Owner Operator Insurance – Learn to Truck

Yes, you can lower your insurance premium… and I have the customers to prove it!

By exercising good safety practices and being proactive with all insurance policies,four of my insurance customers have all recently been rewarded with lower insurance premiums. Not a one of them had to increase their deductibles, lower the stated value of their trucks, remove coverage or anything else. At renewal, their premiums simply went down!

These four customers represent a very diverse cross section of truck owners in our industry. That is why I wanted to share their stories. Each of them are excellent examples of how to operate a trucking company in such a way as to be safe, compliant and above all, lower insurance premiums!

Before we look at my customers and how each of them lowered their premiums, first we need to discuss the realities of the ever increasing cost of insurance. We all know that insurance companies have been raising their premiums. Most have increased premiums anywhere from 20% to 40%. Now let’s suppose that hypothetical insurance company has raised their premiums 30% from the previous year. So if one of the hypothetical insurance company’s insured receives a lower gross premium (last year’s premium was $15,000.00 and the renewal premium is $10,000.00) it represents a total reduction of 60%.

How does that work? It means that the hypothetical insurance company reduced the risk score (“risk score” is my own chosen verbiage to help explain how insurance carriers rate and consider each application before offering a quote with a premium) by 60% for the insured. If the risk score by hypothetical insurance company had remained the same the insured’s premium would have increased by 30% (last year’s premium was $15,000.00 and the renewal premium would be $20,000.00) to accommodate for the premium increase.

All 4 of my customers we’re going to look at employed the same strategies which most of us are aware of. What they all did the same is:

1. CSA scores did not increase

2. No driving or moving violations

3. No adverse road side DOT inspections or non-moving violations

4. No liability insurance claims payments

5. No physical damage insurance claims payments

6. No cargo coverage claims

Now let me introduce you to my customers and what each of them did in addition to the above mentioned which solidified and improved their premium reductions.

Insurance Customer #1:

Is a 36 year old Independent Owner Operator. He entered into trucking last year as both a driver and as an Independent Owner Operator. As most of us are aware, his chosen and virtual overnight path to being an Owner Operator is one of the most difficult ways to enter into this industry. But like me, he is a very determined individual and has survived his first year in business. Because of his efforts, on December 20^th, he was rewarded with a 30% gross premium reduction for his insurance renewal this year from last year’s policy. That means his insurance carrier reduced his risk score by approximately 60%. Talk about a Christmas gift!

First, he had 2 personal auto claims that are no longer being considered. Second, he had a moving violation that is also no longer being considered and lastly, he’s now over the age of 35. When MVR violations or insurance claims become a certain age, typically 3-5 years, they no longer count against our risk score. As for age, there seems to be a sweet spot. Generally speaking, older than 35 and younger than 65. Outside of that 30 year period I have noticed insurance companies apply a higher risk score than those within that 30 year age period.

Insurance Customer #2:

Is a small carrier with 2 trucks and 2 trailers (1 van and 1 reefer). The owner is a driver of one of those trucks. The owner has been a driver for over 20 years and he began his trucking company in 2019. His path to having his own trucking company is far more traditional. This year his gross premium for his renewal decreased 33% from last years policy. That means his insurance carrier reduced his risk score by approximately 63%.

This customer’s reduction in premium for his renewal was improved by taking advantage of a safety program offered by the insurance company. This customer enrolled in a program that measured all trucks driving performance via the insured’s ELDs. This program alone accounted for 20% of this customer’s premium reduction for his renewal.

Insurance Customer #3:

Is a 45 year old Army veteran. He has been driving trucks for the past 17 years. Last year he started his own Independent Owner Operator flatbed company operating OTR. He has 2 teenage sons which I am mentioning for a reason. His gross premium for his renewal this year decreased 30% from last years policy. That means his insurance carrier reduced his risk score by approximately 60%.

This customer’s reduction in premium for his renewal was improved by a very proactive and responsible approach to managing his CLUE (comprehensive loss underwriting exchange). It also served for an excellent teachable moment for one of his teenage sons. On our last call when I shared the good news about his premium reduction for his insurance renewal he shared this story with me.

One of his teenage sons parked a motorcycle next to his pickup truck (a personal auto vehicle) earlier this year. That motorcycle fell over and into the pickup truck causing significant damage. His teenage son said “good thing we have insurance for that dad.”

To which my customer replied to his son “insurance isn’t paying for this. You are. Otherwise it can cause both our personal auto policy and my commercial auto (trucking) insurance premiums to increase.”

