Commercial trucking insurance is a significant operational expense for any business, regardless of whether its fleet consists of two vehicles or two thousand. However, despite being an ongoing expense, the cost of trucking insurance is not fixed. Instead, a business’s monthly premium varies depending on its distinctive risk factors, cargo and vehicle type, driver records, and more.
Business owners owe it to themselves to recognize how these factors impact their own trucking insurance costs. This provides a stronger basis for reassessing premiums and potentially reducing them with the help of an experienced local insurance provider. We’ve gathered what you need to know about the cost of trucking insurance and how fleets of all sizes can efficiently manage their premiums with a few simple strategies.
What is Commercial Trucking Insurance?
Commercial trucking insurance refers to a bundle of policies that protect vehicles, cargo, and drivers from liability. Trucking businesses typically need multiple policy types bundled together to manage their vehicles effectively and avoid penalties; however, many fleet owners struggle to identify which policies are necessary in their fleet’s specific circumstances.
Many policies are required by law, while others, although not mandated, are highly recommended for any commercial trucking operation, regardless of the size of its fleet. Consider these core commercial trucking insurance types as the baseline coverage for any fleet:
- Primary Liability: This coverage is required by federal law for vehicles that are owned or leased, providing vehicle coverage for accidents sustained while performing business duties.
- General Liability: General liability protects the company from liability related to property damage or bodily injury from crashes involving their vehicles. This also covers vehicles for load delivery and loading dock mistakes.
- Physical Damage: Natural disasters, collisions, vandalism, theft, and other factors can cause damage to vehicles. This coverage pays for vehicle repairs or replacements, depending on the replacement costs of the equipment and the policy limits.
- Bobtail: As personal vehicles are not covered while performing company duties, company vehicles are usually not covered for incidents that occur when the vehicle is off-duty. Bobtail coverage extends commercial trucking insurance to include these instances, unless the personal use is for-profit.
- Cargo: Cargo must be separately insured from vehicles, and the cost of cargo insurance changes depending on the type of cargo. Refer to the FMCSA guidelines for more information about minimum liability requirements, which can be as high as $5,000,000 when transporting hazardous freight.
Not every fleet needs every type of trucking insurance policy. However, each policy comes with its own benefits and costs, depending on several factors that trucking company owners should note before assembling their fleet insurance bundle.
Factors that Impact Trucking Insurance Costs
These are the main components to consider when calculating trucking insurance costs and strategizing ways to lower premiums without sacrificing necessary coverage:
Cargo Type
The cost of insuring cargo depends on the projected financial risk of loss or damage. Commercial freight has a far lower insurance premium requirement than high-value cargo, such as expensive electronics, perishable items, or heavy equipment. Hazardous materials, such as chemicals or oils, carry the highest liability, as accidents involving these substances often require specialized hazardous cleanup and may lead to costly lawsuits.
Driving Records
The cost of insuring drivers also depends on their projected liability risk, which in this case is represented by their driving records, prior accidents, and DOT violations. Clean records demonstrate to insurers that drivers are lower risk, which results in lower premiums. In some cases, a poor record can result in coverage denial. Trucking company owners should prioritize safe driving records in their hiring process to reduce insurance premiums in the future.
Vehicle Type and Condition
Heavier vehicles come with higher premiums since accidents involving these vehicles often cause more extensive damage. Additionally, newer and more expensive trucks will require higher premiums to cover physical damage and theft, including specialized equipment, such as tankers. Keeping trucks in excellent working condition with clear maintenance records can offset some of the costs of high premiums.
Location and Driving Routes
Businesses in different locations will experience varying insurance premiums, even if all other factors remain the same. Trucking companies that operate along routes with a high accident rate, especially in urban areas and in states such as Florida, California, and Illinois, which have high accident rates, will cost more to insure. This also applies to companies with long-haul operations or those that operate over state lines. All of these components result in greater risk exposure and, therefore, higher premiums.
Age of the Business
Trucking businesses that have been in operation for longer than two years may pay less in insurance premiums due to their established safety history. On the other hand, a history of accidents or safety violations can offset this benefit.
Save on Commercial Trucking Premiums with Knowledgeable Advisors
Trucking insurance premiums rely on many conditions, only some of which are in the business owner’s control. At Pro Insurance Group, our experienced local advisors help trucking business owners reassess their premiums and reduce costs without sacrificing coverage.
Contact our team today to learn more about the cost of commercial trucking insurance in your area and how you can control costs while satisfying industry requirements.