Safeguard your COI

And avoid becoming a victim

COI’s provide a gateway to identity theft and scams for would-be thieves.

Way too often I get calls from someone claiming to be a broker who wants to receive a certificate of insurance for one of my customers so they can dispatch them on a load. I politely inform the broker, “COIs can only be requested by the insured.”

Then: I contact the customer to inform them of the broker attempting to get a COI. Frequently, that’s when I learn that the supposed dispatch didn’t and wasn’t about to happen at all — it was either an attempt at identity mining or a scam.

Many of us look at our COI and think, “there’s nothing here to steal my identity.” That is most certainly not the case. Would-be identity thieves use multiple sources to mine or gain as much information on us as possible before executing the theft. Our COIs contain our addresses, company names, insurance policy numbers, vehicle identification numbers, our insurance carrier, our insurance agency information and more.

Insurance fraudsters and insurance stalkers can also use COIs to determine if it’s worth their time to attempt an insurance claim or lawsuit against us. We all know what an insurance fraudster is. But I call attorneys who target trucking companies insurance stalkers. Both like to use COIs to identify who they can collect the largest sum of money from with an insurance claim or lawsuit. Insurance stalkers can use COIs when a potential client approaches them with a request to represent them for a claim or lawsuit involving a truck or trucking company.

The FMCSA only requires the minimum bodily injury property damage (BIPD) coverage to be listed on our publicly available MCS-90 endorsement. However, that amount may be and frequently is less that what our actual policy BIPD coverage is for. These days, most trucking companies have at least $1 million in BIPD coverage. That is why insurance stalkers like to have a COI, because it shows that full amount of BIPD coverage on the policy. Insurance stalkers use that information to adjust the amount of the claim and/or lawsuit to an amount closer to the total BIPD coverage of the policy.

Insurance fraudsters, meantime, can use COIs to identify which trucks they wish to target in a planned “accident” — aka insurance fraud.

Broker and carrier impersonation are forms of scams previously reported on here in Overdrive. I can think of several ways to use a COI to accomplish many identity-theft crimes and scams. Because I do not want to not give a would-be scam artist or an aspiring identity thief a new idea, I’ll limit my list to the most obvious and simple ways our COIs can be used against us.

After acquiring your COI…

  1. The identify thief learns your preferred lanes of travel from the load boards, contacts you and says he has a great load, already has your COI and only needs a current W9 to dispatch you on the load. When the would be identify thief receives your W9 they now have the most important piece of information to steal you or your company’s identity.
  2. The would-be thief learns your preferred lanes of travel from the load boards, contacts a broker on a load, posing as you, accepts the load and receives an advance — a scam that’s grown more common in recent years and is often referred as the fuel-advance scam. Fundamentally, though, it’s about identity theft, and you may be held liable for the advance and required to refund the broker for their loss in the worst cases.
  3. The would-be thief uses the learned information for a loan in your name and uses the VIN number on the COI for collateral, securing the loan in your name. When the loan goes unpaid, your truck may be at risk of repossession by the lender.

These are but a few scenarios. I’m certain that enterprising scam artists and identity thieves have more ways to use information on the COI against us than I can think of. The good news is there are steps you can take to protect yourself.

  1. Verify with your insurance agent they will not give out any COI for your policy unless the request comes directly from you.
  2. Remove all “additional insureds” from you policy. Along with other risks of having additional insureds, such insureds can potentially request COIs be given to third parties without your knowledge.
  3. Lock all your credit reports to prevent creditors from receiving a credit report for a would-be identity thief posing as you.

The last may well be the most important among these – and you can do that via the links below to credit-freeze services of the major credit-reporting services:

Equifax | TransUnion | Experian

Taking that final step may seem drastic but it won’t cost you in hard cash and it’s something I have done myself. It will however create more work for you when applying for credit of any kind. You’ll have to unlock your credit temporarily to allow for a legitimate lender or other entity to access the report, before locking access again. But in today’s world, with identity theft running rampant, that little bit of headache could be well worth the effort.