The customer was right! He also did the very best thing for both the long run and short term. Over the long run it cost far less for his teenage son to pay for the repairs compared to the total cost of higher insurance premiums for years to come. In the short term it taught both of his sons about responsibility, safety and insurance. That will pay dividends for them both for the rest of their lives.

Insurance Customer #4:

Is a 60 year old who was looking for something to do before he is ready to fully retire. He operates a flatbed what I would consider to be regionally. Why I wanted to include him in this article because he even had a liability claim filed against his policy. Even with that claim, his gross premium for his renewal this year decreased 5% from last years policy. That means his insurance carrier reduced his risk score by approximately 35%.

Some readers may be asking, why is Joel including this customer? Great question. The answer will surprise most of my readers! This customer’s reduction in premium for his renewal is not something we would typically be aware of. So I thought it important and valuable to share his story with you. This customer had a 3^rd party (another trucking company) file a liability claim against the customer’s policy. The 3^rd party accused the customer of being liable (responsible) for an accident and as such, liable for the damages to the 3^rd party’s property (truck). The customer fully cooperated with the insurance adjuster assigned to the claim and the investigation. The customer provided pictures, documents, police report and provided a statement.

In doing so it enabled the adjuster to have enough evidence to deny the claim to the 3^rd party. Yes, a claim does impact our risk score. But nowhere near as significant as a claim with a payment (financial settlement)! As a result this customer’s risk score wasn’t impacted enough to cause a premium increase for his renewal.

In conclusion – Be proactive to maintain a low CSA score, avoid moving and non-moving violations, avoid claims even on personal auto policies, in the event of a claim be cooperative with the adjuster, be a defensive driver and take advantage of any programs offered by an insurance company to verify your safe driving practices. Employing these practices and not being deceptive to the insurance company, as I have written about several times before, will all result in insurance premiums that are more affordable than if you don’t.

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What to do when your insurance policy doesn’t provide the coverage you need

If you discover that your insurance policy doesn’t provide coverage for something you need coverage for, there is almost certainly a solution to provide that missing coverage.

If you took my advice in my last article and read your insurance policy(s), I would not be surprised to learn that you discovered that something (a peril, cargo commodity, operation type or location, etc.) is not covered by your policy that you need coverage for. It’s actually not that uncommon. Thankfully there’s almost always a solution available to get the coverage you may be currently lacking. Frequently it is fairly simple to get the necessary coverage added to the existing policy.

Other times however, because of the uniqueness of what coverage is missing, we may need to consider other insurance options that are available.

The most common missing coverages are somewhat obvious. In fact, most all of us are familiar them. Situations where we’ve bought/sold a truck or trailer, hired/fired a driver or moved to a new address. Adding or removing equipment and adding or removing a driver is as simple as notifying your insurance agent. Most agencies, including mine, will require some type of documentation from the insured requesting the change. Typically the only challenge here is when the insured wants to add more trucks or drivers than the insurance policy will allow for.

From time to time one of my new insureds with less than one year in business, will buy a truck or two to grow their company. They will call me up and ask to add the new truck(s) to their existing policy. Unfortunately, some of them had forgotten that their policy does not allow them to exceed 1 truck within the first two years of business.

That leaves them with a difficult choice to make. I can either get them a policy from another insurance company, which will all but certainly have a much higher premium, or they need to sell the extra truck(s) so they are not in violation of failing to schedule all owned and/or operated commercial vehicles on their policy.

An address change isn’t always as simple. If it’s only a mailing address change, or a business address change that is within the same state, it’s typically the same process as adding or removing equipment or drivers. But if it’s a new business address in a different state, it can become quite cumbersome and a bit complicated very quickly. Oftentimes it can require a new insurance agent and/or a different insurance company.

Why? Because every insurance company has to be approved by each state’s Department of Insurance to be able to provide insurance in that state. Many insurance companies providing commercial auto coverage with filings (the BMC91 filing for the MCS90 endorsement required by the FMCSA) only provide insurance to a limited number of states. There are only a few insurance companies that offer commercial auto insurance nationwide. Likewise, that is also true for insurance agents. We are required to be appointed (licensed) in each state in which we have insureds we are a producer (agent) for.

Changing or updating commodities is where things can get dicey extremely quickly. As I explained in my Why won’t an insurance company give me a quote article, insurance companies only insure trucking companies that fit their specific appetite. All insurance companies I am aware of have commodities that fit their appetite and commodities that don’t fit. As such, an insurance company will not provide insurance to any trucking company that hauls those commodities that don’t fit their commodities appetite.

