Trucking Insurance – Learn to Truck

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.

To get more great business tips and trucking news visit Overdrive extra!

Not all Cargo Insurance is Created Equal

From time to time I, Joel Baker truck driver, have been asked by a customer or a broker if my insurance is from xyz insurance company. When I respond and say: “no, why do you ask?” I typically get a reply that goes something like “our company doesn’t, can’t or isn’t able to do business with any trucking company who has their insurance from xyz insurance company.” Usually what they are politely trying to tell me is that the customer or broker has had a previous bad experience with xyz insurance company in the form of a denied claim. Most of the time it’s a denied cargo claim. Sometimes they will also state something along the lines of “xyz insurance company does not provide broad form cargo coverage.”

So what in the heck is “broad form” cargo coverage and why does it matter? The answer is simple but the details can get us lost in the weeds. To try and keep us from getting lost in those weeds I’m going to stick to the basics.

First of all, when anyone brings up “broad form” cargo coverage they are actually borrowing a term that is most commonly used with Homeowner’s Insurance policies. There are actually 3 forms. Those 3 forms are Basic, Broad and Special. The verbiage used within a policy rarely actually uses these terms. Rather the policy will detail coverage for perils (I’ll explain perils in the next paragraph). What the policy states about the perils determines whether the policy provides Basic, Broad or Special form coverage. The use of the terms Basic, Broad and Special forms is most frequently used between insurance companies, underwriters and agents so they can more easily discuss the policy coverages.

OK, what’s a peril? A peril is the cause of the loss. For example, the scenario in my last article, the loss of my cargo (glass panels) was due to my collision with the dock. So in that scenario the peril for the loss of the cargo was collision.

Now lets look at sample lists. *Important – Each insurance company creates it’s own list of what is and is not a covered peril and what perils are exempted from coverage.

Disclaimer: This table of perils is only a sample and for educational purposes only. It does not reflect any insurance company’s list of covered perils or exempted perils. Please contact your insurance agent or insurance company for a list of covered perils and exempted perils within your policy.

Good Basic Form	Better Broad Form	Best *Special Form
Covered Perils	Covered Perils	Exempted Perils
Theft Fire Collision	All basic form Perils – PLUS: Falling Objects Vandalism	Flood Intentional Acts Nuclear Hazard War

*Special Form covers all perils EXCEPT those which are exempted from coverage

Using the table above, it’s very easy to see why a customer or broker may not be able or willing to accept cargo coverage if the policy provided by an insurance company only provides coverage for a very limited number of perils.

Now this is where the weeds get pretty tall, thick and a bit difficult to navigate. Remember that I mentioned that each insurance company creates it’s own list of what is and is not a covered peril. Sometimes two different insurance companies can have the same list but NOT use the same form verbiage. Lets compare 2 lists of perils for two different and fictitious insurance companies:

Disclaimer: These tables of perils is only a sample and for educational purposes only. They do not reflect any insurance company’s list of covered perils or exempted perils. Please contact your insurance agent or insurance company for a list of covered perils and exempted perils within your policy.

XYZ Insurance Company

Good Basic Form	Better Broad Form	Best *Special Form
Covered Perils	Covered Perils	Exempted Perils
Theft Fire Collision	All basic form Perils – PLUS: Falling Objects Vandalism	Flood Intentional Acts Nuclear Hazard War

*Special Form covers all perils EXCEPT those which are exempted from coverage

ABC Insurance Company

Good Basic Form	Better Broad Form	Best *Special Form
Covered Perils	Covered Perils	Exempted Perils
Fire Collision	All basic form Perils- PLUS: Theft	Flood Intentional Acts Nuclear Hazard War

*Special Form covers all perils EXCEPT those which are exempted from coverage

Notice that even though ABC insurance company has what it calls “broad form” cargo coverage, the coverage is exactly the same covered perils provided by XYZ insurance company’s “basic form” coverage. So the form title used by an insurance company does not necessarily reflect the coverage that we are seeking or coverage we believe we have purchased.

