Here’s your guide to semi-truck financing. Semi-truck financing is a vital piece of the trucking industry puzzle. Correctly leveraging your credit and having the proper equipment and truck financing is critical to managing cash flow, increasing revenue and growing your trucking company.
We know what it takes to help you grow your business. Whether you’re an owner-operator, small fleet owner, or own a large fleet buying trucks on a regular basis, we have a finance program for you.
We’re one of the nation’s largest commercial truck financing brokers. We have the partnerships and ability to finance equipment and vehicles the big banks can’t. We have partnerships with 25 of the top lenders in the commercial equipment and trucking industry.
Quick & Easy Truck Financing Process
We’ve made the semi-truck leasing and finance process quick and easy so you can get funded fast and on the road with your new truck.
- Apply Online: Click the “Get Pre-Approved Today” button. Fill out the contact form and one of our truck finance specialists will call you ASAP! Or for immediate assistance give us a call at (866) 627-6644
- Select a Solution: A truck finance specialist will contact you to go over your funding and business needs. We want to understand your needs to better help us find the best solution that meets your objectives.
- Review Documents: Once we have determined the best truck finance solution for you and your business, documents are generated and then emailed for review and signature. An electronic signature is acceptable on most documents.
- Get Funded: After the signed contract is returned, we’ll process your documents. Most transactions fund within 1 to 3 days. Fast turn around to get you the truck you want up and running.
Get Pre-Approved – Click the Get Pre-Approve Button Below to get started today. Get pre-approved in minutes. We do a soft credit pull, NO hard inquiries (unlike our competitors) and guaranteed not to hurt your business or personal credit score.
Learn More About Semi-Truck Financing
WHAT EVERY BUSINESS OWNER NEEDS TO KNOW
The IRS tax code is extremely complicated, fortunately, Section 179 is not. If you have ever done taxes for a business you own, you most likely have already claimed a Section 179 Deduction and simply do not know its name. In this article, we will go over Section 179 and how it helps business owners nationwide reduce tax liability, as well as exceptions that apply.
WHAT IS SECTION 179 DEDUCTION?
Without Section 179, business owners depreciate the value of an asset over many years, using a variety of accounting tricks. Section 179 allows a business to write-off the entirety of an asset’s value for the year of initial use, allowing the business owner to frontload the tax savings and effectively reduce the cost of purchase.
The amount a business may claim under Section 179 Deduction has an annual limit. The Tax Cuts and Jobs Act of 2017 (commonly known as the “Trump Tax Cuts”) increased the maximum tax savings of an individual business from $500,000 to $1,000,000.
Additionally, the maximum amount of spent money a business can claim increased from $2,000,000 to $2,500,000. This means if your business’ average tax rate is 22%, the largest deduction your business can get is $550,000. The maximum tax savings and maximum claim for each year are tied to inflation and are subject to change with each year.
Business equipment that qualifies is almost any asset with a useful life beyond one year. This includes office furniture, computers, buildings, and trucks.
EXCEPTIONS TO THE SECTION 179 DEDUCTION
As with most aspects of the tax code, exceptions apply.
Assets must have a useful life of over one year. Gasoline, office supplies such as markers, and month-to-month subscriptions are not eligible for this Deduction.
If an asset is used for anything other than business, only the percentage of business use can be written-off. Furthermore, if the business use is less than 50%, then nothing can be written off. If purchasing a laptop for business, make sure to use it more often for work than for researching pottery classes, or else you run the risk of losing all your deduction!
Additionally, the amount deducted from your tax bill as a result of your deduction cannot exceed the business’ income for that year. Hypothetically, if your business purchases $1,500,000 in trucks, has a 33% average tax rate, and generates $350,000 in income for the year, the maximum your business can claim in deductions is $350,000. Fortunately, the additional $150,000 in deductions can be carried over to the next year.
The software must have non-exclusive use. Purchasing tax preparation software from a retailer is eligible for the deduction, but a purchased website does not, as only your business can use it.
Vehicles have a complicated set of exceptions. Generally speaking, if a vehicle’s original intended purpose is not for business (such as a Honda Civic bought from a dealership), the maximum deduction a business can claim on it ranges from $11,160 to $11,560, even if the vehicle is used entirely for business.
