Finding good vehicle insurance can be akin to traversing a mine field, especially when it comes to commercial truck insurance. Here you'll find everything you need to know in order to avoid the many pit falls and ensure you walk away with the best deal, including a rundown of what level and type of insurance you're legally obliged to purchase as well as top tips for keeping costs low.
- 1. Basic Information
- 2. Overview
- 3. Save Money
- 4. Vehicle Premiums
- 5. ICC Authorities
- 6. Why is it Expensive?
Basic information you'll need to take out commercial truck insurance
Even just getting set up with truck insurance can be a tricky process, though it'll run a little smoother if you're armed with as much information as possible. Some companies will give you a quote without the following information, but they'll need proof and certificates before you can actually get covered.
- Your current insurance policy declarations page - also known as a "dec page".
- If you don't have a commercial insurance dec page, use a current personal auto one. Alternatively, you can get your new insurer to get the dec page from your old insurer directly.
- Drivers license numbers and basic driving histories of all drivers, including speeding tickets.
- Your quote will rise if a driver is later found out to have a worse driving history than you said.
- VIN numbers (vehicle identification numbers) of each vehicle, plus a rundown of safety and security features on each truck.
- If you don't have the VIN number handy, just provide the insurance company with as much detail about the vehicle as you can, including the model, manufacturer and year.
If there's any information you can't find, most companies will give you a quote based on your estimations. However, the quote will change when they inevitably find out the facts.
Top Tip - Ignore the Industry Averages
With auto insurance, it's been widely circulated (by CNN and Insure.com) that prices vary massively between states, sometimes as much as double depending on where you reside.
While there's a certain truth to such figures, they're of very little use to the individual - even if you were willing to move across the country just to lower your premiums by a few hundred bucks, so many factors come into play that they don't make very accurate rules of thumb. Your best bet is to get quotes with a few providers with as much information as you can provide, and use those as a benchmark.
Overview of truck insurance types
While there are numerous factors to consider when insuring your truck, commercial vehicle insurance can be broken down to four main types.
- Liability insurance - this is the mandatory insurance which pays for any damage you cause with your truck. Driving without this insurance is an offense and could result in heavy penalties.
- Bobtail insurance - also known as deadhead or non-trucking liability, this insurance is voluntary and covers your truck for when you're on the road (i.e. when you're having it serviced etc).
- Motor Truck cargo - this insurance covers the load you're carrying. It isn't mandatory but some shipping companies insist on it.
- Physical damage coverage - again not a legal requirement, but this insurance covers your truck against perils like fire, theft, and flood damage.
Top Tip - Help! The Insurance Company Won't Pay Out
This can be a problem if you've chosen a less-than-reliable commercial truck insurance company (particularly when medical costs as the result of a truck accident comes into play). In a nutshell, here's the main tactic employed by reluctant insurers and how to get around it.
If you find yourself in a position where an insurer offers a lot less than what is claimed for (usually after weeks of deliberation), they might be using the Three Ds tactic: Delay, Deny and Defend. Essentially, they are hoping you will take the reduced payment for lack of a better option and will carry on performing the three Ds until you do.
The best advice it to stand your ground and make it clear that you're not backing down, and try to communicate solely through writing. In 95% of cases they'll fold, but do be prepared to sue as there is a strong precedent for claimants winning such cases.
How to save money on commercial insurance:
There are some key do's and don'ts for saving money on your insurance, but perhaps the best piece of advice is to be honest (regardless of how tempting it might be to overstate the value of your truck, or ‘forget' a speeding conviction).
- Get quotes from several companies before you commit to one, and give each of them as much information as you have about your driving histories and your vehicles.
- Shop around for insurance over the course of the year, but not too much. Many companies appreciate your loyalty with discounts, so there's no point swapping companies every few months for the sake of $20 a year.
- Ask for a three-year policy, which will fix your premium for three years.
- Increase your deductibles, or "voluntary excess". The larger your deductibles, the cheaper your insurance will be - but remember you'll have to pay it in the event of an accident or theft. There's very little sense in increasing it if you can't afford it.
- Pay your insurance up front at the start of the year, rather than paying in installments. This could save you around 15%.