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From Independent Owner/Operator to Small Carrier

Properly plan and prepare BEFORE buying equipment, hiring drivers or growing your company.

Once I overcame my setbacks and began enjoying success as an Independent Owner/Operator, I was convinced I was ready to be a successful small carrier with a fleet of 5, 10 or more trucks. I did not remain on that path for long. I quickly discovered that the nominal ROI (return on investment) compared to the added stress and headaches of having that small fleet simply wasn’t something I was going to be financially able or willing to continue. I’ll share the conclusion of my experience shortly. Before that, let’s look at some of the challenges we face when growing from and Independent Owner/Operator to a small carrier and/or fleet.

The 3 most common methods of growing our trucking businesses is by purchasing trucks and hiring drivers, leasing trucks to our authority that are either owned by the driver or by a fleet owner and lastly by purchasing trucks and selling them to an entrepreneur using a method known as lease purchase agreements. For the purposes of this article we will focus on those who purchase trucks and hire drivers.

When planning to grow our company, the impact to our commercial auto insurance (trucking insurance) is the easiest to prepare for. There are some fundamentals that make it fairly simple to estimate the increase in our insurance premiums when we are considering to add a truck, trailer and driver to our policy. All things being even (same truck type, year and value, same trailer type, year and value and same or similar driver age and MVR) our insurance will be double when we increase from a one truck operation to a two truck operation. The biggest variant to that way of estimating our premium increase is always the driver. As drivers, our MVR’s are seldom similar for a variety of reasons. More often than not, company drivers looking for a new job tend to have more infractions on their MVR then us owner operators will typically have. Generally speaking, us owner operators make a conscience effort to be more diligent to protect our MVR for obvious reasons. If we do not it will negatively impact our insurance premium costs as well as risking our business itself. I always advise my insurance customers to use an MVR service to check any driver they may be considering to hire prior to purchasing the equipment. That will help avoid the potential hazard of making the biggest mistake of all – hiring a driver that isn’t acceptable to the insurance company or a hiring driver who causes our insurance to increase to an un-affordable annual premium.

Hiring and retaining drivers is the most challenging concern with growing a company. The first mistake I made was believing the drivers I hired, some of whom were friends I had known for years, were going to stick around for a long time to come. I was seriously mistaken. Driver turn over is financially devastating for multiple reasons.

The immediate dilemma when we lose a driver is the truck is not generating any revenue to pay for its fixed costs such as loan payments, insurance premiums and registration. The longer the truck sits idle the more desperate we become to hire a new driver. Frequently that results in us hiring the first available driver our insurance carrier is willing to allow us to add to our policy. More often than not this new driver will have a less than stellar MVR and will result in an increase to our insurance premium. As an example, recently one of my insurance customers added a driver that had several infractions on their MVR. Adding that driver increased their policy premium from approximately $13,000.00 a year to about $28,000.00 a year!

Keep in mind we are discussing truck owners who purchase trucks and hire drivers – The next challenge we face with our drivers is proper classification. If we get it wrong we have a serious risk of running afoul with compliance. I’m not referring to compliance with the FMCSA, IFTA, UCR, IRP, etc. Rather I’m referring to agencies that few of us would ever want to cross sabers with.… the IRS and each state’s Departments of Labor. Being out of compliance with either or both of these can, and has many times over, lead to some of the most devastating consequences I have ever seen a truck owner experience. Unfortunately many truck owners have been incorrectly lead to believe that they can classify drivers as “Independent Contractors” and issue them an IRS form 1099 instead of the correct IRS form W-2. Both the IRS and all the states I am aware of state’s Departments of Labor have very clear and defined conditions in which an individual can be classified as an independent contractor. There is no gray area. A driver we hire to drive trucks we own or lease is an employee and not an independent contractor. As such when we hire drivers we are required to have both Workers Compensation and Unemployment insurance as well as collect the social security from the driver’s wages and pay the matching amount as required by the IRS. As a general rule of thumb if we hire a driver for a salary of $1,500.00 a week, as employers, it will cost us an estimated additional $1,500.00 a week for Workers Compensation insurance, Unemployment insurance, matching social security and any additional benefits such as medical benefits or a 401K. These additional costs brings our total cost of hiring a single driver to an estimated $3,000.00 a week.

