Commercial Truck Insurance

What is Truck Insurance? Why Do You Need It?

You decide to become a truck driver. You’re looking to finance or lease your new semi-truck. But before you can get approved for truck financing you need to have commercial truck or semi-truck insurance.

There are several types of commercial truck insurance. We will cover everything you need to know about insuring a semi-truck.

The coverage you need and the cost of truck insurance is dependant on a few factors. One of the factors is your owner-operator status. There are two types of owner-operator status. 

Owner-operator under lease to a motor carrier – An owner-operator is an individual who owns their own commercial vehicle or small fleet, typically tractor-trailers. Alternatively, they can provide their truck and driving services to another motor carrier under a lease for a contracted period and operate under that carrier’s authority.

Owner-operator under your own authority – Having your own carrier authority means you have the government’s permission to get paid for hauling freight as your own trucking company.

Owner-operators under lease typically pay less due to the motor carrier cover some of the insurance needs.

Owner-operators with their own authority tend to pay more because they’re the owner and have full responsibility and liable for anything that goes wrong while driving, loading and unloading their trucks.

Common Types of Truck Insurance and Who Needs it

Owner-operators under their own authority or lease have different insurance requirements.

Here’s a breakdown of the most common types of commercial truck insurance

#1 General Liability Insurance

General liability insurance, also called public liability insurance in the trucking industry, covers third-party bodily injuries and property damage that result from business activities that aren’t related to truck driving. 

If a person is injured on your business property, they may make a bodily injury claim against your business. For example, a package delivery man trips on loose carpeting in your accounting office, falls and breaks his wrist. General Liability Insurance can help cover the costs of the bodily injury claim he makes against your business for this accident.

The Federal Motor Carrier Safety Administration states, owner-operators with authority, freight forwarders, and motor carriers are required by law to carry General liability insurance (public liability insurance). 

Drivers under lease do not typically need general liability insurance; most are covered by the motor carrier’s policy. (Always confirm with the motor carrier that you’re covered under their policy)

Who needs it – Owner-operators with authority & motor carriers

#2 Primary Liability Insurance

Primary liability insurance is also known as trucking liability insurance. Primary Liability Insurance is the core of any good commercial truck insurance policy. 

Since this type of insurance is the minimum amount necessary to operate a trucking and transport business. Primary Liability Insurance will not cover damage to your own vehicle or the goods being transported.

Primary liability policies usually require every truck to be scheduled or listed on the policy. Insurance companies will not pay claims if the truck is not scheduled.

Who needs it – Owner-operators with authority & motor carriers

#3 Non-Trucking Liability Insurance

Non-Trucking Liability, or NTL for short, is truck insurance coverage for when you use your truck for non-business purposes. Non-trucking liability insurance offers you liability coverage for property damage or bodily injury to a third-party. 

Any personal use between your return and next dispatch points will be covered under non-trucking liability insurance.

Non-Trucking Liability is primarily for drivers under lease with a motor carrier. Even though they’re usually covered by their motor carrier’s general liability insurance, that policy is only for business activities like hauling cargo, dead-heading or traveling for maintenance. 

Drivers still need non-trucking liability insurance to cover non-business driving.

Who needs it – Owner-operators under lease

#4 Bobtail Insurance

Bobtail Liability insurance is a term coined to apply to auto liability coverage for an owner-operator after a load has been delivered and while the truck is not being used for trucking purposes. 

This usually occurs when an owner-operator is operating his or her truck for mobility only, and not in the course of transporting property for the motor carrier under whose operating authority they haul, and on whose liability policy they depend while they are engaged in trucking. 

Examples of accidents that can trigger bobtail insurance

• Accident on the way home after a delivery
• An accident between dropping off a load & en route to pick up another load
• Accident picking up your first load of the day.

Who needs it – Owner-operators under lease

#5 Physical Damage Insurance

Physical Damage Coverage is a general term for a group of insurance coverages that protect your vehicle. This general term includes Collision insurance, as well as your choice of full Comprehensive insurance or the more limited Fire and Theft with Combined Additional Coverage insurance.

Who needs it – All Owner-operators

#6 Motor Truck Cargo Insurance

Motor Truck Cargo insurance (Cargo) provides insurance on the freight or commodity hauled by a For-hire trucker. It covers your liability for cargo that is lost or damaged due to causes such as fire, collision, or striking of a load.

Who needs it – All Owner-operators

#7 Workers’ Compensation Insurance

Workers’ Compensation Insurance covers the expenses that come with an employee’s work-related illness or injury. There’s even a portion that covers your legal fees if an employee decides to sue. State laws require most employers to carry Workers’ Comp Insurance in case employees are hurt on the job.

