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Commercial Truck Insurance: Cost & Coverage

Commercial truck is big business. In 2018, these vehicles counted for 13.4% of all registered vehicles in the United States and brought in revenues of close to $800 billion. If you are thinking of opening a trucking business, that transports goods for companies like Walmart or Amazon, you must put a heavy emphasis on which commercial truck insurance you will buy. In this article, we will examine multiple components of this kind of insurance, from what it is to the best providers, and more. Let’s dive in by getting a clear definition.

What is Commercial Truck Insurance?

Commercial truck insurance is similar to commercial car insurance, but it is geared specifically to trucks. Vehicles that are covered include box trucks such as the ones operated by U-Haul all the way up to full blown tractor-trailers that move cargo across the country. Now that the differentiation between the two types of insurance is clear, it is important to know what kinds of coverage is included in commercial truck insurance. A standard commercial truck insurance policy will protect truck drivers against:

  • Any physical damage sustained in an accident,
  • Liability relating to truckers and other drivers on the road, 
  • Loss of any cargo related to an accident .

These coverage options provide protection for the most common mishaps, but there are other benefits that can be added to a policy. The next section will explain these options in more detail.

>>MORE: How Much does Commercial Auto Insurance Cost?

What Kinds of Coverage are Right for Your Trucking Business?

As mentioned in the last section, there are multiple facets of trucking that are protected in any commercial truck insurance policy. Let’s review those in detail. 

Physical Damage Coverage

First and foremost, any policy will protect against any damage done to a truck in an accident. This coverage will help pay for any repair expenses if, in the unfortunate event, the insured truck is in an accident. This is the reason why the insurance premium reflects the value of the truck. That said, it is good to have this coverage, particularly if the vehicles for your business are leased rather than owned. 

Primary Liability Coverage

As the owner of a trucking business, one of the most important coverages in commercial trucking insurance is primary liability coverage. This coverage protects a driver against anything he or she may be held responsible for in an accident. That includes:

  • Bodily injury liability, which will pay for any injuries other drivers sustain in an accident.
  • Property damage liability to cover the costs of any claims because of the accident.
  • Legal defense coverage to minimize the expenses related to any litigation regarding the accident. 

What if something happens near your truck e.g. a person slips and falls. This is where general liability coverage is beneficial.

General Liability Coverage

This coverage protects against property damage or injuries that are not caused directly by any truck in your fleet. An example of this would be a disgruntled employee suing the business for a perceived violation of their contract. This coverage also protects your business from responsibility of a person’s clumsiness e.g. slipping on the sidewalk next to the business.

Motor Truck Cargo Insurance

Many trucking companies carry products from other companies. If your company plans to do this, motor truck cargo insurance is necessary. This coverage protects your company if an accident destroys any cargo that was being transported by your company.

Insurance for Uninsured and Underinsured Drivers

A final type of coverage to consider adding to your commercial truck insurance is insurance against uninsured and underinsured drivers. It is reported that 1 in 8 drivers do not have insurance. If any truck in your fleet gets into an accident with one of these drivers, your company will have to pay for those expenses out of pocket, unless you ask for this additional coverage option.

Again, these coverage options protect your trucking business from the most common incidents on and off the road. There are, however, other factors that can make any policy you choose more expensive. The next section of the article will examine those factors.

What Factors Influence the Cost of a Commercial Truck Insurance Policy?

As the owner of a trucking business, the only consideration can’t be just how to cover the trucks in your fleet. Other considerations must be made. This section will briefly look at four of those factors, courtesy of Merchant Maverick.

1. Age of the driver

Yes, the age of any person you hire to drive a truck in your fleet will impact the cost of your commercial truck insurance. As a person ages, key senses begin to decline, namely eyesight and hearing. Commercial truck insurance providers want to be sure that your company is using the best personnel group. When that happens it minimizes the chances of a policy being used to cover an accident.

2. Driving record of an employee

Non-commercial car insurance providers take a person’s driving record into account when giving a quote. Logically, commercial truck insurance providers and policies will look at this as well. There is a much bigger chance of someone getting seriously injured from a commercial truck accident than a car or motorcycle accident.

3. Age and condition of the equipment used

Last, but not least, you need to think about the age and condition of any truck in your fleet. As a vehicle gets used, the chances of it malfunctioning in one way or another increases. To keep your costs as low as possible, it is wise to keep every truck in your fleet up-to-date with inspections.