Some of the most difficult commodities that don’t fit many insurance company’s appetite is HAZMAT that requires placards. There are a limited number of insurance companies who will provide insurance to any trucking company hauling HAZMAT. Additionally, the ones I am aware of all require that a trucking company have many consecutive years of safe operations before they will even consider offering a quote for a trucking company wanting to haul HAZMAT.

To make it even more complicated, insurance company’s commodities appetites might seem unreasonable to us truck owners. For example, some insurance companies will insure a trucking company that hauls livestock but won’t insure trucking companies who haul cars. Yet another insurance company will insure a trucking company that hauls cars but won’t insure a trucking company that hauls livestock.

That is the same for virtually all commodities including but not limited to Seafood, Electronics, Grain & Feed (hopper loads), Rock & Sand, Pharmaceuticals, Non-HAZMAT corrosives, Machinery, Oversize commodities… the list is virtually endless. That is one of the most important reason why it is imperative to understand what commodities are covered by the insurance policy.

As I explained in my last article Why every truck owner should read their insurance policies, just because we have “general freight” listed on the cargo coverage doesn’t mean we have coverage for any commodity we haul.

It’s impossible for me or any other insurance agent to detail each and every possible change in your business that you should notify your insurance agent and/or insurance company to make certain you have coverage. The very best thing to do – any time you make a change in your company’s property (new address, office building, shop, add/remove truck/trailer, etc.) or a change in the company’s operation (hired/fired a driver, begun hauling a new commodity or stopped hauling a commodity, changed where the company is operating or radius of operation, etc.)… Always notify your insurance agent and/or insurance company PRIOR to implementing that change.

Otherwise, the change can result in a very difficult circumstance that you regret.

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Why Every Truck Owner Should Read Their Insurance Policy

You might be very surprised to find what is NOT covered that you think you have coverage for & what is required of you to avoid a claim being denied or your insurance being canceled!

In the majority of my insurance articles you may have noticed an underlying theme. The need to understand our insurance policy. All to often, we, including myself before I became an insurance agent, simply assume we know what we have for insurance or we accept and believe our insurance agent has told us everything we need to know about our policy. Assuming is always a bad idea. Especially when it comes to our insurance. Believing our insurance agent has or is even able to disclose all the details of the policy is not realistic either. That leaves us with only one option. We need to read our policy for ourselves.

Will we read our polices? Highly unlikely. As I confessed, before I became an insurance agent, I never read my policies either. So I think it’s very unrealistic to believe anyone else will either (even though everyone should). So if we’re not going to read our policies how about knowing some of what is in our policies so we understand why it is so important to read them. Moreover, I’m going to share some tips to locate certain portions of our polices so we can quickly review anything we may question or want to be certain of.

Commercial Auto Policies:

Terms & Conditions – Policies are not required to (and seldom do they) use the phrase “terms & conditions” or any other variant. Rather, the policy will make statements of fact. For example, in my articles Don’t be lured into dishonesty to reduce your insurance premiums and Deception wreaks havoc … again! the insureds were found to have violated a requirement found in all commercial auto insurance polices with filings I have ever had or provided to a customer. That requirement was to have all owned and/or operated commercial vehicles scheduled on the policy. Another almost certain term & condition is that only drivers who are included or added to the policy are permitted to drive any of the scheduled vehicles. There can be (and frequently are) countless more terms & conditions scattered throughout the policy. Such as driver qualifications, radius of operation, hazmat exclusion, involuntary inspections or audits by the insurance company, equipment standards, equipment exclusions, locations excluded for trucking operations, exclusions for specific commodity types and much, much more.

Scheduled Vehicles – This is a list of all the “autos” (trucks) you shared with the insurance company and are scheduled (listed) on the policy. If you own and/or operated a commercial vehicle and it is not scheduled on the policy it is almost certain you are violating the terms & conditions of the policy and risk a outcome similar to those in the 2 previously mentioned articles.

Drivers – This a list of all the drivers you have disclosed to the insurance company and are on the policy as a driver. It’s not a given that we can add any driver we wish to our insurance policy. On every policy I have had or seen drivers can be approved or rejected by the insurance company. In some rare instances a driver may be listed on the policy but then “excluded” as a driver. One example is a driver who has a less than desirable MVR and yet remains an employee of the company as a dispatcher, mechanic, warehouse worker, etc.

