What actions to take to reduce soaring insurance premiums and stay in business.
What do I do now to stay in business?
This is not a topic I enjoy or take any pleasure in writing about. However, by doing so I hope to help any aspiring or new truck owner to avoid making decisions that later result in financial hardship and loosing their business.
Recently I’ve received an increase in calls from truck owners who are struggling to keep their businesses afloat. All blame the increase in their insurance premiums as the cause of their situation. Most believe it’s a result of their greedy xxxxxx insurance carrier who doesn’t care if they go out of business or not. As an Independent Owner Operator myself, these calls have been especially difficult for me. While honesty is always the best policy and it’s the only way I know how to help, it’s not always well received.
All of those who have called and asked me for help share many things in common. Still in their first year of business, they have:
- Grown their fleet of trucks and hired drivers (usually includes at least 1 family member).
- Failed to vet drivers and only hire drivers with clean or at least good MVR’s.
- Not limited their claims by dismissing drivers whose actions resulted in a claim(s).
- Waited until there are few options available to be able to remain in business.
Sadly most who find themselves in this circumstance seldom recover and make it to their 2nd or 3rd year in business. All would have benefited had they read From Independent Owner/Operator to Small Carrier and avoided this unfortunate circumstance by implementing the strategy outlined in my article What goes into calculating your trucking insurance premium rate?
Unfortunately none of those I have spoken with are aware that the their business decisions has caused the consequences they find themselves in. Put another way, it’s not the fault of greedy insurance company. Rather, as difficult as it is to hear, it’s self inflicted consequences by the unaware business owner’s decisions.
After I have finished that very difficult part of these conversations, next is the inevitable question from the truck owner “what do I do now to stay in business?” I always tell them the good news is there is a path to stay in business and lower your insurance costs. Few however are receptive to what is necessary to save their businesses and lower their insurance premiums. All to frequently it is because it involves downsizing which most are unwilling to do. Each and every time downsizing is not an option it is always because downsizing means telling a family member they can’t work for them any longer. I’ve had fathers and sons, brothers and brothers-in-law all tell me that downsizing wasn’t an option because of a family member being a driver. This is why few recover and save their businesses. Instead they elect to attempt to continue business as usual to a very unfortunate and completely preventable demise.
Additional changes to your insurance policy that are far less impactful in the amount they reduce your premium can still be effective tools to utilize to save money. These changes include:
- Reducing your radius of operation.
- Locate and Operate your business outside of regions with high insurance premium rates such as New York City, Los Angeles, Chicago, Miami, etc.
- Removing coverages that are not required such as General Liability, Hired Auto, Non-Owned trailer, etc.
- Adjusting the commodities you transport in favor of non-hazmat, less-risky, lower cost and nominal risk of theft commodities.
- Removing commodities such as:
- All hazmat
- Shell fish
- Replacing with commodities such as:
- Canned goods
- Non-alcoholic beverages
- Agriculture products such as grain & feed
- Removing commodities such as:
- Increase your deductibles to the maximum amount offered by the insurance company.
If you’re truly in crisis mode, the first step to reducing your insurance cost is to identified and take advantage of all/any of these 5 listed options. Then, concurrently, downsize your operation to one truck, one trailer and yourself as the driver if you’re not already there. This will provide you the best possible opportunity to save your business.
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