- Pay by electronic money transfer to avoid costly checking fees.
- Insure all your vehicles with one company and reap the benefits. Most insurance companies give discounts or incentives to people who insure their whole fleet with them.
- Run a safety program. Ask your insurer for advice on how to put one together for your business, and you could save more than 10%.
- A written maintenance plan could save you around 5%, just because they know you're serious about looking after your vehicles.
- Some truckers overstate the value of their vehicles in the hope that they will get a good deal if anything happened to it. That isn't how it works - your insurance company will see how much it would cost to buy a similar replacement. If you say your truck is worth more than it is, however, you're likely to pay over the odds for your coverage.
- Remove comprehensive cover from some of your older vehicles. This cover isn't needed and might be costing you more than it's worth.
Top Tip - Giving off a Safe Image Pays Dividends
If you're facing a visit from an insurance agent, it's prudent to spend some extra time sprucing up your truck before an inspection.
Your semi may not be the most infallible vehicle on Earth, but even simple things such as ‘Fire Extinguisher Inside' stickers and getting rid of the old McDonald's wrappers from the dash can enhance your appearance as a conscientious driver. In turn, this could subtly influence the agent inspecting your vehicle to offer lower insurance prices.
The main factors affecting commercial vehicle premiums:
To a degree, it is possible to control some of the critical factors which govern your truck's insurance premiums. The main issues which come into play include:
- Driving record - how many speeding fines or traffic offences you or your drivers have incurred in recent years.
- Where your trucks are kept, especially overnight. Riskier areas mean higher premiums.
- Limit of liability coverage required - see below for a rundown of what you need.
- Type and radius of operation.
- Age, condition and safety features of the vehicles.
Top Tip - Don't Obsess Over Finding the Cheapest
By using the advice here, you should end up with a fantastic deal on your truck insurance. However, don't ignore quality of insurance in the hunt for a bargain.
As with most things in life, you get what you pay for and it wouldn't be prudent to end up with an insurer who makes things difficult when it comes to making a claim, no matter how cheap they seem. Be sure to read up on reviews from other customers and make as many queries as you feel are necessary when negotiating a deal before you sign on the dotted line.
ICC authorities and MC numbers
You'll need to get an MC number from your ICC authority before you shift goods across state lines. In order to qualify for one, your bodily injury and property damage insurance coverage will need to meet certain requirements based on tone tonnage of your vehicle and the loads you'll be carrying.
- For vehicles with a Gross Vehicle Weight Rating of 10,000lb or more:
$750,000 for general, non hazardous commodities.
$1m for hazardous freight except class A and class B explosives.
$5m for class A and class B explosives.
- For vehicles with a GVWR of less than 10,000lb:
$300,000 for general, non hazardous commodities.
$5m for any quantity of class A or class B explosives.
Top Tip - Give Them a Nudge
Most insurance companies will fight tooth and nail to receive your business. Make sure you give them the opportunity to do just that.
When it comes to renewing your insurance, it's worth having a casual chat with your current provider and mentioning that you're tempted to shop around. Nine times out of ten your insurer will want to negotiate cheaper premiums in order to keep your policy with them, but do make sure that the coverage is not downgraded as a result.
Why is truck insurance so expensive?
Costly insurance premiums can be the bane of the job, but there is some rationale behind prices.
- Essentially, trucks themselves are expensive. Your insurance company is at risk of having to replace your whole rig.
- Trucks are big and heavy, so if you do crash into something it'll generally do quite a bit of damage. More so than if you were in a car.
- Trucks are three times more likely to be stolen than cars, partly because they're worth more, and partly because they often contain valuable cargo.
Some final top tips
The Federal Motor Carrier Safety Administration website (FMCSA) is a fantastic resource for truckers and features all the guidelines and advice you could possibly hope for (to the point of being daunting!)
As mentioned above, it's wise to invest in safety and anti-theft equipment for your vehicle. Things such as front and side-curtain airbags and locking devices can lower premiums considerably, and a tracking device can help authorities find your truck in the event of a theft.
State laws vary, sometimes significantly - be sure to check any specific requirements or limitations with may be imposed in the area.