Car Insurance

If you’re an owner-operator you already know the routine, because it happens every year; you sit down with an agent, select a company to insure your truck, settle on a policy that seems to meet your needs, and sign a check that guarantees coverage.

You’re right, of course — you should do your homework before buying insurance, and in an ideal world we all would. But the trucker’s world includes little spare time. So take seven or eight minutes right now to review the following points on buying truck insurance. You’ll save hours of research and probably a good deal of money as well.

Which is the right insurance company for you?

Companies that insure motor carriers, trucks, and drivers are not all the same. Some sell through independent agents, others through their own sales staffs. Some specialize in commercial truck insurance, while others sell it as one of a secondary line of coverages they offer. Some companies specialize in specific niches within the motor-carrier industry, such as large fleets, temperature-controlled equipment, or owner-operators. Some cover thousands of small customers, while others only handle a few big ones.

This intense specialization suggests your first insurance-buying decision: Buy from a company that specializes in truck insurance. Why? Because nonspecialists too often overlook specialized details. For example, a non-specialist might not know that owner-operators may have to upgrade their coverage on a temporary or single-trip basis to qualify for a lucrative back-haul delivering a commodity they don’t normally carry. A specialist would know to ask whether you need this coverage and could recommend a policy that provides it at a price an owner-operator can afford.

A non-specialist agent may be less knowledgeable about USDOT’s MCS-90 endorsement, or about the motor-carrier filing requirements of the various state regulatory agencies. Picture yourself detained late some night in a weigh station alongside the interstate as a trooper pores over your insurance papers and tells you you’re grounded because your proof-of-insurance is not on file with your home registration state.

Non-specialists, basing their underwriting decisions on auto or light truck criteria, are sometimes overly restrictive regarding the number of moving violations a driver is permitted. They can be unfamiliar, too, with the high/wide load and weight limitations in different states. There’s a good chance, too, that the non-specialist company uses adjusters who, themselves, are not trucking specialists. They may be independents who work for your insurer as needed, mixing a few truck accident investigations into a workload focused mostly on fires, or auto or industrial accidents.

Finally, specialists and non-specialists differ greatly in the way they investigate and verify claims. Because specialists understand that when your truck is out of service, you’re closed for business, they’ll get an experienced truck claims adjuster to an accident scene at 2 a.m., if needed. The adjuster will immediately take photos, interview witnesses and public safety officials, and expedite removal of your damaged unit to a qualified repair shop. A non-specialist may see no harm in waiting until the next day, after witnesses have disappeared, skid marks have faded or become obscured, and the responding officers are off-duty and sleeping. But the difference can be crucial.

Once you’ve identified several insurers who specialize in trucking, compare how each scores on what can be called the “Five Fundamentals:”

* Experience: How long has the company been in business, and how long has it specialized in truck insurance?

* Financial strength: Does the company have sufficient reserves to cover many expensive claims at one time? (Note: “Reserves” are cash set aside exclusively to pay claims.)

* Coverage: What kinds of contingencies and damages are covered by the basic policies? Do these policies offer options that could be adapted to your needs?

* Cost: What is the cost of basic coverage? What is the cost of additional coverage or optional types of coverage? (Costs will vary by region, commodity, radius driven, and other factors, but should be comparable to other bids for your business.)

* Value: What is the total value in time, money, and convenience–of the products and services provided? Are their claim procedures easy to follow? Are their employees knowledgeable, helpful, and accessible? Do they respond promptly when you need help? Do they provide skilled assistance in reducing accidents and passing DOT audits? If so, are there additional charges for such assistance? Placing a total value on the policy and your relationship with an insurer takes some effort, but you owe it to yourself to take the time so you can get the best value for your money.

Price: It’s not as simple as it looks

Normally, when we buy a product we look for the lowest price — if all other things are equal, we take it. The problem with that approach to buying truck insurance is that it can be hard for the layman to tell whether “all other things” are, in fact, equal.

Here are a few pointers:

* Carefully examine any policy that appears to be substantially lower in cost than those offered by competing companies. Compare not just the prices, but the terms, conditions, and extent of coverage. A low price usually means you’re buying less coverage, but the policy language may not be clear about just which benefits you’re giving up in order to save costs.

* Be aware, too, that insurers differ about how they adjust pricing to attract business. Some companies will use price cuts to get business they are not strongly committed to keeping. Particularly in a “soft market”–some companies will cut prices drastically to build immediate cash flow, only to leave the business later when they realize they’ve cut premiums too low to pay the submitted claims. Or the company may decide that to continue to write truck insurance, it must impose a steep rate increase on its customers.

