Owner-Operator Insurance

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There are special insurance coverages needed with respect to owner-operators. It is important to differentiate between the different types of coverages based on whether an owner-operator is leased to a motor carrier versus operating under their own authority.

Owner-Operators Under Permanent Lease

When an owner-operator is leased to a motor carrier, they are typically covered under the trucking company’s auto liability insurance. It is important that the owner-operator understands this coverage is typically only enforced when under a load or dispatch. This insurance is intended to provide coverage for third-party injuries or property damage in the event the motor carrier was held liable.

Additionally, it is important that the owner-operator also obtain several other lines of coverage. These are typically mandated by the trucking company for the owner-operator to purchase prior to leasing on.

The owner-operator may also want to strongly consider (in some cases it will be required) purchasing physical damage or trailer interchange coverage. The physical damage insurance would be intended to cover damage or loss to the tractor. Trailer interchange coverage would be intended physical damage to a non-owned trailer that was being transported under a trailer interchange agreement.

Owner-Operators With Their Own Operating Authority

Owner-operators with their own authority are required to purchase Auto Liability coverage (BMC 91-BMC-91X) based on FMCSA. The required limit is $750,000 for most classes of business, but $1 million is the typical limit purchased as it is required from shippers and freight brokers. In addition to Auto Liability, the owner-operator should also consider purchasing Physical Damage, Cargo, and General Liability. There are sometimes additional policies that may be required based on commodities, state laws, and contracts. New venture insurance can be expensive, so it is imperative that you understand your future goals and objectives when establishing a new trucking company and indicate your intentions to grow and the type of operation and radius where you plan to operate.

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