Now it should be very clear that it is crucial for us as truck owners to ask and be aware of which perils are covered are which perils are not covered by the cargo coverage of our insurance policy no matter what the insurance company has titled it (what form name is being used). Because if we don’t, and we have a cargo loss which is not covered by our insurance policy, we can be sued and held liable in court for the loss of cargo. Being held liable in court means most likely being required to compensate the owner of the cargo for the entire value of the loss.

Because insurance policies are contracts, they are written by attorneys and contain legalese that is hard for most of us to read or make sense of. Insurance companies understand this. So to help, some insurance companies provide some type of a policy or product summary/guide/overview or similar type document for their insureds/customers. Requesting a copy of this document can be the easiest way to find out what perils are covered or exempted within your policy. For the companies that don’t provide such a document, it is best to ask your insurance agent for a list of both covered perils and exempted perils.

To get more great business tips and trucking news visit Overdrive extra!

Deception Wreaks Havoc… again!

From time to time I am contacted by a customer about a cargo claim. This year has been no different. Some of those calls include concerns about a letter of declination for a recent cargo claim. Sad to say, my answers to those customers are usually not what they want to hear.

Insurance agents, such as myself, are required to learn the basics of what is known as contract law. Additionally we must pass a licensing exam that may include questions about contract law. The reason I point this out is because an insurance policy is actually a contract between the insured and the insurer. Contracts (the insurance policy in this case) always come with a set of terms and conditions. When one party of the contract violates a term or condition of the contract then the other party is no longer obligated to fulfill their part of the contract EXCEPT where required by law.

Disclaimer: I am not an attorney and this is not legal advice. Please consult an attorney to receive legal advice or guidance pertaining to any of the following.

When discussing commercial auto insurance, the “ EXCEPT where required by law” phrase in the above paragraph is directly related to the required FMCSA filings (form BMC-91 for the MCS-90 endorsement on commercial auto insurance policies). With the exception of brokers, everyone with an interstate authority with a MC number is required to have filings for BIPD (that is, liability to others for bodily injury and property damage coverage). So when a commercial auto policy with filings has been broken or violated by the insured (the trucking company), the only portion of the policy the insurer (insurance company) is required to fulfill by law is the BIPD coverage. That is the purpose of the filings.

Sadly, this relates back to my previous article Don’t be lured into dishonesty to reduce your insurance premiums. When the application is completed and signed by the insured, the insurance company has no reason to suspect or question the integrity of the applicant or the validity of the information the applicant provided. That is the responsibility of the applicant. Once the applicant binds (the legal term for purchasing the policy) it is the insured’s responsibility to notify the insurance company of any changes as stipulated by the policy terms and conditions. It’s been my experience that deceptive or false information is typically discovered when a claim has been filed. There are many ways in which an insurance company discovers deceptive or false information. Including:

Accident reports
Driver’s statements
Witness’s statements
MCS-150 information
IRP registrations
IFTA reports
UCR
Previous claims reports
and many, many more

A claim can be filed by either the insured or by a third party. In trucking that third party is frequently a shipper, receiver, direct customer or a broker. Once the claim has been filed, the insurance company’s adjuster begins their investigation. The investigation is not limited to the details of the claim. Meaning that the adjuster may, and frequently does, verify that no term or condition of the policy (contract) has been broken or violated.

Now that I have set the table, to put this all together lets look at an easy scenario and an understandable conclusion.

Disclaimer: This scenario is for example purposes only. It does not reflect any specific commercial auto insurance company or policy. Rather, this is a general scenario and only to be understood as informational. I strongly encourage readers to contact their commercial auto insurance agent for the terms and conditions of their existing policy and to verify they are compliant.

My trucking company, W. Joel Baker, has 1 truck scheduled on my insurance policy (which is also listed on my broker’s COI and reported on my MCS-150). My insurance company has provided the FMCSA the filing (form BMC-91 for the MCS-90 endorsement on commercial auto insurance policies). My policy only provides coverage for “scheduled autos.” This is the case for the vast majority of policies for trucking companies. Policies which only cover scheduled autos has a term or condition within that policy which requires that all commercial vehicles owned and/or operated be scheduled on the policy.

I accept a load of glass panels from my broker who I do regular business with. I haul the load inside my 53’ dry van trailer. At the receiver, I back into door number 3. When I do, I hit the dock to hard. I damaged the dock door and the load of glass panels were dislodged resulting in all the glass panels being broken.

