Insurance

[Oilerman1957]

A friend of my who drives a cargo van recently totaled his van. He owes $15,000 on his van but the insurancs company is only going to pay $11,800 leaving him a loss of $3,200. He was kinda new to expediting and had thought the 15,000 he put down as coverage was suppose to be enough so he didnt get the supplement. Guess im just saying,
make sure ths doesnt happen to you.

 

[JohnMueller]

Oilerman;

All Owner-operators should be knowledgeable of their Physical Damage insurance policy. Most insurance companies will gladly accept a premium payment for any "Stated Value" amount that the Owner-operator places on his or her vehicle. The problem arises when a vehicle is "totalled" as in this case. Insurance companies will only pay out the "Actual Cash Value" (book value) of the vehicle if it is a total loss - not the "Stated Value" that the Owner-operator placed on the vehicle.

All Owner-operators should review the stated value on their vehicle on a yearly basis and "correct" that value to what they feel is the "book" or ACV of the vehicle. Not doing so is wasting your money in excessive premiums. This is especially true because the "Phys Dam" portion of your insurance in based on a rate times the value, and is usually much more than the premium you pay for the "Non-trucking Liability" (Bob-tail) portion of your insurance. You will generally pay aprroximately $40 to $50 a month for $1 million NTL. As an example, The Phys Dam portion would be calculated by taking the "book value" of the vehicle times the agreed upon rate, say $35,000 vehicle value at 4.75 per hundred. Tjhis calculation is 35 X 4.75 = $166.25 Add in $40 for the NTL and you would be paying $206.25 per month. Two years later you have not changed the stated value on your vehicle, yet the vehicle is now worth only $23,500. You have over paid (for 1 year) $54.62 a month, times 12 months. YIKES!

I hope this helps.

Thanks,
HotFr8Recruiter

 

[Oilerman1957]

It does explain. However i think it should be explained in depth to recruits at orientation. I have been to 2 different orientations and this was discussed but not emphasised enough i believe. To the drivers that are new to this business they will think they have the coverage they need and 1 mistake {like my friends} and they could be out of business

 

[pjjjjj]

Especially with larger trucks, considering how quickly they depreciate and how much they cost, it's important for anyone thinking of buying or leasing a truck to look into 'Gap insurance'.

Gap insurance covers that amount between what is still owing on the vehicle and the amount the insurance company is willing to pay out in the event of a total loss or theft.

Even if you say your truck is worth $150,000, and that's what is owing, and the premiums you pay are calculated on that amount, the insurer may still only pay out $100,000 if they deem that to be the value at time of loss, if it's totalled. The owner would then be stuck with no truck, and still owe the difference of $50,000 to the finance company after the $100,000 payout is paid.

Apparently Gap insurance has a small window of opportunity when it can be purchased, so best to look into that option before you sign the paperwork when you're buying or leasing a truck (new or used). Not only can this oversight put one out of business, it could potentially bankrupt him, depending on the amounts.