Owner Operator Insurance – Learn to Truck

The most under-appreciated insurance coverage in all of trucking

It’s worth its weight in gold!

If we don’t have this coverage, or if we choose to purchase only the minimum of this coverage, we won’t realize the mistake until it’s way too late.

A recent customer claim has solidified my opinion to never overlook or trivialize any of our insurance coverages. My customer was driving their truck and their spouse was a passenger. (Passengers were and are permitted to be in the vehicle.) There was an incident involving another vehicle. That other vehicle is believed to be a personal car. The actions of that other vehicle are believed to have led to the very sad and unnecessary death of the passenger and spouse of my customer.

The other vehicle, the car, fled the scene and the police are searching for this vehicle.

When we complete an insurance application either physically, electronically or over the phone with an agent, eventually we must choose our Uninsured Motorist/Under-Insured Motorist (UM/UIM) coverage amounts. All too often, I have customers tell me one of several things. Typically they sound something like this: “I need to save money so only give me what I need” or “I only want what’s required” or “Just give me the minimum so I can get my business started.” While most of us – and yes, myself included — can well relate to keeping insurance premiums as low as possible, UM/UIM is the one coverage we should never decline or only purchase the minimum available.

UM/UIM is never fully appreciated until it’s needed. Frequently though, because the insured desires to save money, they either request and purchase the minimum amount of coverage or decline the coverage
altogether. Tragically, this money-saving decision can prove to be financially devastating when the worst happens. Most everyone knows and understands what Uninsured Motorist coverage is — it pays our medical expenses, up to the limits of our coverage, when we are in an accident and the other driver is at fault (liable) but has no insurance. However, what’s typically not understood by most insureds is Under-Insured Motorist coverage — this coverage also pays medical expenses, up to the limits of our coverage, when the other party in the crash is liable but doesn’t have enough liability insurance to pay all of our bodily injury expenses for which they are liable.

If you, like me, have been in and around trucking for 40-plus years, no doubt you’ve witnessed firsthand and/or heard about some horrific accidents. Cars and trucks versus other cars and trucks in all kinds of scenarios: truck versus truck head-on at full speed; trucks avoiding other cars, accidents or road hazards; and of course all kinds of single-vehicle accidents. The vast majority of them required some type of emergency services, such as an ambulance ride and a visit to the hospital ER. Way too often those accidents will even require the services of an air ambulance in an effort to save someone’s life. As we are all aware, these accidents frequently lead to surgery (sometimes multiple surgeries), extended stays in the hospital, physical therapy and sometimes even more.

Point being, as I have personally experienced myself, the investigation oftentimes reveals that many of these accidents involving a truck is the fault of another driver in a personal vehicle.

When that other driver is 100% at fault for an accident with us, they are liable for all damages (bodily injury and property) they have caused us. According to the news release dated March 22, 2021 from the Insurance Research Council, one in eight drivers are uninsured. In that same news release, the national average of uninsured motorists in 2019 countrywide was 12.6%. Even worse, the news release points out that 6 states have 20% to 29.4% uninsured motorists among all drivers there, while 26 other states have from 10% to as high as 19.9%. For anyone to assume that they will never have to use UM coverage is both naive and very risky.

Now what if that other driver, who is at fault and liable, does have insurance? In many states minimum coverage for a personal car is $25,000 worth of bodily injury per person. That means the other driver’s
insurance policy will only pay up to $25,000 for each person’s bodily injury he/she is liable for. In addition to the $25,000 per person coverage, personal auto policies typically come with a $50,000 limit of coverage per accident. Most of the personal auto insurance policies I see have these amounts of coverage. If there happened to be three people in an accident all with $20,000 worth in bodily injury expenses that such a driver is liable for, none of those three will have all of their bodily injury expenses paid, because the total of $60,000 worth of expenses exceeds the per-accident limit of coverage.

