Outrageous Insurance Cost

saba_keon · Jan 6, 2021

I have been in the Sami-Truck business for quite a bit now (It's been treating me extremely good). Due to the CDL requirements(Making it hard to find drivers) and an abundant amount of friends who are interested in driving around the country I decided to purchase a box truck (Instead of continuing with Sami trucks). I was able to buy a great box truck for $10,000 saved up cash (All the repairs included). Now here is where I run into a problem. when I went to add the new driver, my friend who is 21(has one driving ticket for improper passing), to the insurance the rate came out to an additional $27,000 for the 9 months left on my current plan (Insurance agent informed be that if he had not had the ticket the insurance would be $7000 cheaper but that's still not nearly enough to produce a net profit ). Here is my dilemma, that would come out to around $3000 per month for the insurance, guaranteeing me a net loss every single month.

P.S. to insure just the truck is about $3,900 for the 9 months rest is all driver. This guy used to work for a different company driving a cargo van when he was 19, so it brings me to believe there is a way around the outrageous insurance cost.

Does anyone know or have any suggestions on what I can do to significantly reduce or work around the insurance cost due to the drivers age?

Any information is greatly appreciated it,
Thanks,
Saba

Ragman · Jan 6, 2021

saba_keon said:
Does anyone know or have any suggestions on what I can do to significantly reduce or work around the insurance cost?

Yes,
Sell the truck....

Welcome to the real world.

Now with that said, do some research on whats needed to be an o/o before buying another truck.

saba_keon · Jan 6, 2021

I'm not planning on selling the truck. I bought it in the first place due to how much easier it is to find drivers for box trucks compared to Sami trucks (I'm exploring my options before moving to an older audience to lower my insurance cost). I know few people who have done a form of a lease agreement with drivers and put them as owner-operators to help reduce cost (With owner-operators, profit also dwindles as a lot of risk and expenses are lifted off your back). Though this is not a bad model for hiring "owner-operators" it's not very scalable and in the long run, gets very complicated(For box trucks). Additionally, it only moves the insurance cost to the owner-operator which still means I cant hire a younger driver. I don't see this problem as a "sell the truck" kind of a barrier. I'm looking to see if anyone knows a legitimate way around the insurance cost. Having access to younger audience, thought risky, opens a lot of opportunities and possibilities of getting a jump on hiring newcomers to the industry( In my perspective).

LDB · Jan 6, 2021

Trucking, an excellent way to retire with a small fortune. Provided you go into it with a large fortune.

Ragman · Jan 6, 2021

saba_keon said:
I'm not planning on selling the truck. I bought it in the first place due to how much easier it is to find drivers for box trucks compared to Sami trucks (I'm exploring my options before moving to an older audience to lower my insurance cost). I know few people who have done a form of a lease agreement with drivers and put them as owner-operators to help reduce cost (With owner-operators, profit also dwindles as a lot of risk and expenses are lifted off your back). Though this is not a bad model for hiring "owner-operators" it's not very scalable and in the long run, gets very complicated(For box trucks). Additionally, it only moves the insurance cost to the owner-operator which still means I cant hire a younger driver. I don't see this problem as a "sell the truck" kind of a barrier. I'm looking to see if anyone knows a legitimate way around the insurance cost. Having access to younger audience, thought risky, opens a lot of opportunities and possibilities of getting a jump on hiring newcomers to the industry( In my perspective).

I think you need to learn the definition of what an owner-operator is.

skyraider · Jan 7, 2021

Seeing someone pencil in numbers on paper of miles times income per mile in a office can make you alot of money,,on the road where the real world comes in,,,not so much,,remember , most drivers last less than a year....Failure rate is almost a 100 percent . You may need 20k in the bank just to make it the first year,,IMHO You lose an engine,,well you probably know what that would be..

blackpup · Jan 7, 2021

There is an insurance agency that has been mentioned by several posters on this forum, who are supposed to be helpful and knowledgeable on trucking insurance. Who might be able to recommend a course of action to you,regarding insurance. I think they advertised on this website also . Search through the old posts for info.

saba_keon · Jan 7, 2021

blackpup said:
There is an insurance agency that has been mentioned by several posters on this forum, who are supposed to be helpful and knowledgeable on trucking insurance. Who might be able to recommend a course of action to you,regarding insurance. I think they advertised on this website also . Search through the old posts for info.

Thank you blackpup

I'm going to go through the forums and see what I can find. The comment is much appreciated!!

saba_keon · Jan 7, 2021

skyraider said:
Seeing someone pencil in numbers on paper of miles times income per mile in a office can make you alot of money,,on the road where the real world comes in,,,not so much,,remember , most drivers last less than a year....Failure rate is almost a 100 percent . You may need 20k in the bank just to make it the first year,,IMHO You lose an engine,,well you probably know what that would be..