A claim is reported to the insurance company for both the dock door and the glass panels. One of the first thing the adjuster will do is verify that the policy was not expired. Then the adjuster will review the damage to determine if the damage is covered by the policy. If it is covered, what coverage does it fall within. In my scenario, the adjuster should determine that the damage to the dock is covered by my Auto Liability Property Damage coverage (part of the FMCSA required BIPD). The adjuster should also determine that the damaged glass panels are insured by my Cargo coverage.

During the claim investigation, the adjuster will be passively verifying that I have not been deceptive with my application and that I have honored the terms of the policy (contract). Meaning that during the course of the investigation if the adjuster discovers some piece of information that could suggest I may have been deceitful, the adjuster will now investigate that information as well.

For my scenario, the adjuster calls the receiver to request additional information and pictures of the damaged dock. The receiver was cooperative and willing to assist the adjuster to help settle the claim as quickly as possible. During the call the receiver tells the adjuster “Joel and his other truck and driver are always professional and this was just an unfortunate accident. In fact, I appreciate them so much I’ll keep using them!” This compliment and seemingly innocent piece of information just put me and my business in serious financial peril and most likely put me out of business. Why? Because the receiver just told the adjuster that, potentially, I was deceptive with my application or failed to fulfill the terms of the policy by not adding my other driver and truck to the policy as required by the terms and conditions. Having received this information, now the adjuster is responsible to determine if I have violated the terms and conditions of my policy.

The adjuster uses any number of resources available to either verify the information provided by the receiver or to disprove it. The adjuster discovers that I actually have 3 commercial vehicles with IRP registrations. Only one of them is scheduled on my policy. At a minimum, I have failed to honor the terms and conditions of my insurance policy.

For my scenario, the adjuster will now determine if the insurance company has any legal obligation to settle the claim for either reported damage. Remember those filings (form BMC-91 for the MCS-90 endorsement on commercial auto insurance policies)? The damaged dock (property damage) is covered by the BIPD (auto liability bodily injury and property damage coverage to others) and the insurance company is legally obligated to settle the claim for the damaged dock because of the filings. There is no filing for cargo. As such, because of my deception, there is no legal obligation for the insurance company to settle the cargo claim. The owner of the glass panels which is most likely either the shipper or receiver, will now need to file a lawsuit against me. If I am found liable in court, I will most likely be required to pay for the entire cost of the damaged glass panels.

Additionally, because of my deception, the insurance company will almost certainly cancel my policy and disclosure of my deception will be added to my CLUE (Comprehensive Loss Underwriting Exchange) report. This action will all but guarantee that no insurance company will provide me insurance coverage (except for coverage through what is known as the high rick pool) and in doing so, put me out of business permanently.

Now, back to those customers who contact me about cargo claims. I have seen letters of declination that include some variation of “Insured violating provisions of the policy” as the reason a claim was denied. Not scheduling all commercial vehicles owned and/or operated on the policy is the most common reason I hear for an insurer declining coverage or denying a claim. Any misrepresentation by an insured could be a policy violation and potentially void coverage.

For a trucking company, if the insurance policy does not provide cargo coverage because of a failure to schedule all commercial vehicles owned and/or operated on the policy, the trucking company may be sued by the owner of the cargo. If the trucking company is found liable, they can be held financially responsible for the entire value of the damaged/lost cargo.

I can not stress this enough. Never omit, deceive, or otherwise lie to your insurance agent or your insurance company. The financial devastation, loss of the business and potential legal consequences one typically experiences when they get caught far out weigh any so called premium savings by being deceptive.

To get more great business tips and trucking news visit Overdrive extra!

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.

To get more great business tips and trucking news visit Overdrive extra!

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.

To get more great business tips and trucking news visit Overdrive extra!

Agreements and Contracts

Be on the look out for any requirement to provide Additional Insured and/or a Waiver of Subrogation by any broker or customer.

As Todd Dills and I discussed in his Just say no: One owner-operator’s approach to broker/customer demands to be ‘additional insured’, brokers and customers frequently require to be added to our policy as an additional insured. This is a covert means to gain free insurance from us as well as avoiding financial responsibility when or if they cause us bodily injury or property damage. Personally, as an Independent Owner Operator myself, I choose to never do business with any broker or customer who, as a condition in the agreement or contract, requires to be added to my policy as an additional insured.

