Meet Carl, a self-employed long-distance truck driver who transports goods across varying distances, from several hours’ travel to thousands of miles. Carl owns his own tractor unit, and his job is to attach it to various trailers needing transportation to their final destinations. Once he reaches the endpoint, he detaches the tractor from the old trailer and connects it to a new one for the next job. Carl operates as an independent contractor, working with diverse trucking firms and freight brokers.
One unfortunate evening, Carl encounters an icy patch on the highway. The truck jackknifes, veering off the road and tipping the trailer over, resulting in severe damage to the cargo. The trailer is also wrecked beyond repair. Carl sustains minor injuries, is assessed and treated by emergency medical technicians on the scene, and then spends the night in a hospital for further monitoring. Thankfully, nobody else was harmed or involved in the mishap.
In Carl’s situation, multiple insurance policies come into play, covering different aspects of the accident. Each policy is held by different parties, all with vested interests. This brings us to the complexities of insurance in the world of local and long-haul trucking.
Trucking insurance is akin to commercial auto insurance, similar to what a corporation might hold for a company car or what a real estate agency might have for its fleet. It is a legal requirement for all operators of large trucks like tractor-trailers.
Full coverage in trucking insurance is divided into two primary categories: liability and physical damage.
Liability insurance protects third parties and is divided into bodily injury and property damage coverages.
Every state has its own mandated minimum coverage limits for bodily injury. For instance, New York stipulates minimums of $25,000 per person and $50,000 per accident. Limits can vary by state and can be as low as $15,000/$30,000 or even $10,000/$20,000. These limits can also scale up, transitioning to a combined single limit (CSL) around the $1 million mark, which then applies to any mixture of bodily injury and property damage up to that amount.
The minimum limit for property damage liability in New York is $10,000, which can be increased in tiers to $25,000 or $50,000. This covers damage to another person’s property, excluding their cargo, which is under a different policy.
Cargo insurance has variable limits, ranging from $1,000 up to $100 million and can apply to various modes of transport like rail, air, and sea. The policy covers the value of the goods being transported, and adjusting the limits can usually be done quickly and efficiently through a phone call to your insurance agent.
Liability insurance doesn’t cover your own vehicle or property; that falls under the category of physical damage insurance, which has two subtypes: comprehensive and collision. Comprehensive coverage is for non-collision related damage to your vehicle, like theft or vandalism. Collision insurance covers damages resulting from accidents.
Additional Coverages:
You can also opt for rental and towing coverage, as well as underinsured and uninsured motorist coverage, which applies when the other party involved in an accident lacks sufficient insurance to cover your damages.
Both independent operators like Carl and owners of large truck fleets need comprehensive trucking insurance. Also, if you own a distribution center with trailers but no tractors, you would still require specialized insurance coverage for the trailers and cargo.
Necessary Documentation and Endorsements: Two key filings, MCS-90 and BMC-91X, are required by the state when initiating your insurance policy. These validate your compliance with federal and state regulations and can usually be filed on your behalf by your insurance provider.
Additional Riders and Endorsements: Specific endorsements like Bobtail and Trailer Interchange cover unique situations and are essential for complete coverage. These riders can be tailored to your specific operational needs.
When it comes to insurance for motor carriers and freight forwarders, there are two types of filings you must provide to your state. This must happen as you are start your policy. There is the MCS-90 and the BMC-91X. After your insurance policy is opened, our insurance company files these for you.
MCS-90 – The MCS-90, is an endorsement attached to a trucker’s commercial auto policy. The Federal Motor Carrier Act of 1980 created the MCS-90. The FMCA says that each motor carrier that participates in interstate “for hire” commerce. That is, truckers hired to carry cargo across state must show proof that they have some kind of insurance (self-insurance, a surety bond, or a regular insurance policy) that equals or is greater than the minimums set by each state. You would need an MCS-90 endorsement if you own your own truck and trailer, or if you own the rig and hire independent drivers to drive them, like a trucking company.
BMC-91X – The BMC-91X shows the DOT that you have enough liability insurance to cover the increased risk of transporting cargo or people across state lines, and your insurance is provided by more than one company.
We can file both of these endorsements with the DOT on your behalf, when necessary.
There are a few other endorsements and policies you will need for your trucking operation, whether you are a single operator or own an entire fleet of tractor-trailers.
The Bobtail insurance endorsement comes into play when you are making a return journey without carrying any cargo. For instance, if you’re driving an empty truck from Texas back to New York, this type of endorsement becomes crucial. Although your initial journey with the load would be covered by your standard trucking insurance, the return trip without cargo isn’t automatically covered. The Bobtail endorsement provides protection for scenarios like trailer overturns or any incidents that may occur while you’re en route to collect another load for the return journey.
Trailer Interchange insurance is designed for scenarios where you’re transporting goods in a trailer that you don’t own. This can be the case for drivers like Carl, who pick up a trailer owned by another party, transport goods, and then drop it off to pick up a different trailer for the next trip. In contrast to carriers who own both their tractors and trailers, this endorsement provides coverage specifically for those who haul goods in a trailer belonging to someone else.
Trucking operations can be extremely varied, involving a plethora of activities such as storing cargo, attaching and detaching trailers, and loading and unloading goods. Given the multifaceted nature of the work, it’s essential to have specialized riders and endorsements that offer coverage for each specific situation you may encounter.
Determining the right kind of coverage depends on various factors. Are you the owner of the truck and/or the trailer? Do you work under a contract with a single client or service multiple clients? Do you frequently switch trailers during your hauls? These are crucial questions that your insurance agent will likely ask in order to tailor a policy that meets your specific needs.
While trucking insurance is comprehensive, it’s not all-encompassing. It’s essential to be aware of any limitations and exceptions that your policy might have. If you don’t add the requisite riders and endorsements, you could find yourself without adequate coverage. The key is to operate your vehicle responsibly and in accordance with the law, ensuring that your insurance policy is current and comprehensive.
Trucking comes with its own set of substantial risks, not just because of the valuable cargo but also due to the potential for severe accidents. Hence, drivers, vehicle owners, and business owners alike must be adequately insured. Navigating the maze of trucking insurance options can be complex, making it crucial to consult with an insurance expert to get the coverage that best suits your needs.
This article is a mere starting point in your quest to understand the myriad types of insurance endorsements and options available for trucking and long-haul ventures. Every trucking operation is unique, and therefore, a one-size-fits-all approach to insurance is rarely effective. Rather than relying solely on online platforms for purchasing insurance, consult a professional agent who specializes in trucking and business coverage to ensure you’re properly protected.
