Commercial Trucking Insurance vs. Standard Commercial Auto Insurance

April 18, 2023

There are a lot of expenses associated with starting a trucking business. Few are more costly than commercial trucking insurance. Commercial trucking insurance differs from standard commercial auto insurance because it is tailored to address specific risks that trucking companies face. This article explains how commercial truck insurance differs from other business insurance and how to secure sufficient coverage. 

What is commercial truck insurance?

Commercial trucking insurance refers to a group of insurance policies designed to address the specific needs of the commercial trucking industry. This type of insurance often starts with primary liability coverage, which is generally required to obtain a trucking license, and then provides additional coverage options. 

Like other types of auto insurance, trucking insurance provides financial protection for people and property should one of your trucks cause damage. Drivers must have primary liability insurance, whereas an owner-operator must also have an insurance policy with general liability coverage.   

Primary trucking liability coverage only covers the damage to another vehicle or person in the event of an accident. It is designed to provide financial protection for the public.

Contrastingly, as required by the FMCSA, insurance must have an active carrier authority, outlined in the proof of insurance document (the BMC-91). It looks for Bodily Injury Liability, Property Damage Liability, and Environmental Restoration Liability (also called BIPD coverage). 

These requirements cover the following expenses related to an accident:

Despite the scope of expenses covered by general liability commercial trucking insurance, many items are not covered by these policies, including damage done to non-commercial motor vehicles, such as limousines, passenger vans, buses, and vehicles used in construction. In addition, loss of motor vehicle cargo due to broken refrigeration systems and loss of income immediately after an accident are not covered expenses.

In addition to these expenses, motor carriers must purchase additional coverage if they want to extend coverage to include their trucks. This coverage is not standard, but it is recommended since footing the bill to pay for expensive truck repairs could be enough to put a small business owner-operator out of business. 

Additionally, the company’s drivers are generally not covered under a general liability policy since any injuries they may suffer while driving would be covered under a worker’s compensation insurance plan. 

How is commercial trucking insurance different from commercial auto insurance?

The trucking industry and those who work in it face unique risks that other commercial businesses may not face, even if they have a fleet of cars. Generally speaking, most commercial policies apply to the vehicle only, which often drives in one small geographic area. 

However, motor carriers must haul large amounts of cargo - some of which may be high value - across state lines or international borders. For this reason, the Federal Motor Carrier Safety Administration (FMCSA) requires that owners have a minimum amount of coverage. Proof of this coverage must be provided to the FMCSA before a company’s authority can be approved. In addition, many leasing agreements also require proof of general liability truck insurance. 

Because of the additional risks and regulations that apply to the trucking industry, more than regular commercial auto insurance is often required. As the average truck accident costs around $150,000, the FMCSA usually requires that most trucking companies have a policy with at least $750,000 in coverage.  

How do I get commercial trucking insurance?

While all truck drivers must have commercial auto insurance, general liability trucking insurance is also recommended. In addition, depending on your company's unique needs, you may also consider business interruption insurance, which can further protect your business from business-related losses and legal issues. While cargo insurance isn’t legally required for carriers other than moving companies and freight forwarders, a broker will not book a load with a truck that does not have cargo insurance coverage. So while it isn’t legally required, it should be viewed as part of your core insurance coverage. 

Items to Consider When Shopping for the Right Insurance Policy

  1. Consider your risk level
    The recommended amount of insurance coverage will be directly related to your company’s risk rating for injuries, accidents, and lawsuits. Therefore, you will want to consider your ability to meet contract deliverables even in extenuating circumstances, weather-related risks, and ancillary expenses, such as expensive clean-up costs if you transport hazardous materials and an accident occurs. 
  2. Determine coverage needs
    Once you know your risks, you can identify the policy, options, and amounts you want covered. This can encompass many types of insurance, including general liability insurance, commercial auto insurance, worker’s compensation insurance, business interruption insurance, and motor truck cargo insurance. 
  3. Shop for quotes
    As you would for your personal auto insurance policy, you will want to discuss policy options with multiple insurance companies. You can consider insurance brokers, the online insurance marketplace, and individual providers.
  4. Compare products and services.
    While selecting the cheapest commercial vehicle insurance option may be tempting, this could lead to disastrous results. Considering the cost of the policy is vital. Still, you should also look at other factors, such as customer service, policy details, liability limits, and customer reviews. This will give you a more complete picture of the best option to provide commercial vehicle insurance for your company. Ultimately, you can select the best insurance provider to meet your needs. 
  5. Review your commercial trucking insurance needs regularly
    Even though a policy and provider may work for you initially, your needs are subject to change as your business grows and evolves. Therefore, you should look at your risks and operations regularly, ideally once a year, to ensure you still have sufficient coverage. If you don’t, it’s worth talking to your current insurance company, and maybe a few others, about exploring other options. 

    The trucking industry and those who work in it face unique risks. Therefore, they must have the right commercial trucking insurance coverage and a policy with sufficient coverage. These steps will help you select the right insurance for your business.

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