Know the Policy’s Covered Perils – The policy’s list of covered perils determines if the policy will provide coverage in the event of a claim. As I outlined in my last article Not all cargo insurance is created equal if we don’t understand our perils we’ll never actually know if there is coverage. This is true for both the physical damage (comprehensive and collision) of our trucks and trailers and of cargo coverage. Just like with cargo coverage, if the peril which caused the claim is not a covered peril, we the truck owners, may not have physical damage coverage which can result in the cost of repairs being our own responsibility.

Know the Policy’s Coverage Exclusions – Equally as important as knowing what perils are covered we must know which perils are excluded from coverage. In addition to peril exclusions the policy will almost certainly have other exclusions as well. Those other exclusions can be for types of operations exclusions, commodities being hauled exclusions, location of operation exclusions, and countless other possible exclusions. Some polices will have a very small list of exclusions while other policies may have multiple pages of exclusions. If we were to file a claim, including a claim for physical damage of our truck or trailer, and the peril which caused the claim is excluded from coverage or the loss occurred while engaged in an activity that is listed as an exclusion, we the truck owners, once again, may be responsible for the entire cost of the loss (physical damage repair costs).

Motor Truck Cargo Policies:

Verify Cargo Commodities – All to often when we truck owner’s answer the question “what commodities do you haul” we only enter “general freight” on our insurance application or we tell our insurance agents something like “I only haul general freight.” Our insurance agents, as they are required to do, in turn only disclose “general freight” on our application as the commodity we haul. This can cause all kinds of issues, and none of them good.

First, and most important, the commodities we haul can determine if the insurance company will provide us commercial auto insurance (trucking insurance) at all! For example, if we say we only haul “general freight” to the insurance company and our customer or broker files a cargo claim for something specific like televisions or perhaps a racecar there is the possibility that claim may be denied. Why? Because some cargo coverage policies “exclude” (see next paragraph) coverage for “electronics” or “autos” and as such may not provide coverage.

Now what if our customer or broker states that “general freight” was the cargo being hauled when they report the claim to our insurance company? Before a claim is settled, the adjuster is required to investigate. During a claim investigation pictures are almost always required. The adjuster will see that the cargo is televisions or a racecar. Thus, as the adjuster is required to do, the claim will most likely be denied if electronics or autos are excluded. Worse yet, if the insurance company does not insure truck owner’s who haul electronics or autos then our policy can be canceled. That cancellation will appear on our CLUE report as deception (we lied about what we haul) and make it virtually impossible to find commercial auto insurance we can afford.

Know the Cargo Perils – Just like with the commercial auto policy, the policy’s list of covered perils determines if the policy will provide coverage in the event of a claim.

Know the Cargo Exclusions – Cargo exclusions are different than the commercial auto policy’s coverage exclusions. Cargo exclusions specifically identify cargo that is “excluded” from coverage. What cargo is excluded from coverage is entirely up to the insurance provider. Neither our insurance agent or our insurance company is a mind reader. Nor do they have a camera monitoring every load we put in or on our trailers and send us a message that the cargo will not be covered. Knowing what cargo is excluded from coverage within our insurance policy is entirely the responsibility of the insured/policy holder (us truck owners)!

Commercial General Liability Policies:

Business Locations – Commercial general liability (CGL) insurance has a nickname. It’s sometimes referred to as slip and fall insurance. It got that nick name because how common claims are made by the businesses customers or the general public while they on the property for slips and falls. How does that relate to us truck owners? It is not uncommon to forget to tell our insurance agent or our insurance company that we have multiple locations. I believe this is mostly an innocent oversight. However, whether an innocent oversight or not, it can be a costly one.

We provide our business address (which should match our address with the FMCSA) to our insurance company via our application. On that application there will typically be a very long list of questions. Many of them requiring a simple “yes” or “no” answer with possibly a few follow up questions depending on the answer. One of those questions will almost certainly deal with locations. If we do not enter all the locations our business owns, rents or otherwise utilizes for business operations, the insurance company believes that the only location they are providing coverage for is the business address that has been provided.

So if we own an empty lot across the street, a few blocks over or across town where we park our trucks it also can have a slip and fall type of claim. It can happen in many forms. Such as someone simply taking a shortcut through the property and falling down, a tool truck vendor selling tools to a mechanic and falls off a set of stairs, or possibly a mobile mechanic who is is injured while working on the truck owner’s truck or trailer. Any of these examples can result in an incident that could result in a claim against a CGL policy. If we do not include this parking lot then any claim from an incident that occurred on the parking lot property may be denied and we could be sued. Then, if found liable by the court, be responsible for entire amount of the court decision.