To bring it full circle, lets first look at just some of the cost ranges associated with bodily injury claims. All but one of these amounts were provided to me by my representative from one of the insurance
companies I write policies for:

Ambulance ride — $400 to $15,000
Air ambulance flight — $28,000 to $97,000 (as reported by NPR on Sep, 26th 2018)
Hospital ER — $3,000 to $20,000 or more
Surgery – varies depending on the procedure, anywhere from $50,000 to $250,000 for the same procedure in some cases
Follow up surgeries — Reasonable to expect the same as the initial surgery
Hospital admission — Once a patient gets admitted the bills can get really expensive, especially if there is time spent in an intensive care unit

It is painfully clear how bodily injury costs could rapidly soar to $250,000-$300,000, or even exceed $500,000 or more almost in an instant. It’s then also easy to understand that not having or only having the minimum of UM/UIM coverage could leave most anyone in an unthinkable financial situation at the absolute worst possible time, not to mention the agony of potentially having to make medical decisions based on the lack of insurance coverage, which could have been completely avoidable.

In Commercial Auto Insurance (trucking insurance) there is frequently (but not always, depending on the insurance company) the opportunity to purchase UM/UIM coverage that costs mere pennies for the
amount of UM/UIM coverage provided. For example, let’s look at a quote I prepared this week, with $100,000 worth of UM/UIM coverage available at a quoted premium of $87 for the entire year.

Sounds great, right? Yet, given the potential cost ranges above, it’s obvious this could leave us hundreds of thousands of dollars short in coverage to pay for all our bodily injury expenses. For that same quote, $1,000,000 of UM/UIM coverage has a quoted premium of $210 for the entire year! That is ten times the coverage for about two and a half times the premium. Why would anyone pass on such a great value and peace of mind!?

For those who operate a small fleet and hire drivers it’s not only a wise decision to maximize your UM/UIM coverage for the above mentioned, but it can be a great business decision, too. The UM/UIM
coverage can help to mitigate claims against your workers’ compensation policy. Considering the significant costs associated with workers’ comp premiums, the more proactive we are to control those costs the better. Utilizing the comparatively speaking premium-friendly UM/UIM coverage to provide appropriate levels of bodily injury coverage in the event of an accident where UM/UIM coverage is utilized could thus be one of the best business and insurance coverage decisions that you make.

Finally, back to my customer. When an accident is determined to be the other driver’s fault/liability and that other driver fled the scene, the insured’s UM coverage pays the insured’s bodily injury claims up to the amount of coverage. My insured’s very tragic and sad incident is a reminder to us all to consider carefully if saving a couple of bucks is really worth it when it comes to insurance.

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Why won’t an insurance company give me a quote?

Understanding why some insurance companies will provide a quote while others will not.

Each insurance company has what is known as an Appetite. If we do not fit into that insurance company’s appetite they will not be able to provide us insurance. For example, Progressive is not able to provide insurance to any insured (trucking company) if the insured hauls loads which require placards. Other insurance companies are not able to provide insurance if the insured haul cars. Still other insurance companies can not provide insurance if the insured hauls local loads only and yet others can not provide insurance if the insured is an OTR trucking company. Many insurance companies are not able to provide insurance until the insured has been in business for a minimum number or years. That minimum can range from 1 to 3 years or more.

As an Independent Owner Operator, I have had policies with three different insurance companies. Each of them did exactly what I needed when I needed it. Each of them, when I had each policy, provided me the lowest premium available to me at that time.

As an insurance agent, I have access to 10+ insurance companies. Each of those companies has their own unique appetite and unique premium structure. To make it even more complicated each company’s appetite and premium structure are both constantly changing.

The very best way to know if you are receiving the lowest possible premium is to ask your insurance agent for the quoted premium from ALL the insurance companies from which they received a quote for you from. Then request a list of all the insurance companies they submitted your application to. Then, if you do not see a company on either list, you can contact another agent and request quotes from from the company or companies that your agent was not able to get a quote from. Additionally there are ways to lower your premium which I discussed in my Confronting a cost crisis article. I would recommend reading that article as well and taking advantage of any of those premium reducing options that may be available to you.

