February 1, 2024

Why Your Premiums Vary Across States


At Reliance Partners, we understand that insurance is a significant operating expense for motor carriers, second only to fuel and maintenance costs. The premiums that carriers pay can vary dramatically based on numerous factors, including experience, the value of goods transported, driving records, and more. However, one of the most significant and uncontrollable factors is the variation in insurance rates depending on where the state is located.

Insurance for carriers is governed at the state level, despite the Federal Motor Carrier Safety Administration’s universal requirement for liability insurance. This results in a patchwork of regulations that directly impact insurance premiums.

Jackson Alexander, Reliance Partners’ Executive Vice President of Sales, sheds light on the criteria for insurance rate approval. Rates must be sufficient to cover claims, not excessively profit-driven, and free from unfair discrimination. Despite these overarching guidelines, the disparity in state regulations can lead to significant differences in insurance rates.

For instance, New Jersey recently mandated a minimum of $1.5 million in liability insurance for domiciled motor carriers, a regulation that is expected to increase insurance premiums within the state significantly. This variation underscores the importance of residence in determining insurance costs.

States known for being plaintiff-friendly, such as California, New York, and Louisiana, tend to see larger lawsuit payouts in trucking-related cases. This necessitates higher insurance rates in those states to ensure adequate claim coverage. Jackson highlights these state-specific challenges and their impact on insurance premiums.

Despite these challenges, he notes that there are strategies motor carriers can employ to mitigate cost increases. Factors such as individual loss data and CSA scores are pivotal in determining premiums. Proactive measures, like investing in safety technology and choosing higher deductibles, can also help control costs.

Looking ahead, the trajectory of insurance rates will continue to be influenced by state-level decisions. With more states possibly following New Jersey’s lead in increasing liability coverage requirements, the landscape of insurance costs could become even more complex.

Reliance Partners remains committed to navigating these complexities on behalf of our clients, offering expertise and tailored solutions to manage the evolving insurance landscape effectively.

To discover more about how Reliance Partners can support your insurance needs, click here.

To check out the full article from our friends at Freightwaves, click here.