New Venture Trucking Insurance
Thinking about starting your own trucking authority? Here are some insights that might beneﬁt you before picking out a company name and registering for a DOT (Department of Transportation) and MC (Motor Carrier) authority. (Motor Carrier authority is needed in cases where a business operates across state lines).
Trucking insurance is not like regular personal auto-insurance. The premiums and limits of liability can be much higher than that of your family SUV or commuter vehicle. Limits of auto-liability required by the FMCSA (federal motor carrier safety administration) start at $750,000, unless you are a registered hazmat-hauler, in which case the required limits start at $1,000,000 for auto- liability.
Why do I need a million dollars of liability insurance? Often times when an 18-wheeler, or heavy-duty pickup truck combined with a full-sized loaded down trailer are involved in an accident, the results can be catastrophic. Almost all shippers and freight brokerages require $1,000,000 of auto-liability insurance and $100,000 of motor truck cargo insurance, to even be considered to book a load.
What is motor truck cargo insurance? Often referred to as MTC, or Cargo insurance, this line of coverage protects the goods you or your company are hauling when under your direct control. For example: in the event of an accident where you and your load of building materials/seafood/any other cargo you may be hauling is thrown from your trailer… motor truck cargo insurance would protect the cost of replacing those goods or paying out to the customer.
Most companies combine $1,000,000 of auto liability insurance, along with $100,000 of cargo insurance to cover, what most would refer to as, “the basic necessities” of trucking insurance, to be eligible to, “haul for hire”.
Another form of insurance coverage you may be wondering about, is the comprehensive and collision coverage, otherwise known as physical damage coverage, or, “phys dam” as it is most often referred.
This line of coverage will cover the truck and/or trailer for the appraised value upon the time of the claim, in the event it is damaged in an accident, or while parked on a lot. The value of the truck is set by you, the insured, and represents a smaller percentage of the insurance premium for the year, as compared to the auto liability, which makes up the bulk of the total premium.
How much can I expect to pay? Insurance costs vary from state to state, and ﬂuctuate heavily by a number of factors such as: age and type of vehicle, radius, commodities hauled, motor vehicle reports for the driver(s), and several other factors. That being said, the average costs to insure your business from damage to others (auto liability insurance), damage to cargo (motor truck cargo insurance), and damage to your own equipment such as the truck or trailer (physical damage insurance) are ranging as of Q4 2018 to be between$6,000- $25,000 for the year, with most falling in the $10,000-$20,000 range per one unit.
This cost may surprise you, even if you have been running under someone else’s authority, have years of experience under your belt, and millions of miles logged. New trucking companies still fall under the category of “high-risk” due to the lack of history tied to that particular DOT authority.
If you have been running under someone else’s authority, you may have only been paying $1,000- $5,000 a year for your insurance. How is it possible for insurance costs to be so much higher just by running under your own authority? First and foremost, most of the coverage you need was likely provided by the company you were previously running for. Their auto liability insurance and cargo insurance would have covered your vehicle, which makes up the bulk of the premium. The remaining insurance premium would have most likely been physical damage and non- trucking liability insurance. The bulk of the premium is in the auto liability, where the exposure for the insurance company can be $750,000 to over $5,000,000 dollars per truck.
Think of it this way, would you risk paying out $1,000,000 dollars of insurance for a mere $1,000 return? Most would answer a profound, “NO!” Luckily for those purchasing insurance, the costs are not on a 1:1 ratio. A million for a million. The premiums of other insured’s help lower the exposure for the insurance company, meaning you don’t have to pay as much. On the ﬂip side of the coin, the insurance market, as a whole, tends to ﬂuctuate, just like the stock market, when the exposure is not adequately managed. The insurance you are purchasing covers you and your business from a potential ﬁnancial nightmare.
Let’s recap. After you have made the decision to open your trucking business and bought your new truck or tractor, applied for your DOT number, and applied for your Motor Carrier authority, your next step is to call a licensed insurance broker, who will begin to shop the markets for the right insurance product for your business.
Once you and your insurance broker have agreed upon the right insurance products for you and your business, you will need to establish a route of payment. With Reliance Partners, most of the insurance products we provide, have the ability to be ﬁnanced, and this comes with some outstanding beneﬁts to you and your business. Some choose to pay their premiums up front and in full. Others, choose to use outside premium ﬁnance companies associated with Reliance Partners to help secure favorable down payment terms.
With down payments typically at 15%, low APR%, and 9-10 monthly payments you are setting your business up for success, while not having to fork over a large amount of capital all at once.
For more information, call Reliance Partners at 877.668.1704, or you can reach out directly to our Senior Director of Sales, Robert Watson at 423-803-1487 for a quote on your business. We look forward to working with you for all your insurance needs.