Insuring Success for Drivers
Getting the right type of insurance is key to an owner-operator's business
By Nick Krewen
When it comes to insurance coverage, owner-operators face more complex choices due to the independent nature of their business. Many factors, ranging from the kind of truck you have to the type of jobs that you do can impact your rates, so finding the proper insurance broker and company to meet your needs could mean the difference between survival and foreclosure.
A good insurance agent who specializes in the trucking industry can be a huge help in cutting through the labyrinth of red tape and even save drivers some money.“It can be a significant savings,” says Ken Bowman, of Ohio-based Progressive Insurance. “In a business where truck drivers’ margins are pretty tight, anytime you can reduce your outgoing cash flow might be the difference between staying or not staying in business.”
And when looking at costs, drivers need to look at the big picture. “One mistake trucking operations often make in buying insurance is basing the decision strictly on price,” says John Stransky, director of market development for Sentry Insurance in Wisconsin. “An agent who knows trucking insurance can help determine if the coverage offered provides value and the necessary protection.”
A specialty insurer can help owner-operators due to the numerous nuances in their business that require flexibility. “There are specific needs to trucking insurance that are regulated and outlined by states and by federal governments that a truck insurer must understand in order to offer appropriate coverage,” Bowman explains.
Tad DeOrio, president of TAS Insurance, says there are some major differences between the insurance needs of the independently contracted owner-operator and major fleets — even in terms of basic coverage. “These individuals own their own equipment and typically need physical damage insurance to satisfy the lien on their truck, and occupational accident insurance since they’re not covered by workers’ compensation. If they’re leased on with a motor carrier they need non-trucking liability to cover times when they’re using that truck for personal use.”
Of course, the way a trucker operates the rig also comes into play. “A key factor in determining costs for insurance is a driver’s record, an area that is controllable,” notes Stransky. “An insurance company dedicated to providing trucking insurance will not only have driver safety programs in place but also different criteria when evaluating driving records compared to a company that primarily handles personal auto and light truck coverages. What’s more, specialized trucking insurance agents can help decide the right deductible for each particular need.”
Bowman says trucking business insurance needs run the gamut. “Different types of trucking require different types of coverage,” he explains. “There are for-hire trucking businesses — moving other people’s things from Point A to Point B — or private trucking companies whose business might be retailing, manufacturing or some other business that uses trucks in the course of their business.”
The type of truck you own also dictates your needs. “You would need cargo insurance assuming you’re hauling someone else’s food or refrigerated goods or pharmaceuticals from Point A to Point B,” says Bowman.
“If you’re operating that vehicle across state lines, you need federal filings, which are proof of insurance and certification to the government that you have insurance for your vehicle and for the goods involved. If you’re also moving those goods for a company that has contractual requirements, you might need general liability coverage.”
Insurance referral services are available, but when choosing your broker ask the important questions.
“Know who that insurance carrier is and how they’re rated to make sure you’re getting a quality insurance carrier and not somebody who might not have the money or the intent to pay your claims,” DeOrio advises.
“Secondly, make sure you know what the insurance requirements are in the lease you’re signing with the motor carrier. If you don’t, fax the lease to someone who will help you interpret it to make sure you don’t run into a problem down the road.
“Thirdly, understand what the cost is and what the protection is. Even though it’s not cheap, it’s really something you can’t afford to operate without.”