The Ultimate Guide to Commercial Truck Insurance Everything You Need to Know

The Ultimate Guide to Commercial Truck Insurance Everything You Need to Know

Commercial truck insurance is an essential part of running a successful trucking business. In this ultimate guide, we’ll cover everything you need to know about commercial truck insurance, including what it is, why it’s important, the costs, and what coverage options are available.

What is Commercial Truck Insurance?

Commercial truck insurance is a type of insurance policy designed specifically for trucking companies and independent truck drivers. It provides coverage for damage to trucks and other commercial vehicles, as well as liability coverage in the event of an accident.

What Information is Needed to Receive Commercial Truck Insurance?

Insurance companies require information regarding the operations of your business to underwrite a trucking insurance policy. Here’s a list of what is commonly requested when shopping:

  • DOT & MC number.
  • Declaration page of current insurance policy or current certificate of insurance.
  • If you do not have a current insurance policy, you can use your shipper’s insurance requirements.
  • Description of operation: what cargo will you haul, what mile radius will you operate.
  • Driver information: name, date of birth, driver’s license number, and information regarding any potential accidents or violations.
  • Vehicle identification number (VIN) of every vehicle and trailer to be insured, including year, make, model, and value of truck or trailer.
  • Loss runs from current and past insurance terms including a description of any accidents.
  • Copies of International Fuel Tax Administration (IFTA) reports specifying vehicle mileage by state.

Why is Commercial Truck Insurance Important?

Commercial truck insurance is important for several reasons. First, it is legally required in most states. Second, it protects trucking companies and independent truck drivers from financial loss in the event of an accident or other covered event. Without commercial truck insurance, trucking companies and independent truck drivers would be responsible for paying for damages and injuries out of pocket, which could be financially devastating.

What Truck Insurance Coverage Options are Available?

There are several different types of coverage available under commercial truck insurance policies. Here are the most common:

Primary Liability insurance

Primary liability insurance provides protection in the event that a trucking company or independent truck driver is found to be at fault for an accident. It covers bodily injury and property damage to third parties, such as other drivers or pedestrians.

Physical Damage insurance

Physical damage insurance provides protection for damage to the insured vehicle, including collision and comprehensive coverage.

Motor Truck Cargo insurance

Motor Truck Cargo insurance provides protection for the goods being transported by the insured vehicle. This includes protection against theft, damage, and loss.

Trailer Interchange insurance

Trailer interchange insurance provides protection for damage to trailers being hauled under a trailer interchange agreement.

Non-Trucking Liability insurance

Non-trucking liability insurance provides coverage for accidents that occur when the truck is being driven for personal use and not for business purposes.

General Liability insurance

General liability insurance provides protection for claims against the trucking company or independent truck driver that are not related to an accident, such as claims of false advertising or defamation.

Umbrella insurance

Umbrella insurance provides additional liability coverage beyond the limits of the primary policy.

How much is Commercial Truck Insurance?

Insurance premiums are calculated using many factors so there isn’t a one-size-fits-all approach. It is important to look for affordable insurance but remember that cheap insurance may not properly cover your operation.

Depending on the needs of your operation, insurance premiums can fluctuate. Here are some average price ranges by coverage type (yearly premium):

  • Primary liability: $4,000 to $12,000.
  • Physical damage: $1,500 to $5,000.
  • Motor truck cargo: $350 to $1,800.
  • Trailer interchange: $500 to $1,200.
  • Non-trucking liability: $2,000 to $5,000.
  • General liability: $250 to $750.
  • Umbrella policy: $500 to $1,500.

For accurate insurance estimates applicable to your fleet, contact your insurance broker.

How are Commercial Truck Insurance Premiums Calculated?

Premiums for commercial truck insurance policies are based on several factors, including the type of coverage, the value of the insured vehicle, the driving record of the driver, and the location of the trucking company. Insurance companies will also consider the safety record of the trucking company, including accident history and safety protocols, when calculating premiums.

What Affects the Cost of Commercial Truck Insurance?

There are many factors that go into calculating the cost of truck insurance including your business operation, what cargo you haul, fleet size, and more.

Here are some of the most common factors that affect the cost of truck insurance:

1. Location

Different states have different insurance rates based on what liability limits are required, and you could be paying more to operate if you’re in Louisiana, Florida, Delaware, California, and New Jersey.

For example, if you are located in a highly populated area that has an increase in crime or vandalism, your policy premium may reflect.

2. Coverage requirements

There are different coverage requirements for different business and cargo types, which may impact the cost of commercial truck insurance.

For example, if you are operating on a for-hire basis and you operate across state lines, you may need to obtain a motor carrier (MC) number. With an MC number, your insurance carrier will need to post federal filings and possibly state filings. You can learn more about insurance filings requirements and forms from FMCSA’s website.

3. DOT operating history

Similar to a credit score, a DOT number can affect the cost of truck insurance depending on a few factors.

If you have had your DOT number for at least one to two years, and have obtained good clean DOT inspections, you will likely receive a lower premium than someone who starts a brand-new authority.

It is important to take into consideration, if your DOT number has had DOT inspections with multiple out of service (OOS) violations, you could be paying a higher premium than someone who starts a new authority with zero DOT inspections.