There are exceptions to this exception, however: a Honda Civic with an exterior painted to advertise the business is fully claimable for the Deduction. Vehicles originally intended for businesses, such as Semi-Trucks, dump truck, box truck, etc…are fully eligible for the deduction.
The Section 179 Deduction is “use it or lose it” for the year of purchase. If your business purchases $300,000 worth of equipment in 2020, it cannot write-off $250,000 for its 2020 tax year and then $50,000 in the next year.
Since larger corporations are more likely to purchase business equipment exceeding $2,500,000 in a year, the current Section 179 Deduction leans in favor of smaller businesses. Additionally, if your business does not start using the equipment the same year it is purchased or leased, the Deduction is lost.
USING THE SECTION 179 DEDUCTION TO YOUR ADVANTAGE
Utilizing Section 179 Deduction allows a company to reduce the effective cost of purchasing or leasing new or “new to you” equipment, with a higher tax rate meaning higher savings. If a company purchases $2,000,000 in transport equipment, uses it exclusively for business and has a 40% average tax rate, a company can possibly save $800,000 on their tax bill, making the transport equipment effectively cost $1,200,000 instead. This Deduction incentivizes companies to invest in their business to make it grow.
Interested in using the Section 179 Deduction to expand your trucking business? TopMark Funding has a variety of different truck financing programs for your next semi-truck or commercial vehicle. Whether you have excellent or less-than-excellent credit, we can get you the best possible rate! Contact us for a free no-obligation quote that will not impact your credit score.
This article does not constitute as legal tax advice. Every business is different and as such has different tax needs. Talk to a certified tax preparer to fully utilize Section 179 to your business’ own advantage.
Semi-truck leasing is a popular alternative to purchasing a semi-truck, financed or otherwise. In this article, we will discuss the benefits of a semi-truck leasing, and why it is such a popular option.
HOW MUCH DOES IT COST TO LEASE A SEMI-TRUCK?
While purchasing a truck has a general range of prices, the cost of leasing a semi-truck can have a much wider range of solutions depending on your budget and what you want to get out of it. Some questions that impact price include:
- How new is the semi-truck?
- What is the length of the lease?
- Is there an option to purchase the semi-truck after the lease expires? If so, for how much?
- Is there a penalty for terminating the leasing contract early, and if so, how much?
You and the lessor can negotiate different terms of the contract to arrive at a payment plan that works for you.
IS IT A GOOD IDEA TO LEASE A SEMI-TRUCK?
Generally speaking, a lease is more expensive than a comparable purchase. This does not mean a lease is a bad value.
Leasing a truck instead of buying it allows you to mark its use as a general business expense rather than the depreciation of an asset. This can make your balance sheet look more attractive to potential lenders with which to expand your business.
Purchasing a truck can be a major cash investment. Even if you finance a purchase, the down payment can cause a major cash flow issue, especially for a new start-up business. By leasing, there is little to no down payment, and being able to pay as you go helps improve cash flow.
With purchase, you are stuck with the semi-truck until you find a buyer or it goes to the junkyard. With a lease, you can change to a new, better semi-truck once your leasing term expires. The newer vehicle can have better fuel efficiency and technological upgrades.
Unless stipulated in the contract, repairs and part replacements are covered by the lessor, since they still own the truck. Obviously, this does not cover intentional damage. A lessor might have the contract say you are responsible for parts and repairs to make sure you take better care of the equipment. Be sure to read the contract.
HOW CAN I LEASE A SEMI-TRUCK WITH BAD CREDIT?
Leasing is a good alternative to receiving a loan for a semi-truck, especially for those with bad credit. Rather than being loaned a sum and being expected to pay it back, you are given the use of a vehicle and are expected to pay for its service.
Lessors are more likely to do business with someone with bad credit, as lessors have a lower risk than banks: the most a bank can lose is the entire balance of the loan, but the most a lessor can lose is a month’s use of a semi-truck.
If you are interested in pursuing a lease, TopMark Funding can help you find a leasing solution that works for you, with solutions for almost any credit scenario.
CAN I LEASE A TRUCK WITH NO MONEY DOWN?
If you’ve read this far into the article, you already know the answer to this. No money down can be a stipulation in the contract, but as a result, something else in the contract may change. The payments may go up, the cancellation penalty may rise, the buyout price of the truck at the end of the contract may increase, or all of the above. Be sure to ask the lessor about what changes to the contract a no-money-down agreement may entail!