* Always remember when it comes to truck insurance premiums, the old saying still applies: if it sounds too good to be true, it probably is.

Get free help— rely on the ratings

Three of the Five Fundamentals are relatively easy for a trucker to research: the length of the company’s experience, the extent of coverage offered, and the cost. But it takes a professional accountant, well-versed in insurance, to determine whether an insurance company is in good financial health. Even the best-informed laymen cannot be expected to have the training and skills needed to determine this for themselves.

Fortunately, much of this legwork has already been done for you. Nationwide rating companies continually monitor and report on the financial strength and customer service performance of insurance carriers. The A.M. Best Company assigns ratings (ranging from A++ to F) for financial strength, while Standard & Poor rates claims-paying ability (on a scale of AAA to R) and solvency (BBBq to R). Similar ratings are available from Duff & Phelps, Weiss Research, and others. When interviewing an agent, ask to see copies of the latest research reports from these impartial rating services. You can also examine them at a public library or view them online.

Why is financial strength such an important factor when you select an insurance carrier? When a claim is made, the insurer must have enough cash reserves to pay their policyholders and other claimants in a timely fashion. If an unusually large number of claims are submitted within a short period of time and the insurance company’s reserves fall short, the company may find itself with more claim obligations than it can cover. At worst, an insurer can go out of business still owing thousands of dollars in claims.

Normally, such “distressed’ insurers are forced into receivership by state insurance regulators. Claims are then paid by state guaranty funds or by another insurance company that buys up the defunct insurer and pays off its obligations. But these payments may come only after months or, perhaps, years of waiting, an ordeal few truckers can afford to undergo.

Coverage

Knowing what coverages to buy and how much to pay can be difficult if you don’t know what to look for or what questions to ask.

Some of the coverages you buy are required by USDOT regulations. You must, for example, carry liability insurance to pay for damage you cause to another’s property or for medical care given a person for an injury you caused. Other types of coverage required by state authorities, or by shippers, include physical damage to the cargo and worker’s compensation. If you are an owner-operator, you normally do not need worker’s compensation because you have no employees, but you may need accident and health insurance as well as disability coverage on yourself as a self-employed professional.

You will also need uninsured-motorist (UIM) coverage and personal-injury protection (PIP), as well as bobtail insurance to cover accidents that occur during “non-trucking use” when your truck is not hauling a revenue load. Unless you own a terminal, you will not need terminal insurance, but if you maintain your own vehicle you’ll want to insure the garage where you do the work.

If you’re an owner-operator, the coverages you need will depend on whether you run under your own authority or under someone else’s authority on a permanent or trip lease. If you’re operating under your own authority, you’ll need:

* Primary liability coverage (this includes UIM and PIP)

* Physical damage coverage, which also covers your electronic equipment, tarps, chains, etc.

* Cargo coverage, which insures the contents of the trailer, temperature-control machinery, and other appliances or accessories that keep cargo secure. Coverage should be tailored to the type of commodities hauled and the requirements of the shipper. “All-risk” cargo coverage normally is not available.

Optional coverages include occupational health and accident insurance (pays daily benefits for equipment if you’re laid up, which could be applied to truck payments), general liability, and garage liability.

If you operate under another’s authority, don’t accept an assignment until you have read the lease carefully to determine who is responsible to provide insurance coverage. If you don’t have a copy of the lease, demand it. In most cases, the motor carrier to whom you are leased will carry primary liability coverage. However, few leases carry physical damage coverage for the owner-operator. You will need this coverage because you may be liable for damage to trailers you pull but do not own.

While examining the lease, keep in mind a common insurance scam that bilks owner-operators out of thousands of their hard-earned dollars. Some motor carriers purchase a truck policy for one or two units, obtain an MCS-90 endorsement, then hire out more drivers on the same policy. Technically, these drivers are uninsured. In the event of an accident, claims may be paid by the insurance company nevertheless because of the MCS-90 endorsement. However, the insurer can then recover claims costs from the owner-operator if the motor carrier “disappears,” as often happens. There should never be any doubt as to whether the owner-operator is completely covered, but this question can only be answered by you. Insist on verifying the coverage terms in the motor carrier’s policy before you accept the load.

Cost

Insurance is an intangible product. You sign the policy, then sign the check and hand it to the agent–and get only a promise in return. Of course, as insurance people will tell you, you’ve bought “peace of mind.” But your premium ought to buy you more than that–it ought to buy you superior service. If not, you may find the cost of managing your relationship with your insurance company just as expensive as the coverage itself.