4. Certifications of drivers in your company

Commercial truck insurance providers look favorably on companies that adequately train their drivers. About 130,000 people become injured as a result of truck accidents each year. The best way to avoid this is to hire drivers that are trained in accredited schools. Even better would be to provide safe driving classes to your drivers to keep their skills as sharp as possible, per Merchant Maverick.

4. Having authority as an owner/operator

A final consideration in the cost of commercial truck insurance is if the driver has authority as an owner/operator. Having authority as a truck driver means the government has given you permission to haul freight. This permission is granted through the Federal Motor Carrier Safety Administration when the agency provides you with a motor carrier number. Don’t confuse this with a USDOT number, which you’ll need no matter what. A motor carrier number is important if you carry freight across state lines, according to the Federal Motor Carrier Safety Administration. Let’s explore the different types of authority available to drivers:

  • Motor Carrier of Property (except household goods): you can transport regulated goods for the public e.g. cars to car dealerships, buses to schools, clothes to retailers, and so on;
  • Motor Carrier of Household Goods (Moving Companies): this is where you can help people move their personal belongings when they move;
  • Broker of Property (except household goods): you accept payments for the people who will transport the goods;
  • Broker of Household Goods: similar to a broker of property except you deal exclusively with household goods.

How do you get authority?

Getting authority is a lengthy and expensive process. It could take 5 to 7 weeks to be fully granted authority on the state and federal level. When you get authority, you are required to also get cargo insurance, which increases the cost of your premium. Additionally, at the state level, there are multiple agreements that have fees tied to them, based on the number of vehicles your authority operates or the weight of each truck in your fleet. These fees must be paid before authority is granted. 

New trucking authority versus experienced authority:

The former is when a driver applies for the first time. Before new authority is granted, the Department of Transportation will perform an audit on multiple conditions e.g. maintenance logs, your driving record, driver logs, and alcohol/drug policies, to name a few. This increases the price of your premium, but is not applied to renewals, unless you took a significant break (more than three years) from driving. If you took that long of a break, you will undergo another audit as if you never had authority.

Now, you’re aware of a few of the factors commercial truck insurance providers consider when providing quote to trucking businesses. Let’s see how these they influence some sample quotes.

How Much does Commercial Truck Insurance Cost?

As discussed above, Commercial Truck Insurance rates depend on different factors and their rates can be very different to different drivers. The best way is to get quotes from different companies and compare. Below are some indicative rates for your reference:

  • For an owner-operator who doesn’t have their own authority and has to be leased onto a motor carrier, their commercial truck insurance premiums are estimated to be between $2,000 – $3,500 a year.
  • For an owner-operator who just recently had their authority, their commercial truck insurance premiums are the most expensive. It can be between $10,000 – $20,000 a year; and sometimes it can be as high as $30,000
  • For owner-operator who have had their own authority for a few years with good driving record, their commercial truck insurance premiums are estimated around $10,000 – $15,000 a year.

How to Find Cheap Commercial Truck Insurance? 

If you are looking for cheap commercial truck insurance, it’s best to compare rates from multiple insurers. A brokerage website can help you look at multiple quotes at once. Some popular brokerages to consider include: CoverHound, CoverWallet, and Simply Business. If you are willing to pay for the bare minimum liability insurance needed to drive a truck, then you’ll save a little more too.

You can also work for a major carrier who will cover most of the insurance costs of driving a commercial truck. Another option is to relocate or only operate in a state with very affordable insurance rates.

Some tips for lowering your commercial truck insurance premiums also include:

  • Paying a single premium upfront for a discount
  • Paying by electronic debit for a discount
  • Pairing your commercial truck and business insurance
  • Request a multiyear policy, i.e. three-year policy

Commercial Truck Insurance With No Down Payment

The high initial down payment for commercial truck insurance is another hurdle for all drivers. Down payments may be thousands of dollars. 

While it’s hard to find commercial truck insurance with no down payment, you can find companies offering commercial truck insurance down payment assistance and deferred down payment plans. These insurers may be able to help you get started with insurance coverage for a 50% down payment and deduct the remainder from your bank account each week until the down payment is fully paid. The best way to find these companies is through brokers like CoverWallet.