Whether you want to lease with no money down or have the cash for a nice down payment, TopMark Funding has the means to get you a leasing contract that works for you. Give us a call at (866) 627-6644 and a leasing specialist can work on your behalf to get you the semi-truck lease you desire.
The truckers guide to understanding credit. Whether you’re looking to finance a new or used commercial truck or thinking about getting a loan for your business, the credit world can seem overwhelming. A lot of drivers want to get their business needs and want to be organized in a fast efficient way.
The spider web that credit, loans, financing, good credit, and bad credit create can be tough to sort through. In the worst situation, you could find yourself stuck in a bad spot with things like high-interest rates or big fat declines. Learn more with this guide to understanding credit.
Truckers have enough going on. To make your life easier, we have made an easy to understand guide to understanding the basics of credit. This will get you familiar with the most common terms and concepts from the credit and financing world you’ll need to know.
Credit is simply borrowed funds or money that you can use for personal or business purchases and needs. You receive credit from a credit grantor (and lender, or credit card issue) upon an agreement to pay back the amount you borrowed at an agreed time with applicable charges and fees.
There are four different types of credit that can be borrowed:
Revolving: this what you often see in your typical credit card. A bank or lender gives you a maximum credit limit that you make charges upon up until you reach that amount. On a monthly basis, you carry a balance and make payments on it.
Service Credit: Any agreements made with service providers are also considered to be credit arrangements. Whether you are receiving a service like electricity, internet, or water.. you have an agreement to pay for every month either as a set fee or how much you used. While not all of these will report directly to your credit, some can.
Charge Cards: Similar to revolving credit, these accounts require you to pay the entire balance on a monthly basis instead of a monthly payment.
Installment Credit/Installment Loan: This is where loans and financing come in. A lender will give you a set amount of funds upon the agreement that you pay back the money and interest on a regular basis. These payments are called installments and are usually a fixed amount over a fixed period. An example of an installment loan would be like a mortgage or car payments.
SO WHY DO WE NEED CREDIT?
You may hear some debate about credit is necessary. Some truckers even say that “cash is king” or suggest you pay cash for everything because of distrust for banks and financial institutions. While walking around with liquid funds to get everything you want out of this world would be an ideal situation, for most truck drivers it is not a reality. This is where credit becomes a key factor in a lot of trucker’s lives.
Outside of the trucking world, big purchases like buying a home or car often will require credit for most Americans. Many people simply like the convenience and advantages of credit cards and borrowing brings to their life. Additionally, your credit score can also be looked at by potential landlords if you are trying to rent from them. Credit is pretty hard to avoid in today’s world.
From a business owners’ perspective, credit is essential. Big purchases and borrowing are often necessary for growth. Large fleet owners will finance multiple pieces of equipment at a time, with large amounts of money that just wouldn’t be possible without taking out a loan or a line of credit.
CREDIT REPORTS AND CREDIT SCORES
Other than the direct action of borrowing, spending, and paying back the money, credit is used to determine financial risks. This is where your Credit Report and Credit Score come into play. To put it simply, your credit report is a detailed statement with information about your credit activity. This info is summarized in the form of a Credit Score.
Your Credit Score is a numerical rating you are given based on what is contained in your credit report. We will get to the nitty-gritty details of what is exactly in a credit report and how credit scores are calculated a little later, but that’s what you need to know for now.
When you are looking to get a credit card or loan, credit grantors will look at your report and score to see how reliable you are. If you are trying to borrow money, the lender will be looking to see if you are at risk of defaulting. To default means to not pay back the debt owed according to the arrangement you had made.
Good credit reports show that you have paid back your debts on time, and also have a good amount of experience in borrowing. This shows your banks and lenders that you will most likely pay back your debts with little problems. Bad credit will look like lots of defaults, late payments, mixed with little credit history. This makes credit grantors wary of lending to you.
IS NO CREDIT A BAD THING?
Having no credit is a bit more complicated than being a “good” or “bad” thing.
On the positive side, having no credit is nowhere near as bad as having a bad credit report you need to repair. This is why it is SO important for those just beginning their credit journey to tread carefully. Find responsible lenders and slowly build your credit history over time with credit cards and loans you know you can payback.
So, what’s the bad part of having no credit? Well, the lenders don’t have the concrete evidence of your borrowing history to judge your ability to pay them back. Instead, they have to determine your ability solely on other things like bank statements, how much you make, your other expenses, etc.
