January 30, 2019
Why You Need Owner Operator Insurance
If you have made the move from a paid trucker to a proud owner of your own trucking business, congratulations are definitely in order. This is because becoming an owner-operator is a huge step. There is big money in the trucking business and you are likely to make serious money as an owner operator. Now, it does not matter if you have just one truck or if you have a fleet of trucks. Once you have taken the bold step to set up your own firm, you have nowhere to go but up. Note that you are not likely to make much progress in this lucrative business if you do not take out the right insurance policies.
First off, what is owner operator insurance?
Owner-operator insurance is simply the insurance cover you need in case the unexpected happens. By federal law, you are required to carry a minimum of $750,000 worth of insurance liability. Now, this amount is relatively small. You are not in business to make minimum profits so you should not take out the minimum insurance policy. The smart move is to take out as much insurance coverage as you can afford. This way, you are not likely to get wiped out if a major collision happens.
How much does owner operator insurance cost?
In the trucking business, you cannot talk about a specific amount of money for insurance coverage. This is because the cover that makes sense to you depends on the size of your operation, the number of drivers you have and the number of trucks in your fleet. Most experts suggest you should get coverage to the tune of $5 million but this will depend on your liquidity position. Below are some owner operator insurance policies you should consider.
Motor Truck Cargo Insurance
This is one is simply a common sense policy. You are carrying goods from one point to another. Now, these goods are liable to get damaged if the unexpected happens. Just take out a policy to cover the goods you are trucking. This sensible policy gives you peace of mind. The best part is that you can negotiate for a relatively lower premium if you have an excellent driving record. Note that there is no fixed amount for this cover. Federal law requires you to have a minimum of $5,000 but this is relatively low. The right coverage for you depends on the value of the load you are carrying.
Physical Damage Cover
If you have taken a loan to finance your truck purchases, your lender will insist on this policy. The physical damage coverage is required for the life of the loan you have taken. For this policy, your annual premiums should be 3%-5% of the total value of your rig provided that you have a stellar driving record. If your driving record is not good, you will pay a higher premium because the insurer is taking more risk on your behalf. Now, what are the benefits of this policy? In case you have an accident, this coverage will give you compensation for the value of your truck (less depreciation).
This policy makes a lot of sense because it is a welcome addition to the physical damage coverage policy. Note that the physical damage policy does not cover equipment like chains and tarps. Your physical damage policy does not cover any electronic equipment you added to the truck after purchase. You need the equipment cover for additional equipment like computers, monitoring devices, and other related equipment. Equipment coverage also offers you compensation in case you lose a full tank of fuel (diesel or gasoline) in an accident.
This policy makes sense if you buy a truck or two and finance the purchases. If one or both trucks are seriously damaged or totaled, this policy will help you pay off your loan. This is true in cases where the value of your rig is lower than the amount you owe on the loan you took. In this case, your insurance will provide compensation so that you pay off the loan without losing money.
Occupational Accident insurance
Trucking is a lucrative but risky occupation. This is why drivers need occupational accident insurance. This policy covers your drivers and their families in case the unexpected happens. In fact, this policy is an additional policy because it supplements the compensation that the driver gets in the event that an accident happens. The policy pays the driver or his relations compensation for accidental death, or dismemberment. It also covers medical bills, long-term disability, and accident-related injuries. If you drive your own truck, you can take out this policy because it makes a lot of sense.
Non-Trucking Liability Insurance
This policy is also called contingent liability insurance. It covers you in cases where you are driving your rig but you are not carrying out commercial activities. This policy covers you if you are driving to and from work. It also covers you if an accident happens when you are driving your rig for personal reasons. If you are an independent operator but you lease your service to other operators, you should take out the non-trucking liability insurance.
This policy covers you in cases where you are using a commercial tractor but there is no trailer in tow. It does not matter if the vehicle is being used for commercial or personal activities. Get the bobtail insurance and you are completely covered.
Non-Owned Trailer Insurance
If you hitch a trailer to your truck but the trailer belongs to another person or organization, you need non-owned trailer coverage. This policy covers the trailer you have hitched to your truck in case of an accident or damage to the trailer.
Owner Operator Insurance Requirements
There are different requirements for truckers who own and operate their businesses. However, you can get the insurance package that is just right for you by consulting experts. Talk to an experienced lawyer, a financial planner or a good truck insurance agent. These experts will give you excellent advice.