A lesser known, but even worse, condition often included in a broker’s or customer’s agreement or contract is something called a waiver of subrogation. Many are completely unaware of the potential adverse consequences of providing a waiver of subrogation to a broker or customer. Subrogation is a legal tool used by an insurance company to recover losses it paid out to an insured (a claim) from a liable third party who is responsible for those losses. I know that is a bit wordy and complicated. So lets first start with the definition of Subrogation.

merriam-webster.com’s definition of Subrogation;the assumption by a third party (such as a second creditor or an insurance company) of another’s legal right to collect a debt or damages.

When discussing insurance, and specifically an insurance policy, a waiver of subrogation is an endorsement. Similar to a COI (certificate of insurance), the insurance carrier will provide a copy of the waiver of subrogation to the broker or customer who has requested and been granted the waiver.

The best way to show the dangers of granting a waiver of subrogation to a customer or broker is by example. So lets use the same example I used in Todd’s Just say no story.

An owner-op checks in at his direct customer’s facility. “They say back into door 37,” Baker said, and “door 37 has an overhang outside of it.” While the owner-op’s backed in, “the overhang collapses and lands on his trailer.”

The customer then claims “hey, we didn’t give you that door,” saying the owner-op misheard 37 instead of 57. “It’s not our fault. You need to contact your insurance company.”

The owner-op submits a physical damage claim to his own insurance, yet manages to provide sufficient proof to the insurance company that the failed dock overhang was in fact the one that the shipper sent him to. The insurance company says, “Hey, ACME Widgets Inc., you’re responsible. Pay up or we’ll sue” for the cost of the loss.

In the case of a broker asking to be added as an additional insured, keep in mind, too, that given possible affiliations that broker has with bigger businesses, you may be giving away more than you think.

For the sake of this article the broker or customer was not added to the policy as an additional insured. However, they did require and were provided a waiver of subrogation. Notice the bold sentences? That is precisely what subrogation is. Now if we give the broker or customer a waiver of subrogation then our insurance company can not force Acme Widgets, Inc. to reimburse them (our insurance company) for the settlement of the claim.

Why does that matter? Because that claim and settlement will now be a permanent black mark on our insurance history by appearing on both our loss runs and CLUE (Comprehensive Loss Underwriting Exchange) reports. Loss runs are a report of claims history on a given policy. A CLUE report is generally a report containing up to seven years of personal-auto and personal-property claims history and up to five-year commercial loss run histories. Insurance companies rely heavily on both of these reports when they determine if they can provide a quote for coverage and if they do provide a quote, what the premium for that quote will be.

The consequence of that black mark will most likely be an increase, which is frequently quite significant, on our future insurance premiums for years to come.

The first thing every truck owner should ask when a broker or customer requires a waiver of subrogation is why? To me the answer is obvious. Either they have a fear that they could be financially responsible for bodily injury or property damage to any truck owner they do business with or they were held financially liable by the means of subrogation and forced to reimburse an insurance company. Both of which are huge, bright red flashing warning lights signaling “ENTER AT YOUR OWN RISK!”

So for me, if a customer asks for a waiver of subrogation, my answer is the same as when they ask to be added as Additional Insured. Always, NO!

To get more great business tips and trucking news visit Overdrive extra!

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.

To get more great business tips and trucking news visit Overdrive extra!

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.

To get more great business tips and trucking news visit Overdrive extra!

Insurance Premium Refunds

Know your rights and above all, don’t let any unethical insurance company bully or intimidate you out of what is legally owed to you!

Most of us are aware that if we cancel our insurance policy we receive a refund. That refund in legal terms is known as “Unearned premium.” How much of a refund we receive and how we receive it depends on many factors. Some of those factors are:

Did we pay our premium in full?
Are our monthly premium payments current?
Do we have an MCS-90 endorsement (required for FMCSA filings) on our policy?
Did the insurance carrier file a BMC-91 or BMC-91X with the FMCSA?
Did we complete a request with the FMCSA to “Voluntarily Revoke” our authority?
If we did, what is the effect date of the “Voluntary Revocation?”