For me, to grow my trucking business, I elected to buy and sell trucks using the lease purchase method. It was a disaster. The drivers who signed the lease purchase agreements discovered that it was a lot harder being an owner operator than it was being a company driver. They all elected to return to being a company driver. That resulted in my having trucks I was paying for that were not generating any revenue to be able to pay for them. So I considered hiring employee drivers. I crunched the numbers and considered the risk. It was painfully obvious to me that I would be better off accepting my losses and returning to being an Independent Owner Operator. I sold the extra trucks and trailers and returned to a one truck operation with myself as the only driver I had to worry about. It was the best personal, business and financial decision I ever made owning trucks.

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What goes into calculating your trucking insurance premium rate?

Good News! Most of it is firmly in your control.

In 1999 I decided to apply for my own authority. But before doing so I wanted to make sure I had all my ducks in a row. I began to prepare. Secured the money for the down payment on a truck and trailer, saved enough operating capital for a minimum of 30 days, established a customer base, and developed a financial back-up plan if things went south on me. With all those items in place I was confident I had planned well and was prepared to get my own authority. I promptly did so.

It wasn’t until I became an insurance agent that I discovered my plans should have started years earlier. Simply put, I did not do any of the preparation I should have done to lower my initial insurance premium. The first year I was in business my annual premium cost me as much as the price I paid for my truck! So just what was it that caused my insurance premium to be so outrageous that first year I was in business?

Insurance companies rate us by several factors. Some of those factors most of us are aware of and include things such as our age, details on our MVR (Motor Vehicle Record), years of driving experience (with a CDL) and years in business. Yet there’s a lot more to it than that, too. There are more factors many of us, including me when I first began, aren’t aware of. Those are factors like our credit reports, business address, severity of the items on the MVR, prior insurance claims (including those in personal vehicles). In recent years, too, our CSA BASIC scores, and many more factors besides.

Each insurance company chooses to use or not use some of these items. I’ve listed the factors that are commonly used across the majority of the insurance industry. Some of them provide insurance companies with information that can impact how we are rated with another factor or even factors. For instance, if our place of business has an address in Oklahoma the insurance company expects our driver’s license to be in Oklahoma as well. So if for example we have a California driver’s license that causes an unexpected mismatch. That unexpected mismatch will almost always cause a significant insurance premium increase. Additionally, if we declare to the insurance company on our application that we are going to operate within a 500-mile radius of our Oklahoma place of business yet we have a California driver’s license, that causes yet another unexpected mismatch.

Insurance companies don’t like the uncertainty in those mismatches. Additionally, insurance companies know that it’s highly unlikely that a business owner lives in California and works in Oklahoma but never goes home to California with the truck. The best practice is to live in and have your driver’s license in the same state that your business is located in.

Our MVR has some of the most significant impacts on our insurance premiums, both positive and negative. As a general rule insurance companies will pull a five-year MVR report and a CLUE (Comprehensive Loss Underwriting Exchange) for complete history of insurance claims for all drivers listed on an application.

In my case, I was initially what us old-timers referred to as an “outlaw.” The impact of being an outlaw was all over the pages of my MVR. I had several speeding tickets, a previous 90-day CDL suspension in one state and a prior suspended license. Additionally, my CLUE report had a not-at-fault accident listed that was settled out of court by the insurance company for a very large sum of money.

If we have a history of insurance claims in either commercial or personal vehicles, it will be immediately evident, with adverse and severe implications for our commercial auto insurance (trucking insurance) premium. When it comes to commercial auto insurance, both liability and physical damage insurance claims are viewed through two lenses. First, all paid claims are considered an accident, even if there was no police report.

To repeat: If you have a paid claim in your history, many insurance companies consider it an accident.
Second is the amount paid to settle the claim. The higher the amount paid, the higher risk we are considered to be by insurance companies.