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Navigating insurance claims

Patience is in our best interest.

When you file a claim with your insurance company, being patient to receive an expected settlement check can be difficult. Like most who have been in this industry for any length of time, I have had the misfortune of enduring my share of insurance claims. Seldom have I gone through an insurance claim when a settlement was reached and paid as quickly as I had wished for. That slow, agonizing claims process always left me frustrated.

However, since becoming an insurance agent and witnessing claims investigations, I have a new appreciation for that slow pace. Before you completely dismiss me, let me share with you what I have learned. It is quite possible, in fact probable, you will come to the same conclusion I have.

In 2001 I was involved in a terrible accident. A car hit me on the passenger side of my 1994 W900 Kenworth, then spun in front of me and I “T-boned” the car broadside. The car spun again, now facing me on my driver’s side and the car hit my driver’s side fuel tank, launching the car into the medium. It came to rest under a bridge at the I5, California 60 & I10 junction in Los Angeles. One witness stopped and immediately checked on the driver of the other car (thankfully his injuries were very minor), then came to check on me. He remained at the scene and insisted on providing a statement to the investigating police officer. The witness informed the officer that the car literally ran right into the side of my truck as if they hit my truck deliberately.

The damage to my truck was significant, but not to the point that I was unable to repair it myself. I took a week off work and I replaced the bumper and one wheel; repaired both fuel tanks, fenders, etc. and got back to work. The claim seemed to be taking forever, and I wanted to be reimbursed for my loss (repair expenses), especially when the witness indicated that this was a deliberate act by the driver of the car. After several months went by I finally received a notice from my insurance company that the investigation of the claim was complete and that my policy would not pay for any medical or property damage to the other driver or the car he was driving. The adjuster’s investigation discovered several things.

The owner of the car was not the driver.
The car was not insured.
Several payments to the lien holder of the car were passed due.

The adjuster concluded that this was a case of insurance fraud. I did not want a claim on my policy (even for uninsured motorist) so I did not accept a claim settlement check for reimbursement of my repair costs.

Had the insurance company not fully investigated the claim, with or without the eyewitness, and simply settled the claim quickly because that big, bad, ugly truck darn near ran over that poor innocent little car, both I and the insurance company would have been victims of insurance fraud. It could have cost the insurance company an untold amount, up to $1 Million (my policy’s limit of liability) and dramatically increased my premiums for years to come or put me out of business all together. In my case, it would have put me out of business because I was already a high risk Independent Owner-Operator paying near top dollar for my insurance.

Recently, one of my insurance customers was involved in an accident. They were hit from behind by another truck. The company who owned that other truck filed a claim against my customer’s policy. They believed that my customer was at fault. Again, after many months (6 or more I believe it was) the insurance company’s adjuster completed the investigation. The adjuster denied the claim of the owner of the other truck who our customer from behind.

In my customer’s case, had the insurance company paid and settled the claim to the owner of the other truck, the insurance company would have been accepting financial responsibility and paid out thousands of dollars for an accident the customer was not liable (at fault) for.

In both of these very real examples the insurance company is doing exactly what we need them to do. Making 100% certain that they and their insureds (us customers) are not being victimized by someone trying to either defraud the insurance company or having us accept financial liability for an accident we were not at fault for.

What is most surprising to truck owners is a slow claims process for a single vehicle accident. In these instances, we still want the insurance company to fully investigate the claim before settling. Why? For the exact same reasons as the previous 2 examples! If insurance companies don’t investigate each and every claim thoroughly before paying a settlement, could you just imagine how many cases would be fraud!? In turn, that would result in premiums so high that none of us could afford to buy insurance.

I have learned to think of our insurance system as something like our judicial system. It ain’t perfect, but it’s the best there is.

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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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