With the recent dramatic increase in fuel costs, fewer available loads and declining rates, some truck owners have chosen to either suspend their trucking operations, lease to large carriers or shut down permanently. That has resulted in an increase of FMCSA voluntary revocation applications by truck owners. For that reason I am focusing on factors 3, 4, 5 and 6.

With a long history as an Independent Owner Operator myself, I personally have voluntarily revoked my authority multiple times for military deployments (I’m a retired US Army National Guardsman) and other personal reasons. Each time, the three insurance carriers I had at those times, without any hesitation or delay, canceled my insurance policies and issued my refund with an effective date that matched the effective date of the voluntary revocation of my authority.

In contrast to my very good experience as an independent owner-operator, it has been my recent discovery as an insurance agent that not all insurance companies act ethically, timely or willingly when a truck owner requests to cancel their policy. Due to Department of Insurance licensing regulations, I’m unable to disclose the name of the insurance company that prompted this article. However, before the conclusion of this article, I will disclose the inexcusable bad behavior and the bullying tactics used by the insurance company. I will also provide information and guidance to anyone who believes they may have been inappropriately denied their full unearned premium refund by an insurance company.

Understanding when the MCS-90 endorsement can be removed from a policy and how that impacts BMC-91 or BMC-91X filings is fundamental to understanding when a policy can be canceled.

Disclaimer: I am not an attorney and this is not legal advice. Please consult an attorney to receive legal advice or guidance pertaining to any of the following.

The MCS-90 endorsement form states:

“Cancellation of this endorsement may be effected by the company or the insured by giving (1) thirty-five (35) days notice in writing to the other party (said 35 days notice to commence from the date the notice is mailed, proof of mailing shall be sufficient proof of notice), and (2) if the insured is subject to the FMCSA’s registration requirements under 49 U.S.C. 13901, by providing thirty (30) days notice to the FMCSA (said 30 days notice to commence from the date the notice is received by the FMCSA at its office in Washington, DC).”

Noticed the underlined section, because that phrase is relevant to the voluntary revocation. 49 U.S.C 13901 states:

(a) .—A person may provide transportation as a motor carrier subject to jurisdiction under subchapter I of chapter 135 or service as a freight forwarder subject to jurisdiction under subchapter III of such chapter, or service as a broker for transportation subject to jurisdiction under subchapter I of such chapter only if the person is registered under this chapter to provide such transportation or service.

Notice the last phrase, underlined above: Once an authority is voluntarily revoked it is no longer registered to provide transportation or service.

What does all this regulatory legalese/double-speak mean? Simple. A revoked authority is NOT registered to provide or conduct transportation (trucking operations). As such the revoked authority is also NOT subject to 49 U.S.C. 13901. If NOT subject to 49 U.S.C. 13901 there is NOT a requirement for the MCS-90 endorsement. No requirement for an MCS-90 endorsement means it can be removed at the insured’s (that is, the customer’s, that is, your) request without any delay. Removing the MCS-90 immediately and legally removes the BMC-91 or BMC-91X filing.

When the BMC-91 or BMC-91X filing is removed the policy can be canceled upon the insured’s request on the date the insured requests (as long as the requested date of cancelation is on or after the date the BMC-91 or BMC-91X filing was removed). Once a lawful policy cancelation request is submitted to the insurance company, the insurance company by each state’s Department of Insurance regulation is required to return (refund) ALL “Unearned” premium.

The short version – Once our authority is revoked by the FMCSA, we can request to cancel our policy with an effective cancelation date to match the date of the revocation. That request includes canceling the MCS-90 endorsement and the BMC-91 or BMC-91X filing. Our refund of unearned premium is then calculated from that date of cancelation.

What prompted me to write this article is the very disgraceful, unethical attempt by one insurance company to bully and intimidate one of my and its own, customers. First, the insurance company denied the customer the right to cancel the policy with the effective date to match the date of the customer’s voluntary revocation. I sternly objected, citing my own past voluntary revocation and unearned premium refunds (including twice by this same office from which I had previously purchased multiple insurance polices!) and the above short version of the FMCSA and DOI regulations. The underwriter said they would discuss it again with the insurance company and get back with me.

