Dollars & Sense

Insurance 101: What's Out There For Drivers?

The issue of insurance and its ins and outs can be something of a hurdle for folks who are new to expediting.  There’s something of a maze when it comes to insurance, and it can be hard to tell at times what the right plan is, what’s required, and what plans will give you the security you need in the event of an accident.  

I sent a message to Shelly Benisch from Commercial Insurance Solutions about the matter, and as you might guess, she was incredibly helpful.  At the most basic level, Ms. Benisch lays out some advice for those new to the industry: “For a new guy starting up, the most important thing to do is read the contract that the Motor Carrier has.  Do they want you to be exclusive?  Do they accept or even encourage you to haul for more than one (carrier)?”

That piece of advice is without a doubt the most valuable I’ve come across when it comes to commercial insurance.  Which isn’t to say that there doesn’t exist other valuable bits of knowledge; there’s plenty to go around.  It should come as no surprise that much of it comes from Ms. Benisch and Commercial Insurance Solutions, a go-to company for expediters.  

But what’s out there?  It’s not likely that you’ll be deciding which carrier to work with based solely upon their insurance structure(s), but it’s something that will certainly figure into the matter in one way or another.  So it’s good to know what’s available and what’s common out there--especially for those who are just getting into expediting.  

There are essentially three basic structures for insurance in the expediting industry, and they depend upon how the owner/operator structures its relationship with its carrier(s).  Specifically, it depends upon whether an o/o contracts with multiple carriers or just one.  In cases where an owner/operator is contracting or leasing to only one carrier, there are two “traditional” formats.  In the first, the owner/operator’s insurance covers non-trucking commercial auto liability, physical damage on his vehicle, and occupational accident coverage/worker’s comp, if that’s not already provided by the carrier.  Additionally, the carrier is listed in the “Additional Insured” section on the owner/operator’s policy.  In this format, the carrier holds primary commercial auto liability coverage, cargo coverage, general liability coverage, and worker’s comp coverage.  

In the second traditional format, the carrier’s commercial auto liability only extends to units it owns, and cargo coverage is for both owned units and independent contractor (i.e., owner/operator) units.  In this model, owner/operator insurance is only on their own unit, and it’s primary commercial auto liability coverage as opposed to non-trucking liability.  

The third structure tends towards owner/operators who contract with multiple carriers, and its primary difference is that the owner/operator holds cargo insurance, and the carrier carries cargo insurance on only the trucks they own.  

All this is of course rudimentary and entry-level--and that’s what we’re going for here.  At the same time, though, we still haven’t really answered the question: what kind of insurance does the average expediter need?  

The answer to this question, as you might have guessed, is that it depends.  Often, the type of insurance that will serve you best is based upon a broad set of variables that goes beyond which carrier you’re contracting with.  Insurance coverages can vary pretty widely based upon the type of vehicle you’re running, for example.  

What’s likely to be equally as important to drivers, aside from the minute details of exactly what’s covered, how, and under what circumstances, is how much you’ll be paying.  While it’s pretty much impossible to just start tossing numbers your way, I can tell you with some confidence what insurance companies look at to determine what your rate will be.  These criteria are:

The type of trucking you’re doing; The company or companies you’re contracting with; The make, model and year of truck you’re driving (as well as the type); Where your vehicle’s registered--some owner/operators tag via their carrier; The rate can be affected by whether an o/o uses his/her carrier’s terminal address, also; The actual cash value of the truck and its permanently attached equipment; and Previous trucking experience. In the end, your best course of action when shopping for insurance is to consult with an insurance professional or two; they’ll be in the best position to provide you the advice you need at that particular moment and they’ll offer the most competitive rates they can.  As always, it’s a good idea to shop around and, obviously, read up as much as you can.  Most importantly, and this is something of a return, it’s absolutely vital that you know exactly what your carrier requires of you, insurance-wise.  That’s what’s going to dictate your coverage levels perhaps more than anything else that pops up in the insurance maze.  And it never hurts to have someone experienced to help guide you through it.