Many of those factors are what led to my top-dollar insurance premium. In 1999, my first insurance premium was approximately $25K annually. That is a breath-taking $42K in today’s dollars! The silver lining for anyone who finds themselves in a similar situation is that you can change your driving habits and wait to get your authority until the violations drop off of the five-year history on your MVR. That is what I should have done, and would have done had I known. As you can see, my high insurance premium in 1999 was virtually all self-inflicted.

For those of you who, like me back at that time, find yourself already struggling with a high insurance premium, here’s what I did: I changed my driving habits, worked as hard as I ever have in my life, and was able to succeed at reducing my insurance premium over time.

My premium last year was a very affordable $8K with all the same coverages With the current high demand for trucking services and excellent rates, you are in a much better situation than I was in to be able to achieve this, I believe. It can be done.

If you are contemplating applying for your own authority one day or want to keep yourself in the best possible position should you ever decide to take that route, here are the best things you can do to help get the lowest possible insurance premium. They are prioritized beginning with the most important:

For the previous 5 years:

  1. Have a 100% (or as close as possible) clean MVR
  2. No distracted driving, failure to yield/stop, speeding over 25 mph, or at-fault rear-end accidents
  3. No auto insurance liability or physical damage claims (this includes while as an employee driver for a carrier)
  4. Have your license in the same state you reside in
  5. Have your CDL for at least 1 year (preferably up to 5 years)
  6. Establish your business in the same state you reside in
  7. Have a good credit score

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Power Only Operations

Trailer Interchange vs Non-Owned Trailer. The basic differences between the 2 coverages.

With the combination of the on going trailer shortage and the appeal of less start up costs many of us are turning to power only operations. While this can be a very successful business plan there are some serious considerations when it comes to insuring the variety of trailers we pull as a power only operation. If we get it wrong neither us nor our customers who own the trailers will be happy. In fact it can financially cripple us and potentially put us out of business.

This is the most important take away from my article. Every insurance company has differing policy and claim rules when it comes to trailer interchange and non-owned trailer coverages. Likewise every customer or truck broker has differing insurance requirements to do business with them. It is imperative you consult with your insurance agent and disclose to your agent the exact nature of your business agreement with ALL your customers and truck brokers who you do power only for. Only then can your agent assist you in securing the correct trailer coverage to meet your insurance needs.

It’s important that we understand the differences between trailer interchange and non-owned trailer coverages. Trailer interchange coverage was created and offered to truck owners as a method to insure trailers that were owned by a single company/customer that the truck owner hauled loads for. Non-owned trailer coverage was created and offered to truck owners as a method to insure a specific trailer class or type and for pulling those trailers for multiple and different trailer owners. Those 2 basic differences are the starting point for understanding which coverage is the best choice for our power only operation or in some cases the necessity of having both coverages. Deductibles do apply for both of these coverages.

Trailer Interchange

To purchase or add trailer interchange coverage most insurance companies require that they be provided a copy of the trailer interchange agreement between us the truck owners and our customer or truck broker. Additionally insurance companies will require us to disclose the type or types of trailers we will be pulling such as vans, reefers and flat beds. Very important note – each insurance company is different as to when they receive the trailer interchange agreement. Some are before they allow you to purchase the coverage while others are if/when you file a claim. Some insurance companies require both. If you are not able to produce a valid trailer interchange agreement coverage (a claim) can be denied!

Non-owned Trailer

Adding or purchasing non-owned trailer coverage is a much easier process. However it too has very specific details we need to address. Every insurance company is different when it comes to non-owned trailer coverage. Just like trailer interchange insurance companies will require us to disclose the type or types of trailers we will be pulling such as vans, reefers and flat beds. Some insurance companies will exclude certain types of specialty trailers like carnival rides, industrial mobile generators, extendable trailers for over length loads, etc. All insurance companies will require us to disclose the maximum value of the non-owned trailers we pull. That amount is the limit of coverage.

Scenario 1: If we purchase non-owned trailer coverage for van trailers only with a value of $40,000.00, that amount is the limit of our coverage for a van trailer we pull. If we happen to pull a reefer trailer and have a claim the claim can be denied because it’s a reefer trailer and not a van trailer.