Consider, for example, the time and effort you’ll spend complying with the insurance company’s rules and regulations. A policy that appears cheap may turn out to be expensive once you calculate the time on the phone for a simple answer, or time lost because the company failed to send proof-of-insurance to the states in which you have business. Can you obtain a history of losses on your account, or correct an error in a document? Is the claims process simple and thorough, or does it rob you of precious work or rest time getting shuffled from desk to desk? “Low-priced” insurance policies carry hidden cost penalties that do not become apparent until you file a claim, request documentation or ask for assistance from a company trying to save on labor costs.

The hidden factor in cutting costs: you

Owner-operators cannot afford to self-insure. An insurance policy is a must. The cost of such a policy can vary widely–anywhere from $2,500 to $10,000 per year, depending on your age, the type of vehicle you’re driving, and the type and range of commodities you expect to haul during the life of the policy.

One of the most critical factors in determining your premiums, however, is your driving record. That means that minimizing losses is the single best way for you to keep your premiums down. Different insurers treat driving records differently, so before you choose an insurer, ask each company how much credit you will receive when you reduce losses or continue loss-free.

Insurers can base premiums on various criteria, such as gross receipts or mileage, depending on individual needs. But the rate you end up with under any schedule of discounts is basically dictated by your driving history.

People commonly try to reduce their auto insurance rates by increasing the deductible. However, that is not recommended for truck coverage since the deductible applies only to property damage and will, consequently, reduce your costs only marginally. (You may, however, want to discuss this option with your agent if you feel your particular circumstances warrant an increase in deductible.)

You also may want to consider a “continuous policy” in which the time-consuming renewal process is eliminated. The annual premium may be adjusted, but the same coverage package continues automatically. Your carrier may also offer premium payments on an annual, semi-annual, or quarterly basis. (Be sure to ask whether any finance charge or service fee is added if you choose to exercise one of these options.)

Insurance people see themselves as “selling peace of mind.” And, while that may sound like a cliche, it’s true–and it’s important. Although nothing tangible changes hands when you sign the policy and turn over your check, something dramatic happens nevertheless: you’re free of worry. If you should have an accident, you’re covered.

And if you’ve bought the right policy from the right company, you have something else as well–the security of knowing that even if you never have an accident, your agent and your insurance company will be there with the information, services, documents, and answers you need, whenever you need them, to help keep you rolling and profitable.

Everybody who has ever held a job knows well that your salary isn’t what you actually earn. By the time Uncle Sam withholds his income tax and Social Security, your paycheck is a pale shadow of the robust sum you had imagined.

Auto insurance can have a similar effect on the true cost of a new vehicle. You’ve crunched the numbers and figured out how, by eating only ramen noodles for the next 60 months, you can swing the monthly payment on that hot new 4×4 you’ve been eyeing. Then along comes the insurance man to rain on your parade.

Insurance for many new trucks and SUVs can be quite costly. That’s because, although you’re probably careful with your pride and joy, other truck and SUV drivers as a group haven’t established an enviable driving record. Worse yet, the bad guys covet your wheels as much as you do: As a class, trucks are stolen much more frequently than typical cars.

Cars also tend to cost less to buy than most trucks, and insurance rates directly reflect a vehicle’s value, as the insurer will have to replace your ride if it’s totaled or stolen. Further, large vehicles can cause more damage in a collision-to other vehicles, passengers, or structures. Bottom line: Trucks cost more to insure than cars.

That said, within the truck category (or any other, for that matter) insurance rates vary dramatically. Insurance company accountants are very good at counting their beans and therefore know exactly how much every make and model is likely to cost them in claims. So forget what you’ve always heard about insurance companies not liking red vehicles or two-seat cars; they set rates based on your exact vehicle and your particular driving history.

Antique car insurance is different from collectible car insurance and it is important that the owner know the difference. The key difference that makes antique car and antique truck insurance less expensive than collectible car insurance is that these will NOT be driven on a regular basis. While collectibles are allowed to be driven with limitations, the antique insurance will not allow as much mileage as the collectibles. This means they are meant for display only, not for use in running errands or to work. There are specific details that will specify the actual mileage limits per year.

Storage of these vehicles is specified in the policy. Very specifically they are to be kept in a locked garaged area. Zipped covers are not acceptable in most antique truck insurance policies as adequate protection. It is important to follow the guidelines in the policies since they are such unique vehicles. Antique car insurance is based on the understanding that these vehicles are irreplaceable. The age of these vehicles has reduced the number of actual running models and the company will place special coverage on these cars only if they still carry some inherent value. The upkeep of the vehicle is crucial to the coverage.

