Hassan Bukhari
If you own a small trucking company, you have probably been inundated with advertisements for insurance of every kind. According to Simplex Group, the more insurance coverage you have, the better. However, there are a couple of insurance policies that you’re required to get. Without these critical policies, the FMCSA could easily shut you down. Policies required by law and those the trucking company needs to operate their business profitably are the most common kinds of commercial trucking insurance.
Liability Insurance
If you drive any vehicle on United States roads, you must have accident liability insurance. It’s especially important if you own a trucking company.
The Federal Motor Carriers Safety Administration requires drivers to carry public liability insurance. If you transport freight in a truck that weighs over 10,000 pounds and crosses state lines, you must have anywhere between $750,000 to $5,000,000 of insurance, depending on the type of cargo you carry. If you carry freight in a vehicle that weighs under 10,000 pounds, you must have $300,000 for non-hazardous freight.
Vehicles that transport passengers need to have $5,000,000 to $1,500,000 of insurance if they carry 15 or fewer passengers.
You should get more than the bare minimum required by law. New trucking companies often hire drivers right out of trucking school. New drivers are anxious to work, and they’ll do so for cheap. However, if you have new drivers, you must have extra insurance coverage.
New drivers are more likely to drive too fast for the conditions. They’ll get tired out easily and make mistakes due to fatigue. People who are new to driving may also become distracted. If someone is used to driving a car or an SUV, they may think they can take their eyes off the road for a few seconds to look at their phone. This is a very dangerous behavior that can lead to accidents.
When a driver is new, they won’t be used to driving through all different types of terrain. Dangerous roads caused by bad weather are a leading cause of trucking accidents.
Bad brakes are another cause of road accidents. You must perform your daily inspections before and after every trip. If someone misses that their brakes aren’t working properly, they could end up causing a major collision that’ll cost lives, injure people, and damage property.
Although the average cost of a trucking accident is $148,279, that amount will be greatly increased if there is a fatality. If one of your drivers causes a crash that results in a fatality, your ending cost might be as much as $7 million. Although there’s no way to put a price on human life, you’ll have to pay funeral expenses. You’ll also have to pay family members for their pain and suffering and their loss of companionship.
When you consult with an insurance salesperson, you’ll talk about the size of your company, the number of trucks you own, and the type of hauls you take. There’s no such thing as too much insurance. However, you have a budget, and a good insurance expert will be mindful of that when they put together an insurance package for you.
Cargo Insurance
If you’re a moving company that handles household goods, the FMCSA will require you to have cargo insurance of at least $5,000 for each vehicle and $10,000 for each occurrence. Again, you’re likely to need far more insurance than that.
When you sign a contract with a new client, you’re agreeing to do everything you can to get their products where they’re going in one piece. If cargo is damaged by an accident, poor weather, or theft, they expect to be reimbursed for this. They’re likely to want more than just the wholesale cost of the product.
When products are destroyed, it’s not only the manufacturing company that suffers. Retailers are counting on selling the products. They’ll lose profit if they’re unable to get the product. If you deliver necessities such as toilet paper, food, or medicine, consumers may need those products. Hence it’s of the utmost importance to fully insure your cargo.
Each contract will contain a clause that specifies the amount of cargo insurance you have. If you have an accident and it’s revealed you had less insurance than stated, the client may be able to sue you for breach of contract.
Physical Damage
Liability insurance isn’t the only thing you have to worry about when one of your trucks is in an accident. Your liability insurance will pay for damages your driver causes to vehicles and people. However, your truck is unlikely to remain completely undamaged.
You’ll need to get your truck repaired or replaced to stay in business. If your driver caused the accident, the insurance wouldn’t pay for your truck. If someone else caused the accident, they’re unlikely to have enough insurance to repair your truck. Therefore, you should ensure enough coverage to pay for your rig if it needs to be replaced.
Although the FMCSA doesn’t require you to have physical damage insurance, your truck financing company will. The trucks you’re driving still belong to them. If you have an uninsured crash, you’re unlikely to be able to pay for the truck.
Trucking is an industry that benefits businesses, the government, and the general public. It’s an industry with a great deal of responsibility to the public. Having the insurance, you need to operate your business will let you concentrate on getting more clients, making profits, and enjoying your work.
