Owner Operators looking to save money on new Motor Carrier Truck Insurance need to understand the basics.
Are you currently a Leased on Owner Operator hauling freight under permanent lease with a large Motor Carrier?
If you’re ready to obtain your DOT Motor Carrier authority, keep reading.
Truck insurance is very different for a ‘leased on’ Owner Operator vs a Motor Carrier.
The bulk of the insurance responsibility transitions from the company you’ve been ‘leased on’ with – over to YOU.
What kind of Truck Insurance is a newly-founded Motor Carrier going to require?
Your Truck Liability Insurance needs will shift from ‘Non-Trucking Liability’ over to ‘Primary Commercial Auto Liability’.
As a leased Owner Operator, your insurance obligations are small compared to the Motor Carrier who bears the brunt of the risk while you transport freight on their behalf.
The Non Trucking Liability you carry now is very narrow in coverage, designed to protect you while you’re on personal time and generally speaking close to home.
Obtaining your own Motor Carrier Authority comes with the responsibility of carrying the Primary Commercial Auto Liability insurance.
Commercial Truck Insurance Requirements for Motor Carriers begin with Federal Requirements set by FMCSA
FMCSA is the Federal Motor Carrier Safety Administration which oversees the Department of Transportation.
Vans, Sprinters, Hotshots, Straight Box Trucks and Semis transporting freight interstate are mandated by the FMCSA to have certain minimum insurance limits. These are determined based on the unit’s weight and the type of freight carried.
FMCSA Insurance Requirements for Trucks & Commercial Vans hauling general freight across state lines:
$750,000 minimum liability for large commercial trucks
$300,000 minimum liability for Cargo Van & Sprinter Insurance
HotShot Insurance, or Duallys with Gooseneck Trailers hauling cars must carry a minimum of $750,000 liability
Industry Standard insurance requirements to haul freight are often different than FMCSA minimums
It’s important to understand that while FMCSA requires the minimum limits of liability listed above, industry standards are very often $1,000,000 liability. This is due to customer request or in order to bid on certain load boards.
So you can certainly start your truck insurance policy at $750,000 to activate your DOT, but very often you will need to circle around to increase that liability limit to $1,000,000 in order to get loads.
Commercial Vans can start their liability policy at $300,000 to activate their DOT, but very often they too will circle around to increase that limit to $1,000,000.
What additional insurance is required for a new Motor Carrier
As a new Motor Carrier, you will also need to insure the Cargo you’ll be hauling.
For most trucks and commercial vans, the industry standard for General Freight is $100,000 limit for Motor Truck Cargo Insurance.
HotShot customers frequently require $250,000 Motor Truck Cargo Insurance, as the combined value of 2 or 3 cars can easily exceed $100,000.
A growing number of customers will also require you to carry Truckers General Liability Insurance.
General Liability Insurance pays for injuries or property damage you may have caused while you’re NOT driving your truck.
The most commonly requested limits for General Liability is $1,000,000 per occurrence, $2,000,000 aggregate (or per year.)
Any way you look at it, your total insurance costs will be much higher as a Motor Carrier vs a leased on Owner Operator because you are taking over the bulk of all the risk exposure.
Confusion among Motor Carriers: Should DOT authority come before insurance, or is it the other way around?
Here’s how it works:
- Apply for your new DOT authority by registering online.
- *Then purchase your truck insurance.
- The insurance company sends your proof of insurance – 91X/MCS90 to FMCSA.
- FMCSA then activates your DOT authority and you then get an MC number, Motor Carrier Authority.
*It is extremely important to get some quotes on your truck insurance BEFORE you apply for your DOT.
Establish your expenses in advance before delving into the process of acquiring your Motor Carrier Authority.
Premiums vary significantly based on the state you reside in, as well as your credit and driving record.
Given the complexity of setting up a new DOT authority and finding brand new insurance, engaging a professional Truck Insurance Broker is beneficial because they guide you through the entire process at no cost.
How does a new Motor Carrier find affordable truck insurance
There are limited insurance options for former Owner Operators looking to strike out on their own to become Motor Carriers with their own DOT authority.
Surprisingly, the insurance companies that do insure truckers have been experiencing losses for years.
So there’s only a handful of insurance providers eager to cover any transportation companies, much less new ones.
New trucking businesses face a more stringent underwriting process compared to known risks.
A former leased on ‘Owner Operator’ is calculated as a ‘New Venture Motor Carrier’ by insurance algorithms…so you need human help.
Your Professional Truck Insurance Broker is your advocate.
She knows what insurance is available for new truckers in your state.
She will guide you to secure the best premiums by asking the right questions to unlock your discounts.
Is there a new insurance company writing truckers?
Yes, and possibly in your state.
For years, Progressive has been the go to insurance provider for new startup Owner Operators and Motor Carriers.
While a few other small outliers have shown interest in new trucking startups, most have melted away after getting nailed with losses.
However, another established and well funded insurance contender has entered the marketplace for trucking.
This new commercial vehicle insurance option is only sold through select independent agents in pilot states with no current advertisements to the general public.
Their premiums have been very attractive for both new and established Owner Operators and small Motor Carriers.
Where does a new Motor Carrier find freight?
All the insurance savings in the world won’t help if you don’t have a steady supply of freight to haul.
Research where you will be getting your loads before you get your DOT.
If you have a few customers already that’s great, but typically new startups depend on a reliable loadboard to secure consistent freight.
For Cargo Vans, Sprinters and Straight Trucks we recommend the loadboard MyVirtualFleet.com.
Time is Money
…and the timing of your FMCSA application for DOT to insurance to MC authority to obtaining loads takes…TIME.
Do as much research as you can BEFORE you embark on your new Motor Carrier venture.
Talk with a truck insurance specialist from the beginning to ensure a streamlined process with minimal wasted time.
She knows all the questions and will guide you in preventing costly mistakes…and help you make new connections.
Give us a call at CIS: 330.864.1511
…we’d love to help you get started and succeed!
