Risky Business
2020 Owner Operator Truck Insurance #1 Question & Solution
In 2019 the number one Commercial Auto Insurance question asked by new Owner Operators and Motor Carriers was…
“What’s the Best State for me to set up my Truck Insurance?”
Oh how I wish it were that simple:)
BUT:
CCJ: “During the last four years, truck insurers have paid out 12 percent more in accident claims than they brought in from policy premiums, says Tommy Ruke, founder of Motor Carrier Insurance Education Foundation (MCIEF).”
So it stands to reason that insurance companies are understandably cautious when they take on new commercial auto trucking for hire accounts.
In 2020, even if you try to set up your business based on prior data in “Best States for Truck Insurance Rates” you’re not going to get anywhere fast without understanding these three facts up front:
1. First, you need a physical address where you actually live in that state (along with proof that varies from insurance company to insurance company.)
2. Second, your vehicle(s) also need to be registered and garaged in that state (along with proof that varies from insurance company to insurance company.)
3. Third, your driver’s license needs to be in that state, and in most cases all other drivers as well.
Solve these three issues before attempting to establish a new DOT number, or you’re giving yourself an unnecessary and expensive headache.
Insurance underwriters like stable insureds with good track records that help predict safe future risk exposure. When insurance companies receive multiple quote requests from the same entity with different scenarios their “gamer radar” goes off which tends not to be to your advantage:)
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Instead, if you’re a new Owner Operator…wherever you live…please stay put.
Start your new commercial auto insurance policy, establish a steady stream of freight and drive safely for 2 years.
In whatever type of unit you drive, you will have SO many more insurance options after 2 years.
For now, here’s a few attainable tips on how to get started as a brand new Owner Operator/Motor Carrier in 2020:
- Quick cheat sheet on the “4 Keys to Owner Operator Truck Insurance”.
“Start the year right” by Linda Caffee is a great way to establish an organizational method to keep you on track for 2020 and beyond. (Linda is a proficient long haul driving professional as well as an excellent writer who frequently shares interesting personal experiences of life on the road.)
Don’t do it alone. Unless you are very savvy with the FMCSA, hire a professional to handle your permitting, authorities, licensing and registrations. Their knowledge will also help you grow safely…with the additional bonus of years of freight experience and advice on what works and what doesn’t!
Set yourself up a game plan for freight…here’s great advice on your “Freight Balancing Act” by Jimmy Nevarez, Owner of Angus Transportation.
Understand your overhead…what it costs to be on the road…what you CAN control and NOT control. DAT always offers some excellent links.
Still thinking about controlled overhead and profit…get quick inexpensive snack ideas by The Crafty Trucker so you’re not dropping unnecessary money at the truck stop!
MOST importantly, spend time on SAFETY. TeamRunSmart is an enjoyable source to really start learning and thinking about all kinds of things that can happen on the road. Become familiar with companies like JJ Keller and their Transportation Course Library.
When it all seems overwhelming, get inspiration and tips for independent life on the road from seasoned successful driving pros like Henry Albert!
Once you’ve essentially trained for 2 years on the road and you honestly wish to relocate:) …then enlist the help of a Certified “TRS”, Transportation Risk Specialist who will help you with your commercial auto insurance options as an established entity versus a new start up.
…And that’s also when you WILL be able to get that coveted “Hired Auto” endorsement so many Shippers require.
Two years in is also a good time for you to start to grow your company if you so choose. So keep that in mind as you track your current overhead and profit.
Safe growth IS encouraged by some truck insurance companies. But they’ll be looking for you to immediately enlist your drivers as responsible professionals vs driving drones.
Stay in front of this upcoming trend: We’ll see more insurance companies request direct communication to drivers via handheld screening authorizations for background checks, tests and safety. (Sometimes a picture is worth a thousand words…click here then scroll down for image if you’d like to see one.)
When drivers buy into their own safety responsibility there are multiple advantages to the Motor Carrier. From less paperwork for you and more solid SMS scores, insurance companies want to enlist entities where they have the most clear data.
Even if you never plan to add additional trucks or drivers and choose to operate as a one man band, transparent communications directly to the insurance provider via hand held devices will be a key factor of controlling truck insurance premiums in this new decade.
Shelly Benisch, TRS, CIC
Commercial Insurance Solutions Inc.