4. Cargo commodity

Some commodities carry a higher insurance classification than others which leads to a higher insurance premium.

For example, if you haul automobiles on a for-hire basis, you will pay a higher insurance premium due to the higher cargo limits that are usually required plus the business type of auto hauling.

It is important to remember regardless of the commodity you haul, to always report the exact cargo commodities you haul to your insurance agent or broker to avoid a cargo claim not being covered in the future and the possibility of putting your trucking company in jeopardy due to misclassification.

5. Mile radius

If you are hauling across the country on an unlimited radius, your exposure to accidents is higher which can lead to higher insurance premiums than someone who operates on a local radius or state exclusive radius.

6. Driving history and claims

Drivers with less than two years of commercial driving experience will impact premiums more than someone with at least two years of commercial driving experience. Drivers with accidents, or speeding violations are surcharged or may not be acceptable to some insurance carriers.

When we were discussing earlier about shopping for insurance and to obtain loss runs, if your loss runs have claims that are paid or are still open/pending, this can also attribute to a higher insurance premium.

Best Ways to Reduce the Cost of Commercial Truck Insurance

Here’s a list of ways you can lower your truck insurance costs:

1. Implement ELD and Dashcam Technology

It is no surprise one best way to lower truck insurance costs is to implement an electronic logging device (ELD) and obtain dash cameras. It is extremely difficult to dispute dashcam footage which puts you in a better position when someone is trying to file an insurance claim when you are not at fault.

Russell Agency has a partnership with Motive which allows trucking companies to obtain safety technology and save on ELD setup costs and lower insurance premiums. Learn more about Motive and their dashcam technology and how customers of Russell Agency can access a discount on ELD’s and dashcams.

2. Implement driver safety

The biggest asset to a trucking company is its drivers.

Building a driver safety program can lead to driver retention and reduce driver turnover. Implementing a safety program can help save trucking companies money in the long run and reduce costs across the board.

All fleets can access FMCSA’s SAFER scores and review violations that drivers could have avoided which gives you a blueprint of what areas need more monitoring.

3. Decrease SAFER scores

Safety and Fitness Electronic Records (SAFER) is FMCSA’s system that details all DOT inspections and violations.

If you have a DOT number that has received several DOT inspections that are without violations, you will receive a lower insurance premium than an authority with several violations.

Implementing a safety plan should address SAFER scores and the most common violations like Hours of Service (HOS) and vehicle maintenance.

4. Pay your insurance premiums in full

Paying your insurance premiums in full will significantly decrease your overall premium. Some insurance companies give as much as 15% annual savings.

5. Increase your insurance deductible

A deductible is the amount you pay for a covered loss out of pocket when filing a claim. Depending on the type of insurance policy you have, your deductible can range from $1,000 to $25,000 depending on the size of your fleet.

For example, if you have a covered loss totaling $20,000 and your deductible is $1,000, the insurance company would pay $19,000.

If you opt for a higher deductible, you will receive a lower insurance premium, but it is important to remember to only opt for a deductible you can afford.

What are the Disadvantages of Cheap Commercial Truck Insurance?

Obtaining a low insurance premium is great for your business and great for your pocket.

However, if you’re purchasing insurance only based on pricing, you may be putting your trucking company at risk of not properly insuring it.

When shopping for commercial truck insurance, you will likely encounter unrealistically low rates, and these are likely the reasons:

  • Business type misclassification. Unethical brokers or agents can misclassify your business and cargo that is hauled to intentionally lower the cost of your policy. The policy that you purchase will be underwritten and reviewed by underwriting and you will see a hefty increase in your premium. The worst thing about misclassifying your business is if you have a claim that is not covered, you could be left to pay out damages.
  • The limits of your policy don’t comply with your industry. Commonly when trying to save money on insurance, agents will leave off coverage or reduce coverages to lower premiums. This is something that will prevent you from obtaining loads and causing you to pay more in the long run.
  • Discounts that aren’t transparent. Some insurance companies offer discounts for prior insurance or paying your premiums in full. If your prior insurance coverage isn’t obtained, the discount can be removed which would lead to increased premiums. Unethical agents can give you a paid in full premium as the yearly total but not disclose the accurate premium which isn’t paid in full.

How to Choose the Right Commercial Truck Insurance Provider?

Choosing the right insurance provider is important to ensure that you have the coverage you need at a price you can afford. When choosing an insurance provider, consider the company’s reputation, financial stability, and customer service. You should also compare coverage options and premiums from multiple providers to ensure that you are getting the best coverage at the best price.

In conclusion, commercial truck insurance is a critical component of running a successful trucking business. By understanding the different types of coverage available, how premiums are calculated, and how to choose the right insurance provider, trucking companies and independent truck drivers can protect themselves from financial loss and ensure their long-term success.

Why use Russell Agency as Your Commercial Truck Insurance Provider?

There are many challenges trucking companies face when finding a new insurance provider or applying for insurance for the first time. But there’s good news. There is an insurance broker you can trust to write an insurance policy tailored to your needs.

Consider Russell Agency for your commercial truck insurance needs when shopping. Our team can assist you in learning about your operation, risk exposures, and provide a tailored quote to maximize a better insurance experience.

Request a quote today to see how our solution can help you lower insurance costs, provide better protection, and so much more.