You might also be limited to what you can get approved for. Don’t fret, most big banks and lenders have specific credit cards, loans, and programs specifically tailored for people beginning to borrow. With these, people can steadily build their credit history and get their credit score higher.
WHO IS KEEPING TRACK OF THIS?
In the United States, your credit history and score are collected and maintained by credit reporting agencies (CRAs). These are also known as Credit Bureaus. The three major CRAs are Equifax, Experian, and TransUnion. These agencies are regulated by the U.S government under the Fair Credit Reporting Act (FCRA).
Everyone in the United States with a social security number can have a credit and report. If you have never borrowed money in your life, you shouldn’t have a credit report and your score would be considered 0.
Most credit grantors will look into your credit report before approving you for funds. They do this by requesting your credit report and score from one or all of the credit bureaus. This action is called a credit inquiry.
A credit inquiry can be done two ways: either by a hard inquiry or a soft inquiry.
A Hard Inquiry is an official request made by a lender to the bureaus so they can view your credit report in full. Hard inquiries themselves show up on your report and impact the score by lowering it a few points. Each individual inquiry stays on your credit for 2 years before going away forever.
Often, one or two will not harm your score very much and is not a bad thing to have on your credit report. Hard Inquiries are usually required when you apply for financing, a credit card, loans or a mortgage.
A Soft Inquiry can be considered a non-official credit check. These do not impact your score and do not show up on your report. Often, a soft inquiry will show roughly the same information as a hard inquiry but isn’t included in most official lending applications. A soft inquiry can be used for things like background checks, pre-approvals, and checking your own credit score on free credit monitoring sites.
OK, WHAT ABOUT THIS CREDIT SCORE THING?
Your credit score can be imagined as a grade you are given based on how well you’ve managed your loans and borrowed money. The credit score itself is important is it directly affects if you can borrow money and how much it will cost you to do so.
There are actually different types of credit scores and ways that they are calculated, but the most popular and commonly known type of credit scoring model is the FICO Score.
FICO Credit Scores typically range from 300 to 850 with 300 being very poor and 850 being exceptional.
HERE IS THE DETAILED BREAKDOWN OF FICO SCORE RANGES
- 300-579: A score in this range is considered Very Poor. Credit applicants with a score in this range will often be required to pay larger fees and deposits, or sometimes may not be approved for credit at all. 16% of people have a score in this range.
- 580-669: Scores between the 580 mark to the higher 600s are called Fair credit scores. Often, people with scores in this range will be referred to as subprime borrowers. A total of 17% of people have a credit score in this range.
- 670-739: This range is referred to as Good. Individuals with scores this high have a much lower rate of default. Statistically, about 8% of applicants with a Good range credit score will become seriously delinquent. Around 21% of people have a score in this range.
- 740-799: People with scores in mid to top 700s are in the range of Very Good. Borrowers with scores in this range will receive better than average interest rates from banks and lenders. 25% of people have a score in this range.
- 800-850: The top of the scale is considered an Exceptional credit score. Individuals with a credit score above 800 receive the best rates from lenders. Around 21% of people have scores between 800-850.
Statistically speaking, most people’s credit scores fall between the range of 600 to 720.
WHY YOUR CREDIT SCORES MATTER
Credit scores are used by lenders as a decision-making tool to anticipate what type of borrower you’re going to be. Credit scores are sometimes referred to as “risk scores” because it is a direct signal of what types of risks you bring to the table.
That being said, it is your credit score that determines if and how you’ll qualify for a loan. Your score will determine the interest rate of the loan you qualify for.
Your interest rate is a proportional amount of the amount loaned and often expressed as an annual percentage. This is the dollar amount you are paying in addition to the money you borrowed.
The higher your score, the lower you are as a risk to the lender. This will also mean your interest rate will be lower. This is how a good credit score can be the difference between hundreds or even thousands of dollars in savings for you.
People with lower credit scores often pay higher interest rates and fees as they present a higher risk of default. When a customer defaults, the lender loses that money.
A good credit score could also mean you can qualify for higher balances on credit cards or borrow more money in general. Think of it this way: Your credit scores are very similar to a report card, but instead of the traditional letter grades, you are rated within a scoring range. Your credit score, or grade, is generated when a lender requests it from the CRAs.