When the underwriter contacted me the second time, they made the claim that the unnamed insurance company was following guidance from the FMCSA. I immediately informed them of my and the customer’s objections. They again said they would discuss it with the insurance company.

The underwriter contacted me a third time two days later. They requested 3 things. A copy of the truck owner’s “lease agreement,” a copy of the endorsement adding the truck as an owner operator to the insurance policy of the trucking company the customer is now leased to, and a copy of the new “Non Trucking Liability” (bobtail) policy. They said if those could be provided the insurance company “may further consider.” I received and provided the underwriter with a copy of the lease agreement and a Certificate of Insurance (COI) listing all coverages (commercial general liability, auto liability, workers compensation and cargo) of the trucking company the customer is now leased to. The COI included listing the customer by name and the truck by the description and VIN.

The underwriter contacted me a fourth time another two days later. They stated that the COI showing coverage was not acceptable by the insurance company. They reiterated that the insurance company required a copy of the “endorsement” adding the insured (customer) to the trucking company’s insurance policy and a copy of the customer’s Non Trucking Liability policy declaration page.

In all the regulations I have read, Once an authority is revoked, there is no regulatory requirement for an insured (customer) to provide any of the above mentioned documents or any document to an insurance company before being allowed to cancel a policy or removing the MCS-90 and BMC-91 or BMC-91X filing.

In my opinion, this was and is an ongoing obvious attempt by the insurance company to avoid refunding the full amount of the unearned premium owed to the customer. This is absolutely shameful, unethical and completely unacceptable behavior that no insurance company should be allowed to engage in.

All insurance companies have legal counsel either on staff or retained outside the company with the services of a law firm. I am a simple-minded truck driver. Even I know and understand when a policy can legally be canceled and a refund issued. It is absolutely inconceivable that an insurance company who’s sole business is to provide insurance to trucking companies does not. I informed the underwriter that I will never again accept a quote from this insurance company to offer to my customers. Even if the quoted premium is less, I would never recommend this insurance company to anyone.

If this unnamed insurance company goes this far out of their way to bully and intimidate their customers in an attempt to avoid refunding all legally owed unearned premiums, I can only imagine how ugly they would be when a customer needed them the most… when the customer has experienced an unfortunate loss and filed a claim!

If you have been denied the right to cancel your policy with a requested effective date matching the date of voluntary revocation of your authority, and have not received your full unearned premium refund, there is a way to combat it. Contact your State’s Department of Insurance and file a complaint. Filing a complaint will enable the State DOI to begin an investigation. To properly complete their investigation the DOI may contact you for additional information. Once the DOI’s investigation is complete you can expect to be provided with the results of the findings and what to do or to anticipate next.

UPDATE:

26 days later
40 plus emails exchanged
Over 8 documents provided to the unnamed insurance company (important to note here that the insurance company was NEVER provided all the documents they had requested)
One, (understandably and rightly so) very upset customer who threatened to file a complaint with the state DOI
One stubborn insurance agent who would not allow the customer to be intimidated or bullied by the insurance company.

Success! The unnamed insurance company realized they would not be able to keep something that did not belong to them. The customer’s money (unearned premium)! Because of the relentless pressure applied by the insurance agent (me), the insurance company ISSUED A FULL REFUND of the unearned premium made effective the day after the request to cancel the insurance policy by the customer and the revocation of the customer’s authority by the FMCSA.

While this was a very painful experience for the customer and myself, it resulted in the customer being refunded what was legally owed to him. This is an excellent example of how not to be intimidated or bullied by an insurance company. It equally demonstrates the immeasurable value of having a moral, ethical and hard working insurance agent fighting for what is right.

To get more great business tips and trucking news visit Overdrive extra!

Leasing out Equipment?

Call your insurance agent first!

If you have trucks and/or trailers sitting in the parking lot and you’d like them to generate some revenue to help pay the bills by leasing them to a third party company or an independent owner-operator, you’d be wise to contact your insurance agent first. To clarify, I’m not talking here about truck/fleet owners utilizing lease-purchase agreements with drivers in this story, rather lease agreements with independent third-party companies or individuals who assume the responsibility for the safe operation of the equipment.