Scenario 2: If we purchase non-owned trailer coverage for vans, reefers and flat beds with a value of $40,000.00, that amount is the limit of our coverage for any of those types of trailers. If we happen to pull a reefer trailer and have a claim for $90,000.00 the claim will be paid up to the limit of the policy of $40,000.00. We are then liable for the unpaid amount of the claim of $50,000.00.

Deductibles do apply in both scenarios.

In some cases it may be necessary for us to have both trailer interchange and non-owned trailer coverage. This usually happens when when we pull trailers for multiple customers and one of our customers requires trailer interchange coverage for the trailers they own while the other customer we have will only accept non-owned trailer coverage. Without going to deep in the weeds it mostly has to do with who owns the trailer. When a broker gives us a power only load they most frequently only ask for non-owned trailer coverage because most brokers don’t own the trailers we pull for them. However when a direct customer who owns the trailers gives us a power only load they will sometimes require trailer interchange expecting us to pull their trailers on a regular if not dedicated basis.

Insuring a trailer using either trailer interchange or non-owned trailer coverage is traditionally a higher premium than insuring a trailer we own. When assessing a power only opportunity with a customer or truck broker it is best to request a quote from your insurance agent so you can properly estimate your profitability. If that is not an option I recommend estimating high. If your van trailer with a value of $30,000.00 has physical damage coverage (comp. & collision) that costs you $1,500.00 in premiums a year then expect your trailer interchange or non-owned trailer coverage to cost an additional $2,500.00 to $3,000.00 in premiums. Then if your quote comes in lower to add trailer interchange or non-owned trailer coverage it’s a pleasant surprise that means better profits for you.

This is a very telling statement from an insurance underwriter I work closely with: “Honestly, I do not write “Trailer Interchange” often as it cost the same as Non Owned Trailer with PhysDam and requires way less paperwork for everyone.”

Because of the intricacies between the 2 coverages and differences between insurance companies I can’t emphasis this enough. It is imperative you consult with your insurance agent and disclose to your agent the exact nature of your business agreement with ALL your customers and truck brokers who you do power only for. Only then can your agent assist you in securing the correct trailer coverage to meet your insurance needs.

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Don’t be lured into dishonesty to reduce your insurance premiums

The consequences of dishonesty when it comes to the information provided for an insurance policy can be devastating.

Recently a gentleman from Indiana contacted me. He said he was starting his own trucking company and would like a quote for insurance. He said he had prior experience owning a trucking company and was looking to re-enter the industry. We discussed trucking in general and it was apparent that he had significant prior experience in trucking. We even exchanged a few truck driver stories and our individual experiences of the negative impact on trucking the ever growing FMCSA regulations are having on the industry. All in all a very good conversation between two old school truck owners.

We began and completed his application together. He provided his driver’s, truck’s and trailer’s information along with his specific operation details. It was looking very promising. I was optimistic for him and believed he would receive quotes that would be on the lower end of premium rates.

I submitted his application to several insurance companies as I typically do, to see which insurance carrier would provide him the lowest premium for the amount of coverage he was seeking. To my surprise ALL insurance carriers “declined” (a polite word for refused) to offer an insurance quote. I reviewed all the information…. No drivers had any tickets or violations, there was only one insurance claim from the gentleman’s past (not uncommon for most of us) and the trucks and trailers were all newer. I wanted to learn more and see if there was something I did incorrectly that caused all the insurance companies to decline to quote this gentleman. I contacted one of the insurance carriers I had submitted his application to. They informed me that his previous FMCSA operating authority had been revoked by the FMCSA because his insurance had been canceled by the insurance company.

That’s when I learned, as Paul Harvey used to say “the rest of the story.” Everything the gentleman told me about his trucking past was true. But it was what he didn’t tell me that caused all the insurance carriers to decline to quote.