To be considered an antique car or truck, and to obtain antique car insurance or antique truck insurance, the age of the vehicle must be at least 30 years old. The companies have an easy guideline with this policy to determine the status. The inherent value of the coverage will then be weighed on the condition of the vehicle and the owner’s planned use of the antique vehicle.

It is quite ironic how humans place values of property and people weighed by their age and condition. How glad we should be that God doesn’t differentiate the human value by such factors! It was recorded in His Word: “For ye are all the children of God by faith in Christ Jesus. …There is now neither Jew nor Greek, there is neither bond nor free, there is neither male nor female: for ye are all one in Christ Jesus” (Galatians 3:26-28). It doesn’t matter when any of us are born, all are given the same offer of salvation, Christ Jesus’ insurance policy against death and eternal destruction. It’s great to be an antique or a newer, faster model. But it doesn’t change the fact of salvation for all nor make any one more important or less important to receive more coverage or less coverage when hard times come, or even to walk through the pearly gates.

Catering truck insurance

Not many agents/brokers write catering truck insurance as they don’t have a contract with companies that will write that type of coverage. There’s a certain type of knowledge needed to write the risk with catering truck insurance properly. There are basically (2) categories of operators:

They are, hot trucks and Mobile Food Preparation Vehicles (MFPV), which allow food to be prepared as customers order, and cold trucks, Industrial Catering Vehicles (ICV), which sell only prepackaged foods.

The hot trucks have at least a driver, (which is usually the taxpayer), and a cook, who may be a family member. The cold trucks in most instances, only need a driver since it is a self-service vehicle, however, they are not limited to just the driver.

The average cost of the trucks is approximately between $50,000 - $100,000. The trucks may be owned by one individual, serving as the owner/operator, or several individuals may own a fleet of trucks and lease them to various individuals to operate; or they can be individually owned and then leased to another individual to operate.

The drivers/owners of food trucks are linked to specific commissaries stocking and storing their trucks overnight. The commissary is a wholesale supermarket where the drivers are able to buy food and supplies in bulk. The trucks are assigned to a commissary and are required to park their vehicles there overnight for washing, unloading, and morning loading of food.

The drivers purchase their goods for sale at the commissary, although you may discover that outside purchases were also made. The Department of Health Services have very strict requirements with regards to the purchase of food for sale. Food must be obtained from an approved vendor, approved facility, or approved commissary.

The owners and operators of the vehicles have to meet certain requirements for various governmental agencies. The owners are required to register their vehicles with the Health Department. All vehicles must have a valid County Health Permit.

Vehicles are usually inspected annually in order to renew their license by the Health Department. The license, showing the name of the owner, must be on display in the vehicle or on the persons of the driver.

Selling any goods, wares, or merchandise on public streets and sidewalks on foot or using a pack, stand, or push cart is illegal without the approval of the Department of Building and Safety.

There are also stringent health codes that must be followed and enforced to operate safely and within the guidlines of the dept of health in order to be able to operate the food business. State laws also require catering truck insurance.

When you rent a car in Europe, liability insurance is normally included in the rate. Fire and theft insurance may also be included, but it’s always a good idea to ask.

What typically isn’t included is insurance against collision damage. To protect yourself against having to pay for car repairs (or even a brand-new car) in the event of an accident, you need a Collision Damage Waiver or “CDW.” This is available from three sources:

Rental agencies

The rental agent will offer you a Collision Damage Waiver when you pick up your car. In a few countries, such as Italy, you may be required to take the CDW. The cost isn’t cheap–typically 10 to 25 euros or U.S. dollars per day–but buying it from the rental-car firm is simple and offers peace of mind. You may also want to inquire about theft insurance, (LDW), which is usually mandatory with Italian car rentals but is optional in most countries.

Credit-card companies

Some credit-card companies provide free collision insurance for rentals charged on their Gold or Platinum cards. Unfortunately, the coverage isn’t always as good as it seems, and many card issuers no longer protect overseas travelers or limit their protection to cheaper cars.

To make matters worse, you may be required to authorize a deposit on your credit card up to the replacement cost of the vehicle, which isn’t very practical if the car’s value is more than your credit-card limit. If you get into an accident, you’ll normally have to settle up with the rental firm, then seek reimbursement from the credit-card company after you get home.