Take for example one of my customers. They have one truck, and when they started the business, they had one trailer. When that initial trailer suffered a mechanical issue, there was an unexpectedly long period of downtime waiting for necessary repair parts. To minimize the loss of revenue, the customer elected to purchase a second trailer and remove the initial trailer from the policy. Several months later, that trailer had finally received the repair it needed — the owner contacted me and wanted to place the repaired initial trailer back onto the policy.

They informed me they were leasing the trailer to a third party and they wanted the trailer to be insured while in the third party’s possession.

I had the unfortunate obligation to inform them that if they leased out any equipment to a third party, the leased equipment would not be covered while in the “care, custody and control” of that third party. Additionally, all the insurance companies I have access to (10-plus) would not offer the coverage they sought. Insurance that provides coverage for our equipment while it is leased out is hard to come by.

The best guidance I’ve ever received for insurance came from an underwriter. It is especially relevant if we want to insure equipment we lease to a third party. He said: “Usually, you can find insurance for anything if price is not an object. So I am not saying you can’t, just I wouldn’t know where it would be.”

Bottom line, if/when we locate an insurance company who will offer us a quote for equipment we want to lease out, it’s almost a given that the quote will be cost-prohibitive for most truck owners and especially for independent owner-operators or small fleets.

Why? Equipment leased to a third party has a much higher claims rate. Both trucks and trailers that are leased out have an increased potential to be damaged, stolen, abandoned or vandalized when compared to the equipment we operate ourselves or equipment we hire drivers to operate for us.

As a result of this reality, the insurance carriers I represent (accounting for the majority of insurance companies who insure owner operators and small trucking companies in the United States) do not provide any coverage for equipment leased out in this manner. Or, depending on the insurance company, they will only provide limited coverage. Specifically, coverage may be available only when the equipment we lease out is currently not under a lease and is in our “care, custody and control.”

What it all boils down to is if you don’t have the correct insurance coverage while leasing equipment to a third party and you file a claim for a loss, that claim can be denied. The best way to illustrate this is by using a couple of hypothetical yet realistic scenarios.

Lease agreement for both scenarios: John Doe of John Doe Trucking has signed a lease agreement for a term of 1 year with you for a 2022 dry van trailer. As per the lease agreement, John Doe provides you with a certificate of insurance which provides proof of physical damage coverage up to $50,000 for a “non-owned trailer” which is in his “care, custody and control.”

Scenario One: With three months to go on that one-year term, John Doe, without notifying you and without your knowledge, returns the trailer during non-business hours. When you return to work on the next business day you find the trailer. To your dismay you see the trailer has been topped. That is to say, the top of the trailer hit a bridge and has suffered extensive damage. You contact John Doe and he denies that he returned the trailer damaged. You then contact the insurance company on John Doe’s certificate of insurance and file a claim. The insurance adjuster for John Doe’s insurance policy notifies you that John Doe had removed the non-owned trailer coverage 8 months ago. Because there is no coverage for non-owned trailer, your claim is denied.

Scenario Two: Six months into the lease term, John Doe failed to make his lease payment. You attempt to contact John Doe but his number is not in service, the notices you sent him via registered mail are returned and his emails bounce back to you. You check the FMCSA and discover his company John Doe Trucking is “not authorized.” You then contact your local police department and report the trailer as stolen, and contact the insurance company on John Doe’s certificate of insurance to file a claim. The insurance adjuster for John Doe’s insurance policy notifies you that John Doe’s insurance was canceled two months ago. Since John Doe has no current insurance policy, your claim is denied.

After exhausting your attempts with John Doe’s insurance company to recover your losses in the scenarios above, you then file a claim with your own insurance company. During your insurance company’s adjuster’s information gathering and investigation of the claim, the adjuster discovers that the equipment the claim is for is/was leased to John Doe Trucking and was in that company’s “care, custody and control” at the time of the incident that led to the claim for the loss. Your commercial auto insurance policy (as most all do) excludes coverage for any of your equipment that is leased to a third party. Because the trailer is/was under a lease and in John Doe’s “care, custody and control,” the claim can be denied.

If you are already leasing out equipment and have not disclosed that to your insurance agent, I would encourage you to contact them today.

To get more great business tips and trucking news visit Overdrive extra!