, drivers and cargo (as any new business). Among the many insurance solutions for trucking, some of the most popular policies are:
Primary Liability insurance: This is mandated by federal law, and covers damage or injuries to others you happen to be responsible for, when one within your equipment will become part of an accident. Trucking companies are required by the Federal Motor Carrier Safety Administration (FMCSA) to maintain at least $750,000 to $5 million in liability coverage (depending on what is being hauled).
Collision and Comprehensive Physical Damage Insurance: These insurances pay for your truck to be repaired or replaced if it is damaged in an accident, by fire, theft, vandalism. This coverage is important because your trucks are one of your best assets.
Cargo Insurance: For the goods you are moving in case they get damaged or stolen. This is a critical policy as most shippers will not work with carriers not properly insured for cargo, so failing to maintain this coverage could have significant consequences.
Bobtail Insurance: This covers your trucks for when operated alone, without a trailer. Bobtail insurance is for truckers that may drive back and forth from depots when not dispatched.
If you hire drivers, it is your responsibility to take care of their safety and make sure they are covered with workers comp. If one of your employees gets hurt in a job-related accident, you can rely on workers’ compensation insurance to cover their medical expenses and lost wages.
2. Balancing Start-up Costs against Adequate Insurance Cover
Starting a new trucking business, you want to make sure your startup costs are controlled, but at the same time you need enough coverage. Insurance costs can be a considerable expense, especially for new businesses. Yet skipping coverage could mean you risk losing a huge amount of money in the event that an accident occurs.
Here are some tips for reducing costs while still getting the best coverage:
- Get Quotes Insurance rates differ wildly between providers. Shopping around will allow you to COMPARE QUOTES and find the LOWEST RATE for the coverage you need.
- Safety Programs: Investing in safety training and technologies like telematics or dash cams can reduce risk to your operations, which may then create lower premiums.
- Consider Higher Deductibles: A higher deductible is what you pay before the insurance kicks in, meaning that higher deductibles will result in lower monthly premiums. Simply ensure that if any mishap happens, you can pay the deductible.
3. Important Policies for Small Fleet Owners
To help reduce their risk, small trucking fleets need to have the appropriate mixture of insurance policies. The rest of this is just for small fleet operators, in addition to the basic policies listed above.
- Non-Trucking Liability Insurance: When your trucks are being driven for non-business reasons, like personal errands. Good policy for fleet owners who let drivers take trucks home or use them after hours.
- General Liability Insurance: Protects your business against non-driving related claims like slip and fall instances that may happen at your office or maintenance facility.
- Umbrella Insurance: if you want more protection than what your standard policies cover, an umbrella insurance policy offers extra limits for catastrophic situations. It protects you from higher payouts than your main primary liability covers.
- Hired and Non-Owned Auto Insurance: Provides coverage for vehicles that are hired, rented, or those you hire to other parties.
Conclusion
For new owners, one of the most critical aspects of being a profitable trucking company is having proper insurance. Primary liability, physical damage and cargo insurance must be top-of-mind when first opening a new business to fully cover the start-up, along with remaining compliant with federal mandates. It can be hard to balance operating costs with proper coverage, but by shopping around for rates and implementing safety programs as much as possible. For small fleet owners, there are several other policies too like general liability, non-trucking liability and umbrella insurance which protect the business against different kind of perils.