Every time you set a goal for yourself or your trucking business, like growing your fleet or purchasing a new piece of equipment, your credit will most likely be a part of that process.
Credit scores alone are usually not the only thing lenders will look at when you are applying for a loan. The credit report itself will also contain important details that will be taken into consideration. These same factors are what help determine your score itself.
WHAT AFFECTS YOUR CREDIT SCORE
- Payment history – This shows if you’ve made your payments on time or at all.
- Credit utilization rate – How much of your credit you are using on your credit cards.
- Type, amount, and age of credit accounts – Lenders do want to see diversity on your credit report. Having a good mix of credit cards, a car loan, maybe a mortgage on their helps your score.
- Total Debt Owed – This is the amount you owe in loans and how much is on your cards.
- Bankruptcies, Child Support Due, Public Records – Filing for bankruptcy or having a large amount of delinquent child support will hurt your score.
- New Credit Accounts – Opening a lot of accounts in a short period of time can hurt your score. If you have gotten too many loans or credit cards in a 2-year period, it can ding you.
- Hard Inquiries – The number of times a lender has requested your credit information will affect your score. These searches stay on your report for 2 years.
HOW YOUR SCORE IS GRADED:
- Biggest Factor: Your Payment history on your credit cards and loans.
- Very influential: Your debt owed in total.
- Fairly influential: Length of credit history.
- Less influential: New credit and credit mix, amount of hard inquiries (the types of accounts you have).
MONITORING YOUR CREDIT
Even if you’re not applying for credit, it is still important to regularly stay on top of what is going on in your credit report.
Checking your credit yourself can be done in many different ways for free and with no risk to you. The most popular and free way to monitor credit is probably Credit Karma. Users receive weekly updates about their credit score and report.
Experian, Equifax, and TransUnion all offer free or premium credit monitoring systems that allow you to see your score and report. Users receive score updates on a monthly basis. In addition to monitoring, users can also “freeze” or lock your credit report to ensure that no one is opening accounts via a stolen social security number.
Monitoring your credit is the best way to ensure that the information is correct, up to date, and to check that you haven’t been a victim of identity theft. If you do see something on your credit report that you don’t recognize or is inaccurate, you can report it and get it removed with a little elbow grease.
Outside of security, knowing what is on your report also will help you when it comes to applying for loans or financing down the road. Knowing your score and understanding what it means for your approval odds will make your application journey much smoother.
MY CREDIT SCORE IS LOW, HOW DO I FIX THAT FAST?
The first step you want to take in fixing your credit is making sure all the information on the report is accurate. Getting incorrect information removed from your credit can take time, but as we mentioned before, it can be done.
If all the information on your report is correct, the best thing you can do for yourself is to focus on fixing the areas of your credit that have the biggest impact. Paying down your balances to shrink your credit utilization will help your score the most. Another thing you can do is wait for any pesky hard inquiries to fall off your report.
Hard inquiries can ding your score up to 10 points! While it might not seem like a lot, having 3 or 4 inquiries from around the same time fall off your report will give you a good boost.
Another thing you will want to consider is your credit history and number accounts. If you do pay down your debt, make sure to keep your accounts open. The more accounts you have, the better your score will be. Additionally, keeping accounts that are in good standing open will help your score and deepen your credit history over time.
SEMI TRUCK FINANCING AND CREDIT
When it comes to getting a new truck, credit can play a big role. When shopping for a loan for a new truck, you need to keep your credit health in mind. A lot of truckers actually harm their credit by applying willy nilly to any and every company that promises they can get them the truck of their dreams.
What actually happens is a LOT of hard inquiries on your report. Remember, each hard inquiry can ding you about 10 points. If you even apply to 4 places, that’s enough to drop your score a whole credit grade.
Dealers are another avenue you want to be wary of in regards to credit. When you “apply” or see if you can get financed for a truck you like at dealership, what that dealers often do is send your information around to any bank or company they think you can get approved at. Again, this leads to many unnecessary and damaging hard inquiries.
Don’t worry, there are companies out there that can get approved for Commercial Truck Financing without harming your credit. We here TopMark Funding can help you by getting you pre-approved with just a soft inquiry. This way, you can see your rates without any damage done to your credit or commitment from you.