Thank you for the comment any sort of feedback is appreciated.

I've been in the business running Sami truck for a while now and quite profitably too. This is not some kid who watched a YouTube video and went out and bought a box truck. So I wouldn't exactly call it someone penciled in numbers on the paper. I can penetrant the market at the base level but I am attempting to reach a new target audience because it allows for a lot more opportunity. As far as engine and transmission problems go that pretty much what what my plan is. I bought a fairly old box truck with minimal rust and a ride height that is able to dock at regular gates( with a few other specifications I was interested in). My plan is to replace the engine and transmission( Hence why I bought the old truck) but for now, I'll let it run until it can't anymore.

saba_keon · Jan 7, 2021

Ragman said:
I think you need to learn the definition of what an owner-operator is.

Frankly, I find that a bit out of place. We can sit here and challenge each other's understanding and intelligence of the business but I didn't come here to bicker. Anyway, thank you for the comment.

Bruno · Jan 8, 2021

Call John or Shelly at CIS. I believe they advertise on here.

danthewolf00 · Jan 8, 2021

He means you can't own the truck and call a driver the owner operator because thats wrong .
If you own the truck your the owner operator and hes the employee.

saba_keon · Jan 8, 2021

danthewolf00 said:
He means you can't own the truck and call a driver the owner operator because thats wrong .
If you own the truck your the owner operator and hes the employee.

IDK I might have took it a bit wrong.

But you can have a leasing agreement with the driver and they can be an owner operator. If you are attempting to hire someone that doesn't have a truck and can't afford one, what you can do is lease the truck to them. They pay for the lease, fuel, and a bit of maintenance which is good enough to allow them to work with you under the title of owner-operator (Basically like they are renting the truck from you and you pay them more "for using your truck rental service instead of a competitor" ). Though this is a bit more work to set up I've seen a few people do it. As the fleet owner, you reducing risk while the driver gets to take a bit more money home for taking on a portion of the risk of owning a vehicle (usually a very good incentive for the driver to remain working with you). A win-win situation.

saba_keon · Jan 8, 2021

Bruno said:
Call John or Shelly at CIS. I believe they advertise on here.

Much appreciated I'll be giving them a call

Thank you again

Turtle · Jan 9, 2021

When you own the truck and lease on a driver for it, the driver is a contractor, I.e., an independent contractor. In expediting the industry standard is a 60/40 split of the line haul, with the 60% going to whomever pays for fuel.

As far as youngsters holding the steering wheel, anyone under 25 and the insurance companies are going to charge you out the wazoo wizwang. If they have a ticket on their record, well, you know.

If you're dealing in expedite, CIS is really the only insurance agent that handles expedite insurance, and that's through Progressive, I believe. But Shelly and company really know what they're doing.

Any type of moving violation within the last three years is gonna ramp up the insurance premiums. If the ticket is for aggressive or reckless driving (which in some states includes improper lane change and/or improper passing) and it'll skyrocket.

saba_keon · Jan 10, 2021

Turtle said:
When you own the truck and lease on a driver for it, the driver is a contractor, I.e., an independent contractor. In expediting the industry standard is a 60/40 split of the line haul, with the 60% going to whomever pays for fuel.

As far as youngsters holding the steering wheel, anyone under 25 and the insurance companies are going to charge you out the wazoo wizwang. If they have a ticket on their record, well, you know.

If you're dealing in expedite, CIS is really the only insurance agent that handles expedite insurance, and that's through Progressive, I believe. But Shelly and company really know what they're doing.

Any type of moving violation within the last three years is gonna ramp up the insurance premiums. If the ticket is for aggressive or reckless driving (which in some states includes improper lane change and/or improper passing) and it'll skyrocket.

Thank you so much for the info. Ya, the current quote I have from insurance is progressives' and CIS is my best bet atm. To my knowledge and what the insurance pulled up on the record it's only improper passing, didn't mention anything about reckless driving. hopefully, I can lower the insurance cost because I know a lot of trustworthy and decent younger people that would live to drive.

Once again, thank you very much for the response.

Turtle · Jan 10, 2021

I kind of sort of maybe a little bit understand the desire for wanting to put younger people in the truck, but that's exactly the type of group that insurance companies view as having the highest risk and therefore the highest cost.

saba_keon · Jan 11, 2021

You are correct it's the highest risk group and thus the cost associated with it, but I know that if I work it carefully and precisely it has very good potential. My view on it is that if I can open the door to hiring younger people it will broaden my target audience and help me grow.

eolandotarro · May 15, 2022

Many drivers, communicating with each other at Truck Stop, often compare their insurance payments, look for a catch in the work of an insurance agent, not knowing what the price depends on, and wonder why some pay more.