I called him and asked if this was a mistake or if he knew his previous FMCSA operating authority had been revoked because his insurance had been canceled. That’s when he disclosed why he was re-entering the trucking industry with a new FMCSA authority. Remember the one insurance claim? That claim was for an accident that one of is trucks was at fault for and both THE TRUCK AND DRIVER WERE NOT LISTED ON THE POLICY. The gentleman only listed one of his many trucks on his commercial auto policy and purchased a personal auto policy for his additional trucks to save money. As a result he was not able to purchase any insurance to get his previous FMCSA operating authority reinstated. He believed he could simply start a new company and be able to continue his trucking business. That is not the case. Even worse, he will most likely never be able to own a trucking company again.

If you are ever tempted or if anyone (a business partner, friend or even an insurance agent) suggests for you to mislead your insurance company, don’t do it! Some of the most common deceptions (lies) I have encountered are:

  1. Not including all vehicles owned or operated on the policy (this includes trucks and trailers)
  2. Not including all drivers on the policy
  3. Utilizing someone else’s address as a garaging address
  4. Utilizing a P.O. Box address as the physical location of the business

While these deceptions can reduce your premium they are also valid reasons an insurance company can cancel your insurance policy. Once that happens it follows you like a bad smell after hitting a skunk. No matter how hard you try you just can’t get rid of it and nobody wants to park next to you in the truck stop. Similarly, that’s how insurance companies deal with dishonest truck owners.

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“Bobtail Insurance” 101:

Detailing various available coverages and components of Non Trucking Liability

After my post last month, Basics of Trucking Insurance, Ed asked about “bobtail insurance.” The phrase itself is slang. It is not a legal name for insurance or insurance coverage. As such, bobtail insurance means different things to different people, depending on their perspective. That’s where the confusion that exists among some owner-operators begins.

Most think of bobtail Insurance as insurance to get the truck fixed after an accident. Some owner-operators have been led to believe that bobtail insurance is a form of “Commercial General Liability” (CGL) insurance, addressed in part in last month’s story. Contrary to popular belief, the FMCSA does not require any trucking company or truck owner to have CGL insurance. While it is advisable for a trucking company with a physical place of business (a dispatcher’s office, maintenance shop, warehouse, etc.) to have a CGL policy, it is almost never useful insurance for a one-truck owner-operator, whether leased to a carrier or not.

Some trucking companies see bobtail insurance as a method to attempt to insulate themselves from lawsuits when owner-operators who are leased to them operate their trucks while on their own personal time. Or, put another way, not under dispatch.

When owner-operators, leased to a carrier, say we only want the required bobtail insurance, what we are asking for is something called “Non-Trucking Liability” (NTL) insurance. NTL is the only required part of any set of coverages that might be called “bobtail insurance.” NTL protects us for liabilities while we are driving our truck during personal time and not under the control of the trucking company we are leased to. If we cause damage to someone or someone’s property for which we are liable, this insurance is what pays those damages and claims. In other words, we’ve been in an accident while not under the control of the trucking company we are leased to and we’re at fault. (IMPORTANT: NTL is NOT, nor does it ever “act like” commercial general liability insurance.)

Another insurance coverage available for purchase with bobtail insurance is something called “Physical Damage” and/or “Comprehensive” and “Collision.” This is the insurance that gets our truck repaired when we’ve been in an accident in which we are at fault. Physical damage insurance is for any accident at any time, including when under the control of the trucking company we are leased to and when we’re on personal time not driving for the carrier we’re leased to. This is the only insurance coverage that will get your truck fixed when you are in an accident that you are at fault for. Physical damage is not required by law but is highly recommended for any truck owner to protect their investment. Personally, I would never purchase non-trucking liability and not elect to purchase physical damage.

In some circumstances, physical damage can even protect a truck owner when they are not at fault for an accident. This occurs when the other driver’s insurance company denies the claim. If that does happen, the truck owner’s insurance company can pay the claim (truck repair costs) and then seek to recover those costs from the other driver or the other driver’s insurance company.

I would never reject or decline “Un-Insured” and “Under-Insured” motorist insurance as part of my bobtail insurance policy. These are vital insurance coverages that provide us insurance for both bodily injury and property damage when the other driver is at fault but has no insurance or not enough insurance to cover the cost of the claim.

