What is Commercial Truck Insurance – Meaning and Definition
Commercial truck insurance can be defined as a type of insurance that
provides coverage to truck or large vehicles carrying cargo or goods for
commercial purposes. To put it simply, it is a kind of auto insurance
specifically designed to cater insurance needs of trucks, tractor trailers and
transporting business. The insurance type might vary based on your need, type
of truck, cargo, distance covered and the state of operation. In case of
semi-trucks, you need to buy a semi-truck insurance.
Who Needs Commercial Truck Insurance
Anyone who is using trucks for commercial purposes is required to get commercial truck insurance. Here we list who are all to get such a truck insurance.
- Owners or operators of commercial trucks or a fleet of trucks
- Those using trucks for business purposes
- Those using truck for transporting goods or cargo
- Those in truck contracting business
Difference Between Commercial Truck Insurance and Commercial Auto Insurance
There is more risk involved with trucking than a car or van as truck carry many good and merchandise. So, they need an insurance coverage that covers all aspect of their business. On the other hand, car and van can be covered under a simple auto insurance.
Trucks have to cover large distances while car or van has to remain in a particular city or area adjoining it. So, the total amount spent on truck insurance is far higher than auto insurance.
While getting hired, customers make sure that trucking company is adequately covered with an insurance. While there are no such requirements with car or vans.
Also Read - Short Term Car Insurance –Meaning, Benefits and How to Buy
Types of Commercial Truck Insurance Coverage
There are several types of commercial truck insurance coverages you can buy. So, it is important to know what coverage is right for you. Here we describe major types of truck insurance coverages.
Primary Liability
Primary liability can be defined as the basic level of insurance coverage that covers the injuries and damages done to others during an accident where you are at fault. You need to have a proper commercial drivers’ license in order to get primary liability coverage.
This insurance covers the injury and damage done to other but it has no provision to compensate for harm done to you.
General Liability
General liability coverage also doesn’t protect the right of truck driver. It means to protect damage done to others at your property or damage done to others where your truck is involved.
This insurance coverage also plays as a safeguard to your business in case of a lawsuit.
Physical Damage
Physical damage coverage provides for the damage done to your truck. This coverage is a bit expensive but it protects your truck and earning.
Cargo Insurance
Are you carrying items from one place to another? You certainly be as it is what trucks meant to do. You may be carrying items that are likely to get damaged. Here a cargo insurance guards you against the damage.
While buying a cargo insurance you should compare between different options provided by different insurance companies.
Comprehensive Insurance
It’s the insurance that protects your trucks or trailer from the physical damages done due to reasons other than collision. The insurance covers damages done due to bad weather, vandalism and theft.
This insurance covers most of commercial vehicles. You can buy a comprehensive insurance coverage depending on the type of truck you have.
Bobtail Insurance
Bobtail insurance covers vehicles that are not attached to trailers. If you are carrying a commercial vehicle that is not attached to a trailer, and if it is damaged, then bobtail insurance provides coverage to you.
What Affects the Price of Truck Insurance
While buying a truck insurance, you might come across varied prices and may be surprised why these prices vary. Here we explain what affects truck insurance prices.
Your Driving Record
Your truck insurance price will depend on your commercial and non-commercial driving history.
Experienced drivers with an impressive and established driving history pay a relatively small price than those who have started driving recently.
If you have a history of accidents, or being fined for unsafe driving, and violating traffic laws, then you may end up paying more.
Types of Trucks You Have
The types of truck you are driving or your fleet consists of also affect you truck insurance prices. Heavy, mid-sized and lighter trucks have different insurance prices. You have to pay more for big sized trucks and less for small sized trucks.
Trips You Take
The trips you often take or your area of operation somehow also affects the insurance prices. If you are driving for long distances, you are more likely to come across accidents. It’s needless to say that you will end up paying more.
State Where Your Business is Based
The cost of truck insurance varies from state to state. Some states are on the higher side of insurance while some state have lower insurance charges. If you want to operate in a state with lower insurance charges then you should look for the states with low priced insurance cover for trucking business.
Place of Storage
The commercial truck insurance prices depend on several factors. And the place where you store the trucks between the trips is one among them. The place where you park your vehicle also affects the price of truck insurance. Say, you are parking it in open space where it is prone to damage or theft then you may end up paying a high price.
Types of Cargo
The types of cargo you are carrying also affects the prices of insurance. If you are carrying items that are costlier or can cause harm during accident then you may end up paying more in terms of insurance.
Deductibles in Policy
Most companies offering insurance policy has a deductible that you have to pay upfront before insurance comes into operation. It is observed that insurance coverages with high deductible have low premium and vice versa.