For these reasons, it is important for you to be familiar with both your credit score and what financing companies can offer you at your current credit rating before you ding your score. Do your research and make sure you are making good choices for your business. If you want to read our in-depth Semi Truck Financing guide, you can check it out here. Being knowledgeable about the process and what it means in terms of credit will help you make the best choices.
In regards to credit checks, you have probably heard of soft credit checks and hard credit checks. What are the differences between them?
SOFT CREDIT INQUIRIES ARE PRIVATE
When a person or organization obtains a soft credit pull, only they (and anyone they tell) will know it ever happened in the first place (minor exceptions may apply). Contrast with a hard credit pull, where knowledge that the check happened appears on your credit score and can be seen by other people who do a soft or hard credit pull.
SOFT CREDIT CHECKS ARE INFORMATIONAL ONLY
The reason hard credit pulls adversely affects your credit score is because they are done with the intention to obtain a new form of credit. When you or someone else does a soft inquiry, it does not necessarily mean you are looking to obtain a new line of credit. Doing a hard pull sends information that you are planning to put on more financial obligations, making you a riskier lender.
Whether a credit check is hard or soft can sometimes be at the discretion of the person pulling. Since utility companies technically give you the service (gas, electricity, water) and then bill you after it is consumed, a utility company may elect to do a hard credit inquiry (because of the intention to take on credit in the form of services), or a soft credit inquiry (because they want to maintain rapport with the customer).
Generally, the greater the monetary value of the loan, the more likely it is the pull will be a hard pull (a rental application is more likely to involve a hard pull than a utility company’s pull).
If a potential employer asks to perform a credit check on you, it should be a soft credit pull, because an intention to be hired is not the same as an intention to take credit. If you see an unauthorized hard inquiry on your credit score, make sure to dispute it with the credit agencies.
SOFT CREDIT CHECKS DO NOT IMPACT CREDIT
Credit is like juggling: the more balls you have in the air, the harder it is to keep all of them in the air. By holding more forms of credit, you are inherently less likely to be able to fulfill all of your financial obligations. A hard credit check shows the intention to add another ball or few to your juggle.
The amount of damage a hard credit pull takes depends on a variety of factors (such as length of credit history, current credit score, credit utilization, etc.), but generally will range from one to ten points. While a one to ten point ding is unlikely to affect your chances of getting a loan, it can raise your interest rate. In contrast, a soft credit pull will take off zero points.
SOFT CREDIT CHECKS DO NOT REQUIRE YOUR CONSENT
While a company (such as TopMark Funding) may be nice enough to ask for your consent before performing a soft pull on your credit, they are not legally obligated to do so. This is why you may often get pre-approval for credit cards you never applied for; credit card companies performed soft pulls on your credit without your knowledge or consent, and are offering you a line of credit based off of it.
Hard credit pulls need either your express (signing an agreement that details a hard check) or implied (replying)to a credit offer with additional personal details such as income) consent in order to be done legally. If someone does an unauthorized hard pull, they violate the Fair Credit Reporting Act and can be sued for wrongdoing (although the resulting litigation is most likely not worth getting the ten points back and disputing the inquiry with the three primary credit agencies tends to be much more productive).
WHAT IS TRUCK INSURANCE? WHY DO YOU NEED IT?
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.
Semi-truck financing is crucial to your success as a fleet owner or owner-operator. Understanding the benefits of leasing vs buying, how credit affects your truck and equipment financing, and types of coverages for truck insurance are very important for your small business to succeed.
Dealing with a top-rated company that specializes in commercial truck loans and leases like TopMark Funding is very beneficial. We have several financing options for trucks and trailers that the big banks can’t or won’t offer to you.
The large banks typically only deal with large commercial trucking companies or customers with outstanding credit and business history. At TopMark Funding we help owner-operators and small to midsized fleet owners obtain great truck financing programs that improve cash-flow and add more profit to your bottom line.
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ABOUT TOPMARK FUNDING
TopMark Funding is a top-rated semi-truck financing and equipment financing company located in Roseville, CA. We specialize in commercial trucking and heavy equipment. Our mission is to become your long-term financial partner by helping you grow your trucking business and fleet.
We’re not here for the short-term, we’re on the long-haul with you!
Learn more about: How to Get Commercial Truck Financing
Fill out the contact form or give us a call at (866) 627-6644. One of our truck financing specialists will contact you as soon as possible to go over your truck lease needs and learn more about you and your business financing goals.