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5 Things To Know About Trucking Insurance

Hi readers, Today I want to talk to you about insurance because let’s face it, without insurance, you don’t have a trucking business. Insurance can be a huge problem in this industry, especially for newbies, so I want to share what I have learned and what I continue to learn every day about insurance. Ready? Let’s go!

  1. Get Your DOT Number: Even if you’re not ready to get your CDL yet. No, I’m not kidding. If you know for sure that one day you want to be under your authority, just get the DOT number and let it age. DOT numbers age like fine wine. You see, insurance companies are not just iffy about new drivers with new CDLs; they’re just as nervous about ensuring new authorities or what they call new ventures. Progressive in California, for example, has no problem ensuring new drivers that have absolutely no CDL experience, but they have a very big problem and actually will not ensure a company that has a DOT that is less than one year old. So, to save any potential headache in the future, just get a DOT number, let it sit there, marinate in its glory, and blossom into a money-making or money-saving tool that you can use in the future.
  2. Check the Insurance Rating: Believe it or not, getting any insurance just for the sake of being insured just doesn’t cut it, especially if you want to get loads. Pretty much every insurance company is rated on a grading system. So, A means it’s very good, B means it’s okay, and as you go down the list, it becomes worse. So, what do these grades mean? Well, an insurance company that has an A rating means that it’s financially stable enough to be able to pay out the claims of its policyholders. On the other end of the spectrum, an F-rated insurance company has a terrible credit history of paying out claims. So why does this matter? Because when brokers give you their loads, they want to make sure that your insurance company, in case they have to file a claim against you, that the insurance company will pay. If you have an A-rated insurance company, they feel safe.
  3. Get the Right Liability Insurance Amount: So, there’s a federal requirement on one hand, and the other hand, there’s what the broker requires. The FMCSA requires you to get $750,000 in liability insurance for you to be able to operate the commercial motor vehicle legally. Great! So, you go out, get yourself $750,000 in liability insurance, start booking loads, and get rejections across the board from all brokers. Well, brokers have their requirements for insurance. Ninety-nine percent of brokers require one million dollars in liability insurance and a hundred thousand dollars in cargo, and if you’re operating a reefer, most brokers also require that you have reefer breakdown insurance. So, yes, legally you’re required to have $750,000 in general liability insurance, but if you want to start making money and transporting loads, you have to have that one million dollars in liability and a minimum of a hundred thousand in cargo.
  4. Don’t Overlook the Radius of Operation: New carriers will go out, and get an amazing insurance quote for their operations without realizing that they’re limited to a 250-mile radius. What does this mean? Well, it means that you cannot run your truck beyond the 250-mile radius. Oh, you were planning to travel from Baltimore, Maryland to the state of Washington, not Washington D.C.? Huh. Yes, this can happen and it nearly happened to me when I was first starting. That’s why I’m here to tell you, that if you’re planning to do interstate operations, meaning you’re traveling from state to state, make sure to tell your insurance agent that you are operating beyond a 500-mile radius. Yes, the price of insurance will increase, but so will your earning potential.
  5. Don’t Forget to Ask About Growth: If you’re someone who wants to eventually start growing your fleet, you have to make sure that your insurance provider allows it. Some insurance companies will not allow you to add more than two trucks a year to your fleet, while others have unlimited expansion potential. I believe that to plan for your future, you have to have as much information as possible today. So, when you talk to your insurance agent, just ask, is there a limit on expansion? And listen to what they tell you.

Now, before I leave you, I want to give you a little bit of a disclaimer. Recently, insurance companies have been changing their policies and lately, it seems like they’re changing them daily. Why? Because they’re being burned by rising claims, they are deciding to minimize their risk in any way possible. In September, just one and a half months later, I reached out to Progressive again on behalf of an acquaintance of mine trying to get him insurance for his reefer operations. Their answer to me was, we no longer insure reefers because of the amount of claims. So, my point is, that insurance companies are changing their policies with what seems to be the speed of light. So, you have to be prepared for the future. The best way to be prepared, as I mentioned in my first point, get a DOT number and let it age.

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