What Types of Insurance Does a Trucking Business Need?

Truck drivers cross miles of interstate every day, keeping supplies moving and trucking businesses on the go. Arguably, a trucking business’s most significant hazard is a car accident. However, according to the American Trucking Association, truck drivers have fewer car accidents than other motorists. Regardless, good insurance coverage is essential for trucking businesses to protect from all their risks, including potential car accidents. So, what are some of the risks?

Related: Guide to starting a trucking business

What Are Some Risks for a Trucking Business?

Some of the risks and hazards that a trucking business will encounter include

• Car accidents
• Damage to a customer’s goods
• Employee injuries
• Fire damage

Car Accidents

Trucking businesses constantly have drivers on the road, meaning the business has an increased risk of car accidents that lead to liability claims and physical damage. Although car accidents can happen for wide-ranging reasons, some of the more common causes of accidents for trucking businesses include the following:

• Extended driving hours, which leads to driver fatigue
• Poor visibility, especially during dark hours 
• Traffic and reckless driving, especially of other automobile drivers
• Inclement weather 
• Construction and detour routes
• Distracted driving

Aside from collisions, a trucking business also has other risks that cause physical damage, leading to costly repairs of the trucks and any specialized equipment. These hazards include fires, blown tires, overturns, and uneven or oversized loads. 

Damage to a Customer’s Goods

Trucking businesses that transport goods for clients are typically responsible for damages or losses to the customer’s items in their care. Losses to a customer’s goods can be expensive for a small business, especially valuable or perishable items. For example, if a customer’s items are lost, stolen, or damaged during transport, the business is responsible for repairing the items or reimbursing the client. 

Damage or loss to a customer’s goods can happen due to some of the following causes:

• Cargo theft
• Car accidents
• Loading and unloading
• Shifting of unsecured loads
• Failure to follow handling instructions
• Refrigeration failure

Employee Injuries

Employees of trucking businesses have several hazards. For example, employees may suffer injuries from slips, trips, or falls. They may also develop muscle or joint strain injuries from repetitive motions. 

Employees operating trucks or assisting with loading and handling goods face additional injury hazards. For instance, truck drivers can be seriously injured in motor vehicle accidents and suffer bodily injury or illness from the long hours of driving. More specifically, the lack of activity and long hours of driving can lead to back, neck, and knee injuries.

Injuries such as muscle strain, back strain, and crushed limbs can result from loading and unloading heavy items. Additionally, mechanics may suffer cuts and abrasions while fixing or maintaining the trucks. 

Fire Damage

On-site fire damage is a major concern for the trucking business’s structures and items. Trucking businesses, especially long-haul carrier trucking businesses, likely have on-site storage that may contain flammable objects. Additionally, on-site mechanic shops and refueling stations have an increased fire risk. For example, fires can start from sparking equipment, faulty wiring, or smoking. If a fire occurs near flammable or explosive substances, such as fuel at a fueling station, the trucking business could face an extensive, fast-spreading fire.

Storage can also introduce a fire hazard as overly stacked items can block sprinkler systems, preventing the fire suppression system from operating correctly. Further, stored items add to the fire load as large quantities of flammable objects contribute to a fast-spreading fire that can be challenging to extinguish.

What Types of Insurance Should a Trucking Business Consider?

Trucking businesses have numerous risks that threaten the financial well-being of the business. However, insurance can protect against the business’s hazards and prevent the trucking business from experiencing financial harm. Some of the commercial truck insurance policies that a trucking business should consider include the following coverage options:

• General liability insurance
• Commercial automobile insurance
• Inland marine insurance – motor truck cargo coverage
• Workers’ compensation insurance
• Property insurance 

General Liability Insurance

General liability insurance (also referred to as public liability insurance) is usually required by most states. This insurance covers property damage and physical injuries resulting from day-to-day operational activities, excluding road accidents. 

Commercial Automobile Insurance

A commercial auto liability insurance policy includes two primary lines of coverage. The first is liability coverage that protects the business from bodily injury or property damage claims that result from at-fault accidents. Second, an automobile insurance policy covers physical damage that occurs to company-owned vehicles. 

Liability Insurance: Between medical bills, ambulance rides, and vehicle damage, at-fault accidents can create expensive lawsuits. However, liability coverage in an automobile policy offers insurance for third-party bodily injury and property damage. The policy also covers legal defense costs and settlements as well as rental reimbursement to cover downtime. Uninsured motorist coverage can also be added to a liability policy and covers injuries and damage caused by an uninsured driver or a hit-and-run incident.

Physical Damage Insurance: Physical damage insurance covers company-owned trucks and trailers for collisions and non-collision perils, called comprehensive insurance. Some of the hazards covered under comprehensive insurance include

• Falling objects
• Hail
• Wind
• Vandalism
• Theft 

Inland Marine Insurance – Motor Truck Cargo Coverage

Despite the term “marine” in the policy’s name, an inland marine insurance policy insures goods that are transported by land. For trucking businesses, motor truck cargo coverage is an essential type of inland marine insurance policy that insures a customer’s goods while in the care of the trucking business.

A motor truck cargo policy offers coverage for customer’s goods against several perils, including the following:

• Fire 
• Theft
• Collision 
• Water damage
• Refrigeration failure

Workers’ Compensation Insurance

A workers’ compensation policy offers coverage for employee injuries that happen at work or during work operations. Although many states require this coverage for businesses with employees, the coverage is important to have even when it’s not required. This is because the policy not only offers benefits to assist injured employees but also protects the business from potential lawsuits.

An injured employee may accrue substantial costs following a work injury, such as medical bills and lost income. Fortunately, a workers’ compensation policy helps cover many expenses, including

• Medical payments
• Lost income
• Ongoing rehabilitation care
• Disability income
• Funeral expenses

Commercial Property Insurance

A property insurance policy covers business structures and items for loss or damage. For example, covered perils included in most property insurance policies include the following:

• Fire
• Water damage from leaking pipes
• Wind or hail
• Falling objects
• Vandalism
• Theft
• Explosion

A property insurance policy covers structures up to an agreed policy limit that is determined by the rebuilding cost of each structure. In a total loss, the policy would cover a complete rebuild of the structure for one of like quality, minus any deductibles. 

The property insurance policy covers business-owned belongings up to an agreed policy limit. Business-owned items include furniture, appliances, supplies, materials, equipment, and inventory. Typically, items are covered on either a replacement cost basis or an actual cash value basis that subtracts depreciation.

How Much Does Trucking Business Insurance Cost?

The risk exposure and coverage amounts for truckers determine insurance costs and can vary significantly depending on a number of factors. For example, an owner-operator with no employees will have lower risk exposures than a large commercial trucking fleet and, therefore, have lower coverage amounts and insurance costs.

Some of the trucking business’s factors that influence risk exposure and coverage amounts include

• The value of trucks needing insurance, especially custom and high-value trucks
• The number of employees on the payroll
• Employee training and licensing
• The value of customer goods in the business’s care
• Fire suppression systems 
• Any past or current lawsuits or insurance claims

Considering that costs fluctuate, the best way to determine the cost of a commercial truck insurance policy is to contact an insurance company for a quote. To ensure that you get the best coverages for a fair rate, gather multiple quotes to compare coverages, bundle discounts, and pricing.