What Is Covered Under the Commercial Truck Insurance
What is covered under the commercial truck insurance is a difficult question to answer. The coverage depends a lot on the policy you have taken. But here is a general overview about coverage.
Primary Liability
Primary liability is the minimum insurance requirement for any commercial truck operator or individual truck driver.
Physical Damage
This insurance coverage means to cover damages done to the vehicle of policy buyer. Under this coverage, damages done due to collision, vandalism, or theft. Having this add-on in your commercial truck insurance would prove good for you.
Uninsured Driver
Truck accidents don’t happen always due to your own fault. But sometime other drivers are responsible for it. What if it happens due to a driver who is not insured. In such a case the party at fault doesn’t have coverage to pay for the harm done to your vehicle.
In such circumstances your own insurance company will pay for the harm done to your vehicle and lost wage through the truck insurance policy. However, they may ask to file a case against the erring driver.
Reimbursing Medical Bills
You might see why this coverage in your truck insurance policy when it is already covered in the primary liability coverage.
Motor Truck Cargo Coverage
If you are a truck driver looking for the protection of your cargo from fire and accidental damage then motor truck cargo coverage could be the right inclusion in your commercial truck insurance policy.
It is more than an option before you as it is a necessity. It is a legal necessity to cover the cargo in transit. The coverage remains in action for the moment you load the cargo till you deliver it.
But there are certain limitations to it. If you are operating ice-cream tuck, garbage truck or passenger truck then you are not eligible for it.
General liability
General liability encompasses coverage for injury or damage done when the truck is not in operation. Through this insurance following things are also covered.
- Bodily injuries
- Damage to property
- Personal injuries
- Payment to medical bills
- Cost of wrong delivery
- Damage to premises
Non-Trucking Liabilities
This type of commercial truck insurance provides coverage to owners or operators who have taken a truck on lease. Through this coverage you will get paid for injuries of property damage while you are using the truck for non-commercial purpose.
Paying Rental for Non-operational Time
Your truck may not be operation for a few days after the collision or accident. But if you have taken a truck on rent the rental keeps accruing. Here you can buy an insurance name Rental Reimbursement with Downtime that pays your rental while you are offroad due to accident.
Tractor Interchange
Another coverage under commercial truck insurance is tractor interchange. Sometimes truck or trailer companies are in agreement with another company to fulfill a shipment. Through this agreement, one driver complete shipment for another company.
As in most cases it is driver who is held responsible for damage. But such a provision is not responsible with primary liability. It is why this additional insurance is required.
What Is Not Covered Under the Commercial Truck Insurance
As you have just gone through what is covered under the commercial truck insurance. Now it is the time to take you through what is not covered under a commercial truck insurance.
Drunk Driving
While some insurance providers consider the claims from drunk drivers, most commercial truck insurance companies outrightly rejects the claim. Driving under influence is punishable as per the US law.
Unlicensed Driving
If you are driving without a license and meet an accident then no doubt your claims will be rejected under the US commercial truck insurance laws. But if you have lost your driving license and there is an add-on coverage for loss of license, you may file claims.
However, it doesn’t mean you can drive without a license.
Contributory Negligence
Before getting into details let us understand what is contributory negligence in laymen’s terms. It is the condition in which both parties are at fault. You can ask from your broker about this clause of commercial truck insurance.
Most insurance companies don’t entertain claims from the erring truck drivers. But some insurance companies provides for limited bodily injuries if the truck owners have an add-on coverage.
Consequential Damage
Consequential damage/losses can simply be defined as negative effect occurred due to damage to property or equipment.
If a truck gets damaged, then general liability insurance won’t provide coverage for damaged cargo. Here you need to have a cargo insurance. If your are the owner of a truck or fleet you must understand this important part of commercial truck insurance.
Loss of Income Post-Accident
If your truck meets an accident and you face non-operational days due to it, your income might suffer. To your dismay your commercial truck insurance doesn’t provide a coverage to it. If you want to get a coverage you should buy business interruption insurance.
Claims More Than Limits
Every policy has a limit on its coverage. But there are times when the damage exceeds the policy limits. So, if your truck meets an accident and the damage goes beyond the limits, your insurance provider will only pay for the limit that has been agreed upon.
Types of Trucks Covered under Commercial Truck Insurance
Almost all types of trucks and semitrucks can be covered with insurance. Not all insurance companies cover all types of trucks. Some small trucks can be covered under auto-insurance policy. For your understanding we list most common types of trucks.
Pickup Trucks
Pickup trucks, they can be either insured through auto insurance or truck insurance depending upon its use. If you are using it for commercial purpose then you need to buy a commercial truck insurance for it. Ask your broker if his company provides pickup truck insurance.