You need to be careful if and when you are offered a no down payment commercial truck insurance policy. Many brokerages claim to offer no down payment commercial truck insurance policy. However, what they actually do is to offer you to take out a loan to pay for the down payment. Of course, you have to pay interests on the loan as well. It will increase your biweekly or monthly payment of the policy’s premiums. Sometimes the interests on this loan can be much higher than usual. It may or may not work for your situation.

Commercial Truck Insurance Rates by States

Speaking of, commercial truck insurance rates are cheaper in some states over others. The price that insurance companies quote for rates is highly dependent on the risk of an accident or damage to cargo in your region. Rates can also be affected by the average costs of claims in a region.

According to CoverWallet, the cheapest states for commercial truck insurance are:

  • Mississippi
  • Wyoming
  • Iowa
  • Nebraska
  • Idaho

By contrast, there are plenty of other states with higher than average commercial truck insurance rates. By state, they are:

  • Louisiana
  • New Jersey
  • Georgia
  • New York
  • Delaware
  • Florida 
  • Rhode Island

If you are also worried about the difficulty of being a truck driver in different states, California, New York, and Texas are some of the most challenging regions. California has strict laws and requirements that can make it difficult to operate. Some cities also have terrible traffic, such as Los Angeles. New York has similar traffic issues, especially in New York City. 

Lastly, Texas is about to pass a new law, Texas House Bill 19, that makes it harder for plaintiffs to bring lawsuits against trucking companies, but not necessarily truck drivers. This could mean drivers will have to pay much higher insurance rates to protect themselves in the event of an accident. 

Commercial Truck Insurance for New Drivers

It’s absolutely necessary for new drivers to get commercial truck insurance. In fact, commercial truck insurance is required to get trucking authority. This puts new drivers in a tight spot as commercial truck insurance for those who are just getting started may be as much as $30,000 per year. 

For this reason, many new drivers start out working for a motor carrier company which leases the vehicle to the driver and covers much of the insurance requirements. They only have to pay a few thousand per year in commercial truck insurance premiums while saving up to get authority.

The longer you keep your commercial truck insurance in force, the lower your premiums are. Different companies have different underwriting policies in place to consider new vs. experienced drivers. However, in general, after maintaining your commercial truck insurance policy active with no negative incident for 12 months, you should see your rates decreasing quite significantly.

Commercial Truck Insurance for High-Risk Drivers 

There are many things that cause insurance companies to consider truck drivers to be high-risk. You don’t necessarily have to have been in an accident! For many insurers, a new driver or a new trucking company would be considered high-risk simply because they lack experience or driving records to review. 

Drivers who transport hazardous materials are also considered high risk because of the material they are carrying.

It is more difficult to find commercial truck insurance for high-risk drivers, but there are companies who offer such coverage. You’ll just need to work with a brokerage to find the companies that specialize in high-risk commercial truck insurance coverage to get insured.

You should know that these brokerages usually try to find a policy satisfying the minimum requirements of coverages only. As soon as your driving record improves, you should consider increasing the coverages of your policy.

Where can I Get Commercial Truck Insurance Quotes for My Business?

Many companies that offer conventional car insurance also provide commercial truck insurance. In this section, we will get quotes from well-known organizations such as Progressive and Geico. Again, these quotes will be insuring one driver. You can also see The 7 Best Commercial Truck Insurance Companies.

If you want to compare quotes of several companies, you should consider working with a broker specializing in commercial truck insurance. One such option is CoverWallet. They are a national digital brokerage firm. Their agents are very knowledgeable and will help you find the right policy for your situation.

Progressive Commercial Truck Insurance

For Progressive, I entered the hypothetical details for the 35-year-old driver with no accidents. You can see that an insurance policy based on those facts will cost $22,239, if paid in full. Can’t afford to pay in full? Progressive allows for a down payment and then gives options for monthly installments to pay the premium entirely.

Geico Commercial Truck Insurance

Unfortunately we are not able to get a quote from Geico.

Final Thoughts

Starting a trucking business is a big decision. To protect your interests, it is vital to find the right commercial truck insurance. Doing so will insulate your business from any damages caused by traffic crashes. The Insurance Institute for Highway Safety reported just under 23,000 crashes in 2018. Some of the benefits include:

  • Protection against uninsured and underinsured drivers, 
  • Property damage liability coverage,
  • Legal dense coverage and 
  • General liability coverage. 

Don’t be a business caught without commercial truck insurance.

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