Trucking industry-related injuries that are covered by worker’s compensation. (refer to your state laws)

• Traumatic injuries after a truck accident
• Work-related illness from exposure to harmful chemicals
• Stress injuries from repetitive loading and unloading cargo

Who needs it – All Owner-operators & Motor carriers with employees

What Does Truck Insurance Cost?

Many factors determine the cost of commercial and semi-truck insurance. Here’s a breakdown of the factors that determine your truck insurance rates.

Coverage limits: Policy limits are the amount the insurer pays for claims. Opting for high limits translates into higher premiums because the insurance company wants to cover the potential cost to them.

Deductible amount: Higher deductibles mean lower premiums. If you can afford to pay more out of pocket on a claim, then you might want to raise your deductible. If you never need to file a claim, the higher deductible strategy can save you money in the long run.

Loss history: Insurance companies often decrease premiums for truckers who file fewer or no claims.

Type of physical damage coverage: Insuring for your truck’s actual cash value (ACM) results in a higher premium, but stated amount coverage is based upon your estimated value. This option typically costs less.

Truck value: Physical damage premiums are a percentage of the truck’s value, so more valuable trucks cost more to insure.

CDL experience: The more experience you acquire after obtaining your commercial driver’s license (CDL), the less risk you present to an insurance company. This is typically reflected in low premiums.

Ownership Status: If you are an owner-operator on a permanent lease, the motor carrier generally covers your public liability, which greatly reduces your overall insurance costs. However, owner-operators with their own authority pay for their general liability.

Cargo type: Risks, and therefore premiums, are typically much lower if you’re hauling hay compared to hauling a hazardous material like fuel.

Weight of freight: Heavier loads usually translate into higher premiums.

Driving distance: The farther you travel, the greater the risk of an accident, and that impacts your premium.

Credit history: Insurers check credit scores and history to help determine if you’re a good risk. They see a poor credit report as an indication you may cost them money and adjust your premium accordingly. (Excluding California, Hawaii, and Massachusetts)

In 2017, Progressive’s national average monthly cost for commercial for-hire truck insurance ranged from $561 for specialty truckers to $795 for other transportation truckers. These numbers only include new policies with clean driving records for all drivers and both primary liability and physical damage coverages present.

Truck insurance rate go up and down every year. Consult with your truck insurance agent for a better understanding of the current rates and a commercial truck insurance quote.

Truck Insurance Coverage Limits and Costs

General Liability (GL) – Typical coverage limit of $1 million with an estimated annual premium of $750 to $7,000

Primary Liability Insurance – Minimum interstate trucker coverage limit of $750k  with an estimated annual premium of $2,500 to $4,000 per truck

Non-Trucking Liability – Typical coverage limit of $250k with an estimated annual premium of $450 to $5,000 per truck

Bobtail Insurance – Typical coverage limit of $1 million with an estimated annual premium of $350 to $450

Physical Damage Insurance – Stated or the actual value of the truck with an estimated annual premium of $2.5% to 5% of the truck’s value.

Motor Truck Cargo Insurance – Typical coverage limit of $5,000 with an estimated annual premium of $500 to $1,000

Your business is probably your largest asset, and not having the proper insurance for your trucking when an accident happens can cause financial ruin. 

Insurance is like anything else you buy. You get what you pay for. You want to make sure you use a reputable carrier and or broker. 

If you’re a fleet owner and have employees and or multiple drivers you need to have a strong insurance portfolio. Having a good insurance broker can help you get the correct coverages and bundle discounts for your business insurance.

ABOUT TOPMARK FUNDING

At TopMark Funding® client satisfaction is our top priority. With 20+ years of experience in the semi-truck and commercial vehicle industry. We know what it takes to get you approved for the best commercial truck financing deal possible. 

We’re a top-rated semi-truck financing and equipment financing company located in Roseville, CA. We specialize in semi-truck financing and heavy equipment. Our mission is to become your long-term financial partner by helping you grow your fleet and business. 

We’re not here for the short-term, we’re on the long-haul with you. We achieve this by being your truck financing advisor, guiding you towards the best financial decisions for your trucking business.

If you’re in the market for a new or used semi-truck, or a commercial truck we can help finance it for you. We have great rates, low down payments, and flexible monthly payments. We have lease and loan programs for several different types of commercial trucks and trailers. 

Fill out the contact form or give us a call at (866) 627-6644. One of our truck finance specialists will contact you as soon as possible to go over your truck financing needs and learn more about you and your business goals.

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