Cement Mixers
Cement mixers are trucks that mixes cement and concrete for construction purpose. These trucks have a big tank to create the mixture. These trucks are prone to accident and it is why they need a sufficient truck insurance coverage. You should choose an insurance that provides coverages like physical damage, liability and medical bills among others.
Tow Trucks
Tow trucks are used to tow damaged, troubled, or impounded trucks from one place to another. The insurance requirement for such trucks are primary coverage liability and physical damage coverage. Ask your broker about tow truck insurance.
Box Trucks
Box trucks are used to carry goods and cargo. Such trucks can be covered with primary liability, physical damage and cargo coverage. Adding some non-trucking liability coverage would also be a good idea. Seek box truck insurance from a reputed insurance provider.
Dump Trucks
Dump trucks are used by transport companies to transport construction material to different construction sites. These insurance requirements for such trucks are as follows.
- Primary liability
- Physical damage
- Motor truck cargo
- Non-trucking liability
- Rental reimbursement
- Downtime coverage.
Tractors
These are farm truck used for ploughing the fields and harvesting farm products. They don’t require much movement. Tractors can be covered with agricultural insurance coverage.
Benefits of Commercial Truck Insurance
If you are running a commercial truck insurance you may be aware of its benefits. Here we are trying to enlist the major benefits of commercial truck insurance.
Safeguarding Your Investment
Buying a truck is a big investment and you might be concerned about its safety. Any damage done will cost you a lot. However, if you are driving on road your truck is prone to damage. So, what should be done. The best way to keep expenses on check is to buy a commercial truck insurance. With an insurance you can rest assured of several risks involved while driving on road. Accidents can happen even if you are extra careful. A commercial truck insurance can help you get prepared to handle unpleasant situations.
Keeps Inconvenience Away
Those running a truck operation business know that even smallest of issues may halt the operations. Small accidents, broken windshield and smallest violation of laws make the operation standstill. The beauty of commercial truck insurance is that it covers even smallest of incidents. With an insurance you can relax as the issue can be resolved shortly and your truck start operation soon.
Safeguarding Your Employees
As a truck owner you have several things to do. Looking for finances, ensuring smooth operations and looking after the mechanical aspects of the truck. Apart from it, there is one more thing that remains largely overlooked. What is this? It is welfare of truck drivers. What if one of your drivers got badly injured in an accident? You don’t need to worry as commercial truck insurance packages have enough provision to support injured truck drivers as well. Isn’t it a good thing?
Meets Medical Expenses
Collision and accidents can cause bodily injuries. But if you have taken the right insurance, you can rest assured that those injured from your side will get better treatment. Commercial truck insurance can foot the medical bills.
Paying for lawsuit
As your truck rams into some other vehicle or property or some other vehicle hits your truck you may find yourself into a legal tangle. You have to hire a truck accident lawyer to fight your case. You have to pay to the lawyer. Here an insurance package has provision for paying the fee of the lawyer. Check if the legal expenses are part of your insurance package.
Also Read
Truck Accident Lawyer – Win the Insurance Claim and Trial
Paying for the Lost Wages
As your truck meets and accident it takes days or weeks to resume the operations. It puts you in a serious financial strain as your business suffers. If your insurance package provides downtime coverage then you will get compensated for lost wages.
Improved Credibility
The benefits of truck insurance go beyond the visible benefits. These days businesses and shipping firms are also making sure that the truck they are hiring has a valid insurance so that their interests can be safeguarded in the hours of need. Having a commercial truck insurance boost your credentials and employability.
Cost Saving
Cost saving is another benefit of having a commercial truck insurance. If your truck meets an accident and it gets damaged you don’t have to bear the complete cost of repair as your insurance company will pay most part of it. So, it is highly useful for big and small truck companies. It is also useful for individual truck drivers as they are not resourceful enough.
Peace of Mind
Perhaps it’s the least talked about benefit of a commercial truck insurance. Individual drivers and companies who have bought insurance remain confident and at peace as there is someone to provide help in the hours of need if there is an accident and resultant downtime.
It Offers Additional Services
More than coverage, some insurance companies provide additional services also. Roadside assistance like towing, fuel service, mechanical services and tire replacement services are prominent among them. Taking it to the next step some other facilities like restaurants and stay are also provided.
Best Commercial Truck Insurance Companies
When it comes to commercial truck insurance, truck owners have various options at their disposal. Here we list some of the major truck insurance companies in the US, along with their pros and cons.
Progressive
Founded in 1937, and headquartered in Mayfield, Ohio, Progressive offers several kinds of insurance options including commercial truck insurance.