These two coverages sound easy enough to understand, but oftentimes we don’t realize their true value. That’s especially true when talking about under-insured motorist coverage. Many personal vehicle drivers elect to carry only minimum coverage for their personal auto liability insurance. Coverage amounts are written (illustrated on the policy) this way: Per person/Per accident/Property damage. States’ minimum liability coverages range from $10K/$10K/$0K up to $50K/$100K/$25K. When we are in an accident and the other driver is at fault and only has minimum coverage of $10K per person in bodily injury damage, what happens when our medical expenses are $80,000? That’s when our under-Insured motorist insurance kicks in and saves the day by paying the additional $70,000.00 and thus helping us avoid cumbersome and expensive lawsuits.

In my opinion, this coverage is the most valuable part of un-insured and under-insured motorist insurance.

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Additional Insured

What EVERY truck owner needs know

Customers and/or truck brokers (this includes freight forwarders and freight brokers) requesting to be added to a truck owner’s insurance policy as an “Additional Insured” has become a common practice in the trucking industry.

When a dispatcher for a truck broker asks me to add the truck broker as “Additional Insured” I always ask them, why? Without fail I will get 1 of 2 answers or sometimes both:

1) So we know if your insurance is canceled and when it is due to renew.

2) It’s just what our company requires from carriers and truck owners.

Neither of these answers provide a valid justification for any customer or truck broker to request to be added as “Additional Insured” on a carrier or truck owner’s insurance policy.

When we provide a customer or truck broker a traditional certificate of insurance (COI) with the customer or truck broker listed as the “Certificate Holder” (NOT as “Additional Insured”) they have all the information about the insurance policy they need including:

1) Name Insured (the carrier and/or truck owner)

2) All amounts of insurance coverage (liability, cargo, reefer breakdown, non-owned trailer, etc.)

3) Policy start date and end date

4) Insurance company

5) Insurance Agency

If the customer or truck broker wants to know if a carrier or truck owner’s insurance has been canceled all they have to do is visit the FMCSA SAFERSYS website (https://safer.fmcsa.dot.gov/CompanySnapshot.aspx) to view the status of the carrier or truck owner’s insurance policy. This is public information that is provided by the FMCSA and is available to anyone who wishes to verify the insurance status of a carrier or truck owner. ALL commercial carriers (everyone with an FMCSA operating authority) are required to have liability insurance. ALL insurance companies are required to provide your insurance information to the FMCSA including the start date, expiration date and if your insurance is canceled for any reason they are required to update the FMCSA of the cancellation date immediately.

Now that we have established that there is not a justification for including a customer or truck broker as “Additional Insured” for the purpose of notification of cancellation or renewal date one has to ask why do they want it then? In order to answer that question we have to know what “Additional Insured” really means and how it can be used by a customer or truck broker.

First lets discuss the basics – An “Additional Insured” is an endorsement. An “Additional Insured” endorsement does exactly what it sounds like it would do. It adds another party, in this case a customer or truck broker, to the policy as an insured. When an “Additional Insured” endorsement is added, there is a change made to the policy. It specifically extends insurance coverage to the “Additional Insured” customer or truck broker placed on the policy. It then provides insurance coverage to the “Additional Insured” who can then, without any additional consent (because consent has already been provided by adding them to the policy as “Additional Insured”), submit a claim against the carrier or truck owner’s insurance policy. Now you may ask why would a customer or truck broker file a claim on a policy they are listed as “Additional Insured?” The answer is going to surprise you… because they either don’t have enough insurance or especially in the case of a truck broker, they have no insurance at all! Thus they rely on you the carrier or truck owner to provide them with free insurance.

Even more important, being listed as “Additional Insured” means the customer or truck broker can avoid their liable obligations – The carrier or truck owner’s insurance company can not sue anyone listed on the policy. This includes “Additional Insured.” If the customer or broker is liable for bodily injuries or property damage that the carrier or truck owner sustains they can not be sued by the carrier or truck owner’s insurance company for those damages. Those customers and truck brokers who are given an “Additional Insured” endorsement on a carrier or truck owner’s insurance policy simply want to make certain that if in the event you, the carrier and/or truck owner, suffer a bodily injury or your truck and/or trailer or other property are damaged in which they are liable for (legally responsible for) they don’t have to pay for it!