Know the Policy’s Covered Perils – Just like with the commercial auto policy and cargo policy perils, the policy’s list of covered perils determines if the policy will provide coverage in the event of a claim.

Know the Policy’s Coverage Exclusions – Again, just like with the commercial auto policy and cargo policy exclusions, we must know which perils are excluded from coverage. Besides peril exclusions there will almost certainly be other exclusions you might be surprised to find within your CGL policy. Exclusions such as “total auto exclusion,” “care, custody and control exclusion,” “hired and/or nonowned auto exclusion,” “designated operations or activities exclusion,” and many, many more possible exclusions. Every policy will have exclusions.

Those are just brief summaries of the most common mis-understandings we truck owners have about our insurance policies. I get all kinds of far more complex insurance questions that can only be answered after a very careful reading of the policy. And even then, sometimes the answer can only be provided by the insurance company itself.

The fastest way I know of to learn if a peril is covered, if something specific is excluded or any other detail of a policy is to request a .pdf copy of the policy and perform a key word or phrase search. I prefer to search for the heading such as “Perils,” “Exclusions” or “Auto.” If for example, I search for “Exclusions” I will read the entire list of exclusions completely and carefully including all the details for each exclusion. Only then can I understand every exclusion of the policy I am reading.

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BEFORE Signing a Lease Agreement for a Truck – Check the Insurance Requirements Within the Lease Agreement.

There are pros and cons for both purchasing and leasing trucks as I wrote about several years ago in my Buying vs Leasing article. However, for those who wish to utilize the leasing option, there is a commonly used condition within lease agreements that can be a serious obstacle to overcome.

A significant number of my customers intend to lease their first truck as a way to reduce the initial start up costs for their new trucking businesses. Most of them are aware that the lease agreement they will sign has certain detailed terms and conditions which includes insurance requirements. However, few are aware of what the exact insurance requirements are and simply assume it’s just a “typical” commercial auto insurance policy. Often, that is not the case.

My own commercial auto policies (trucking policies) have always included coverage for “scheduled autos” as well as other coverages such as “cargo,” “medical payments,” “physical damage,” etc. which is typical for most all independent owner operators. For a significant number of truck leasing companies these coverages, while necessary, frequently will not meet all the insurance requirements of the lease agreement. Many lease agreements include a requirement to have “any auto” coverage and possibly “hired auto” coverage included on the insurance policy. The majority of insurance companies I am aware of or work with will typically not be able to provide “any auto” coverage for an independent owner operator or even small to mid-size fleets.

Because of what “any auto” coverage is, providing that coverage comes with an enormous risk for the insurance company. “Any auto” coverage means exactly what it says. It’s easiest for me to explain by using an example…

Hypothetically, I, W Joel Baker trucking, has an insurance policy that includes “scheduled auto” coverage. When I applied for my insurance I included on my application that I own 1 truck. That truck is “scheduled” on the policy. I also requested and was provided “any auto” coverage. 6 months later my customer informs me they will need 4 more trucks to support the increase in loads and they would like me to provide those 4 additional trucks. Great, my business is growing! So I get 4 more trucks. Without me notifying the insurance company, those trucks automatically have applicable coverage without any premium increase because of the “any auto” coverage I have on my hypothetical insurance policy. So what would stop me from adding 10, 20, 50 trucks or more without paying a single penny more for my insurance premium? That’s right, absolutely nothing! Hence, that is why it’s very difficult to find an insurance company who is willing to provide “any auto” coverage.

I know what everyone is asking. Why would a leasing company require “any auto” coverage then? I sincerely believe their motivations are mostly well intended. For example, if the truck you have breaks down they can quickly and easily give you a different truck. Sometimes the lease will be for different trucks for different days, weeks, months, etc. depending on truck availability. I have seen other cases where I believe the intent is less than ethical. I have seen those same leasing companies offer their own insurance policy that meets the terms of the lease agreement. Of course those premiums are typically much higher which completely negates any start up cost savings.

The best way to avoid this challenge is to fully read the lease agreement before you sign it. Do not take the sales person’s “word for it.” If you’re still not sure, share the lease agreement with your attorney or your insurance agent. Finally, if the leasing company has trucks available for lease (especially in the box truck industry) there is a strong probability their lease agreement includes “any auto” coverage.

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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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