Pros
- The company offers many discounts and policy bundle options for truck owners.
- The company offers free online quotes to prospective customers.
- The insurance prices are highly competitive.
- The insurance policies are open for new drivers and different make of truck.
- This is one of the top 10 commercial truck insurance companies.
Cons
- You can’t expect personalized attention and support given the large size of the company.
- New drivers may not get much discount on some insurance policies.
State Farm
State Farm insurance company was founded in 1922 by Founder: George J. Mecherle. The company’s headquarter is situated in Bloomington, Illinois, USA. State Farm is one of the most popular companies as far as commercial truck insurance and auto insurance is concerned.
Pros
- You are buying an insurance from the largest vehicle insurer.
- The company is known for great customer service.
- Insurance prices are competitive.
- The company also provide coverage to new drivers.
- You can also expect discount on certain products.
Cons
- They don’t offer online quotes even when the world has gone digital.
- You can only buy it through an agent.
- You can’t buy a cargo insurance here.
CoverWallet
CoverWallet is now a part of Aon, a global management company that deals in investment, insurance and risk management. Aon that was founded in 1982 in Chicago, United States is now headquartered in London, United Kingdom. CoverWallet is not an insurance company, instead it is a brokerage firm where you can get commercial truck insurance quotes from multiple insurance providers.
Pros
- Since it is an insurance brokerage firm you can get quotes from several insurance providers at one place.
- It offers valuable tips on how to buy appropriate insurance cover at a reasonable rate.
- Here you can compare policies from different insurance providers.
- Using its platform, you can pay premium of different insurance providers.
- Good place for new drivers to find an insurer.
Cons
- Since it’s a brokerage firm it bears no responsibility towards your insurance coverage.
- As it is an insurance brokerage firm, buying an insurance through it may cost slightly higher than buying it directly.
Nationwide
As a truck insurance provider, Nationwide hardly needs an introduction. This one of the leading insurance companies was founded in 1926. Its headquarter is situated in Columbus, Ohio, United States.
Pros
- It commands the glory of being the largest and most trusted insurance companies.
- It ranks highly in surveys of several agencies that include Moody’s, A.M. Best and Standard & Poor’s.
- It offers custom packages, hard to find elsewhere.
- Customer services are excellent.
- It offers special packages to new drivers as well vehicles with augmented security features.
- This is one of the top 10 commercial truck insurance companies.
Cons
- You can buy it only through an agent as it doesn’t offer online commercial truck insurance quotes.
- This insurance is not available in all states of the United States.
Sentry Insurance
Founded in 1904, Sentry Insurance can be termed one of the oldest insurance companies in the United States. The company has headquarters in Stevens Point, Wisconsin, USA. It has assets of more than $23.9 billion and 4,500 employees work here.
Pros
- It’s available in all states across the United States.
- They specialize in commercial insurance.
- Customer service is excellent.
- It’s affiliated to American trucking association.
- You can avail most of the services online.
- They are highly flexible while offering insurance cover.
- A vast range of insurance options for new and experienced drivers.
Cons
- They don’t provide you online quotes.
- You can only get the insurance through an agent.
In addition, there are some other insurance companies that deal in commercial truck insurance that include Liberty Mutual Commercial, Travelers Commercial, Farmers Commercial, The Hartford Commercial, Allstate Commercial, USAA Commercial and Geico among others.
Requirement of Commercial Truck Insurance
As you go to buy a commercial truck insurance, it’s not only the money you need. You need to have an array of things. Here, we list the major requirements for commercial truck insurance.
Vehicle Details
You should keep your vehicle details ready while planning to buy a commercial truck insurance. Details like make, model, year of purchase and VIN are information your insurance provider might ask from you. This information is needed to calculate the premium of your insurance.
Driving Records
Apart from the vehicle details, insurance companies may seek your driving records to know whether insuring you could be good or a financial risk. Drivers with clean records has been seen paying less premium. On the other hand, if you have been fined or your license has been confiscated, you may end up paying more.
FMCSA Authority
Whether you are carrying the cargo independently or have delegated it to employees, you require to have been authorized to do it from Federal Motor Carrier Safety Administration (FMCSA). Once you apply for the authority you are required to get sufficient insurance.
Commercial Driver License (CDL)
Persons carrying a load of 26,001 lbs or more are required to have a commercial drivers’ license. This license is essential for getting commercial truck insurance.
How to Select the Right Truck Insurance
As you are the owner of a fleet of commercial trucks, you might be concerned about the right insurance company for your trucks. But finding it is not easy. Here we give valuable tips to help you find the right truck insurance.
