Becoming an Owner Operator: Trucking Insurance

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Last month’s Becoming an Owner Operator post discussed the advantages and disadvantages of leasing onto a motor carrier and driving under your own authority. This post will build off of last month’s by explaining how the way you choose to operate your trucking business determines which trucking insurance coverages you will need.

Trucking Insurance: Leasing onto a Motor Carrier.

If you decide to lease onto a motor carrier, then your trucking insurance needs will be determined by your lease agreement. Oftentimes, the motor carrier will provide you with Primary Liability. Primary Liability covers injuries to other people or damage to property if you’re at fault for an accident.

Insurance coverages that are not typically provided by a motor carrier include:

  • Bobtail/Non-Trucking Liability Insurance: Covers the driver when s/he is not under dispatch to his/her motor carrier. In the event of an accident or damage, this coverage would respond to the claim rather than the driver’s Primary Liability Insurance. To learn more about Bobtail/Non-Trucking Liability, check out our Top Questions blog post.
  • Physical Damage Coverage: Covers the cost of fixing or replacing your truck if it’s involved in an accident, damaged (i.e., fire or hail), or stolen.
  • Motor Truck Cargo Insurance: Covers the load you’re hauling if it’s damaged or stolen.
  • Lease Gap Coverage: Covers you if the actual cash value of the vehicle at the time of an accident or theft is less than the amount you owe. This coverage will prevent you from having to pay the difference out-of-pocket.

While not directly providing or paying for the above listed trucking insurance coverages, motor carriers may offer them to you at an additional cost. However, you are more than likely going to receive the same coverages at a better price if you purchase them yourself.

Trucking Insurance: Operating Under Your Own Authority.

While operating under your own authority grants you complete independence, it also means you are fully responsible for your trucking insurance coverages. Therefore, you must pay for the following out of your own pocket:

  • Primary Liability Insurance
  • Physical Damage Coverage
  • Motor Truck Cargo Coverage
  • Lease Gap Coverage

Since you never run under a company, you will not need to purchase Bobtail/Non-Trucking Liability Insurance as long as you have Primary Liability Insurance. That being said, we would recommend that you purchase the following, in addition to the above, to protect your trucking business:

  • Occupational Accident Coverage: Offers benefits to independent contractors and employees not covered under a workers’ compensation policy
  • Business Coverages: There are many types including Property Insurance, Workers’ Compensation, Professional Liability, and more.

Next month’s post will discuss the benefit of joining an owner operator network that provides insurance under a master policy.

For more information about your trucking insurance needs, contact a member of Truck Writers’ Independent Contractors Opportunity Network (ICON) today!

2 comments on “Becoming an Owner Operator: Trucking Insurance

  1. My friend has recently shown interest in becoming a truck driver and wants to purchase a truck. You mentioned that while operating under your own authority grants you complete independence, it also means you are fully responsible for your trucking insurance coverages. Do most insurance companies offer trucking insurance or are there companies that specialize in this kind? It seems that it could be beneficial for him to look into this type of insurance.

  2. Hi, Derek. If your friend is just starting out in the trucking industry, I would recommend that he leases onto a motor carrier first. This will allow your friend to learn the ins-and-outs of being a trucker. However, if you friend does want to get his own authority, then many insurance companies do offer trucking insurance. That being said, it is best to find an agency that specializes in trucking insurance as your friend will then have a team that he can get to know and who will support him in the success of his business. If your friend has any questions, please have him call 1-800-634-8612 for a no-pressure trucking insurance discussion.

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