Insurance broker/Company help

I don’t know how you’re going to have a active authority and be leased to a carrier. Maybe @Ridgeline @wichris @brian991219 know of a way.

 

To have your authority you must have liability in your name. You can't use the "carriers".

 

You have been given bad information by your insurance carrier because they don't understand what you are trying to do. Perhaps I can help clear it up for you. I am a former trucking fleet owner and current compliance specialist. I deal with authority applications daily.

Yes, they are technically correct -as long as your truck is leased to your current motor carrier you have coverage to satisfy the FMCSA minimums, however what they are not explaining is that the current insurance you have is excess insurance, usually called non-trucking liability. This is for things like physical damage or other losses to your truck. It could be compared to comprehensive or collision coverage on a private car.

The insurance that the motor carrier you are leased to has is public liability (which is not a true insurance industry term but is what FMCSA calls it) and that insurance covers the commercial auto portion for all the trucks that operated under their US DOT number. That insurance is tied only to their US DOT number and can not be shared with other motor carriers to be used to satisfy the FMCSA insurance requirements. This is what pays for injury and loss when you are hauling under dispatch from them.

Progressive and the other insurance companies are correct, you will need your own stand alone public liability policy before you can get your own authority. Your insurance company must file a Form MCS-90 with the FMCSA before your authority will be granted. This must be your own insurance policy, by federal regulation the motor carrier (which would be you in this case) is required to provide this insurance.

This insurance is very expensive for start-up motor carriers so your quotes are not out of line. Your base state of Pennsylvania is not helping, although the cost is similar anywhere in the US. The reason you are having sticker shock is because you are used to paying your part for one truck in a fleet of many. Keep in mind, the premium for public liability is not rated on a 1 for 1 basis, meaning it does not simply go up X amount for each truck. The base rate is the base rate.

The insurance companies do not care if you are 1 truck or 1,000 trucks -the public liability portion is the same since by law they must cover anything that happens under your US DOT number, even when you let trucks not declared on the policy use your DOT number and they have a wreck or things like that. Yes, this has happened when some small companies have decided to lease on their friends without fully understanding how insurance works, then they have a wreck or other loss. It is not always intentional fraud, but the insurance companies have to be prepared which makes the base coverage for public liability very expensive.

This type of insurance gives the insurance company large exposure so they charge accordingly.

Please don't read this as picking on you, I just want to make a general statement from years of owning my own fleet and having leased drivers that I have helped get out on their own. Because the coverage that a typical lease operator pays for is so cheap many are surprised when they try to get their own authority. The expensive insurance, public liability, is usually covered in full or only a small portion of the cost is charged back to the lease operator, as part of the rate that the company keeps from your settlement.

In reality, it is cheaper to take the hit for a few months as a new carrier and haul the crappy loads instead of paying $20k for insurance you do not need when leased to another motor carrier just to try to artificially age your MC number. The other side to this is many brokers look at activity, not just age, and expect to see some inspections and other activity associated with your DOT/MC number. If you were still running as a lease operator all that activity will not show on your number, it will show on their number instead.

There is no simple work around to have active authority without the full rate insurance. You need to decide if you want to be a lease operator or a motor carrier as there is no in-between. You may also want to read the terms of your current contract as many have no compete type clauses that forbid you from owning a motor carrier while leased under their authority. Trucking companies generally do not like to help others complete with them and they could claim you will try to solicit their customer base for your own trucking company while leased to them.

One last thought on insurance, make sure you are also pricing enough cargo to cover the types of cargo you plan to haul. Usually companies like Progressive have very low cargo limits, if any at all, since the FMCSA does not require cargo for anyone other than household goods movers anymore.

Sorry I don't have the news you were looking for. I wish you much success. Being a true independent is frightening, hard work yet very satisfying. Enjoy the trip and stay safe.

 

You need a liability coverage for your mc to get active, you don't have it now, because you are leased, your company has it.
What you have, is only bobtail insurance, so when you shop for new quotes, tell the agents, that you only need liability coverage, because you already have bobtail with another insurance company