Reputation of Insurance Company
You may be wondering why we have started this topic with reputation. It is not surprising. Reputation plays a great role while trusting a product of service. It is so important that one of the thinkers have gone to the extent to say that reputation is everything guard it with your life.
So, while choosing a truck insurance company you should know about its reputation. You can assess it on various counts like for how long they are into existence or what is their claim settlement ratio. Don’t trust a company for your truck insurance that has recently started operations.
Ability to Pay Claims
While trusting a company for a commercial truck insurance, you should check whether the company is financially strong to pay the claims. If the company is not financially sound then you should rethink your decision. The financial ratings of the company can be checked online. You can also get the services of a broker to check it.
Check its Previous Claim Records
Checking the previous claim record of the company is an important consideration while choosing a truck insurance company. Reputed commercial truck insurers adopt a transparent approach while granting claims. You should know what is their modus operandi for processing claim. Does your insurance agent have a role in dealing with the insurance claims. Do they work in a round the clock environment as the accident can happen anytime.
Cost of Insurance
It goes without saying that the cost of insurance is an important factor while looking for an insurance company. Every truck owner or head of the truck company understands what he wants to pay for a particular type of coverage. Saving some bucks on commercial truck insurance is OK but you should also be concerned with the quality of services. You should see whether there is any hidden fee. You should read the policy document before signing it and paying. It is essential to make sure whether the insurance holds value for money. If you want cheap commercial truck insurance then you should invite quotes from different insurance companies and compare them.
Type of Truck You Have
The cost of insurance depends a lot on the type of truck you have. Broadly, trucks can be divided into light duty, medium duty and heavy duty. Decide what category your truck falls in and select a truck insurance accordingly.
Area of Expertise
Your prospective commercial truck insurance company should have expertise in specific area you are seeking coverage for. Do they have a team of experienced professionals? Do they have an eye on changing trends in the truck insurance industry? You must seek answer of these questions.
Good Customer Service
Customer service is the backbone of any customer facing industry and insurance industry is no exception. A responsive customer service is a prerequisite for an insurance company. Imagine a situation where you have met with an accident and your insurance company is not picking your phone. While choosing a truck insurance company you should know how responsive they are.
Commercial Truck Insurance: Frequently Asked Questions (FAQs)
We have tried to give a background on all aspects of commercial truck insurance. But some aspects might have left untouched. Here we are covering them in FAQs section.
What is the cost of commercial truck insurance?
It is a difficult question to answer as the cost of commercial truck insurance depends on a lot of factors including types of coverage sought, size of the vehicle and area it operates among the others. The types of good it is transporting, age and experience of the driver and distance covered are other considerations. But on an average the annual premium for a primary liability insurance costs in the range of $9,000 to $15,000.
What insurance coverages I should by for commercial truck operations?
To start commercial truck operation, you must have a primary liability coverage. How you can get further add-ons like cargo insurance if you are transporting valuable consume goods.
How can I find a commercial truck insurance policy?
Finding a truck insurance is easy as most insurance companies are offering this insurance. What you have to do is to figure out your requirements, and then contact an insurance agent. You can contact multiple brokers, seek quotes from them and compare them. Based on this you should take decision.
Which state has the most affordable truck insurance?
The state which offers most affordable commercial truck insurance is Mississippi. But to get this you have to meet requirements of age, driving records and primary liability coverage.
In Mississippi you can
get annual cover for operating within state for $3,552 and for operating
between states for $4,664.
Which US state has the highest cost for commercial truck insurances?
As per the reports of Coverwallet – an insurance brokerage firm - the state with the highest average premium for the commercial truck insurance is New Jersey. The average premium in New Jersey is $20,763.
Do commercial truck insurance companies ask for CDL?
Yes. Most insurance companies ask for it. There are only a few commercial truck insurance companies that can provide you an insurance with less than 2 years of CDL experience. In addition to this your credit history is also needed.
Is it possible to start a trucking company without a CDL?
Yes, you can. But most insurance companies don’t insure trucking companies whose owner doesn’t have a CDL.
I am starting a new trucking company, what kind of insurance do I need?
You can start with commercial auto liability, physical damage and motor truck cargo insurance. However, a commercial truck insurance agent can better guide you on this.
Does commercial truck insurance covers personal uses?
Commercial truck insurance policy doesn’t cover personal uses. If you want to get it covered you have to add a non-trucking use liability coverage also called the bobtail.
Explain the difference between freight and cargo insurance.
There is a difference between these two. The freight insurance covers
the financial losses to the persons or organization involved with dispatch of
good. While cargo insurance pays for the actual damage to cargo.
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