Do I Need Trailer Interchange or Non-Owned Trailer Coverage?

by Yahaira Cope, Account Manager

When beginning your trucking company, it’s crucial to explore all your options relating to the kinds of coverage you’ll need to operate effectively. One essential question that gets asked by many truckers has to do with opting for the right trailer coverage: Do I really need trailer interchange or non-owned trailer coverage?

Here’s Why You Need the Insurance

In the trucking industry, it’s common for truckers to use trailers belonging to others in their business. A trailer interchange agreement is required if a trailer of goods is being hauled by different truckers and trucking companies along its path towards end delivery.

In most cases, companies do not own all the transportation equipment involved in shipping goods to their final customer. In fact, it doesn’t make sense for a company to own and manage fleets of ships, trains and trucks when other companies provide these services as their core business. Instead, companies contract transport out to third parties that handle shipping. These transport companies, in turn, operate in set networks. If a good starts out in one logistical network, but ends in another, the transport companies will use a trailer interchange agreement to complete delivery.

It should come as no surprise then that freight brokers will want their trailer covered—especially under your insurance.

Let’s say you were hauling a load and stopped to refuel. The next thing you know, the tractor catches on fire due to some mechanical issue you were unaware of. The trailer (that isn’t owned by you) should be covered by your trailer interchange or non-owned trailer policy to prevent serious loss. In the example, this type of insurance covers the physical damage that may be caused to the trailer while it’s being hauled by a party that does not own that trailer. The insurance coverage protects you (the trucker) while you’re in possession of the trailer and covers damage caused by the fire. Not having this layer of coverage can spell disaster for your fleet or trucking operation.

There are many other reasons it’s necessary to have a trailer interchange agreement on your policy (such as theft, vandalism, or collision). These types of coverage can be leveraged to protect all parties involved. The right coverage is also key to widening your professional networks and establishing your business reputation.

The Basics

As you know, trailer interchange protects a non-owned trailer as long as both parties have signed a written trailer interchange agreement. The trailer(s) disclosed in the written agreement are covered as long as they’re in your care or possession. Here are a few insights to help you understand some nuances with the coverage.

Non-owned trailer coverage does not require a written trailer interchange agreement, but the non-owned trailer must be attached to the tractor at the time of loss for coverage to apply.
Depending on the limit and deductible you choose, your trailer interchange coverage should add between $100 and $1500 a year to your overall insurance cost. Factors that influence how much you pay include:

Loss history, Location, Equipment Value, and Driving Record(s)

The average limit for trailer interchange coverage is between $20,000 and $30,000, with a deductible of $1,000. To select the right limit, you’ll need to know the trailer’s actual cash value.

To be clear, the insurance company will only pay out the value of the trailer in the event of a total loss, not the policy maximum. So, over-insuring a trailer will only waste money. On the other hand, under-insuring can lead to high out-of-pocket expenses if the trailer is damaged beyond the policy limits.

The Bottom Line

Since the exchanged trailers are not owned by you, they require separate insurance coverage. In other words, your regular Physical Damage insurance won’t provide adequate coverage here. So what’s the answer the question: do I need trailer interchange or non-owned trailer coverage?

The simple answer is yes—if your trucking operation regularly involves the use of someone else’s trailer. Trailer interchange coverage and non-owned trailer coverage provides protection when you have care, custody and control of one, or many, trailers; whether they’re attached to your truck or not. Still unclear about whether your situation requires the added cost? Remove all doubt and get in touch with your trusted insurance partner, today!