My solution – When a customer or truck broker asks me to be listed as “Additional Insured” on my insurance policy, I first ask them the above mentioned 2 questions. Then I inform them of what “Additional Insured” really means followed up with: “If your company can’t afford adequate liability insurance or isn’t willing to be responsible for it’s actions, then your company isn’t a company I’m willing to take the risk to do business with.” Then I continue my hunt for my next load.

No customer, truck broker or their loads are worth granting them “Additional Insured” on my insurance policy!

The trucking industry is complex and changing. To learn more check out the entire category Business of Trucking.

Basics of Trucking Insurance

How to get the right trucking insurance at the right price.

Last month a trucking company in Illinois contacted me. They were concerned about the high cost of their trucking insurance and asked if I could help. I reviewed their policy’s declaration pages and noticed they were paying for insurance that was neither required or of any use to them.

They were paying for insurance coverage that they would be hard-pressed to ever find a reason to use. They didn’t have any exposure or risk that would ever necessitate filing a claim under that coverage. I dug deeper into their policy and saved them close to $1,000.00 annually.

As Owner Operators or even fleet owners, we ask our insurance agent for “Trucking Insurance.” However the legal name for Trucking Insurance is “Commercial Auto Insurance.” Commercial Auto insurance is available to all businesses who uses any type of a vehicle for business purposes. Understanding this legal definition is vital when you are shopping for your trucking insurance.

When talking to an insurance agent make certain that he or she understands you are a “Trucking” business. As such you do not need or have any use for several commercial auto coverages that other types of businesses may require. The following are the top 3 insurance coverages most Owner Operators and some small fleets have no use for.

  • Commercial General Liability – Independent Owner Operators operate their business from their home residence which is NOT open to the public or to their customers. As such, in most cases Independent Owner Operators have no use for “Commercial General Liability” which provides liability coverage for those visiting your place of business such as a dispatchers office or a maintenance facility.

*Note – Not to be confused with “Commercial Auto Liability” which is required by the FMCSA and for most of us is a minimum of $750,000.00 of coverage.

  • Hired-Auto Liability – Independent Owner Operators & small trucking companies seldom have use for “Hired Auto” insurance coverage. Hired auto Covers liability expenses for accidents involving vehicles that your business uses for “work purposes” but doesn’t own such as employees personal vehicles. “Work Purposes” meaning the auto was hired to perform a job. Since Independent Owner Operators & small trucking companies typically don’t hire anyone with an auto for work purposes this coverage has no use.
  • Non-Owned Auto Liability – Similar to “Hired Auto,” “Non-Owned Auto Liability” is typically coverage that is not necessary. “Non-Owned Auto Liability” covers the companies liability when the personal vehicle of an employee or temporary staff, whether owned or rented by them, is driven for business. Since an Independent Owner Operator has personal auto insurance on his or her personal auto or pickup truck they most likely have adequate insurance when running errands such as picking up parts.

*Note – Yes “Hired-Auto” and “Non-Owned” auto are very similar. The way I like to think of them is that “Hired-Auto” is more of a formal or contract relationship. Where as “Non-Owned Auto” is more casual such as asking a driver or employee to make a quick run to the auto parts store for a case of oil or a set of batteries.

In the case I mentioned at the top of the story, this is a family owned small carrier of 2 brothers and their sister. The brothers each with their own truck and trailer and their sister filling the duties of dispatcher and safety manager for the company. They asked me if I would be willing to be their insurance agent and remove the unnecessary insurance. I was happy to do so for them. Now they frequently reach out to me with both trucking and insurance guidance which I’m always happy to provide.

Knowing whether or not these coverages are necessary can save any truck owner, especially an Independent Owner Operator, potentially thousands of dollars on their annual insurance premium.

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