Truck Topics

Understanding Insurance: FAQ

Associate Editor Gary Addis

Having never been an owner operator, like most consumers, I know only as much as I need to about the insurance business. How much an individual's coverage ought to be, that sort of thing.

I do, however, know how to ask questions, and who to ask. In this instance, I queried several insurance agencies re: truck insurance. Alas, only one agency responded; Northland Agency was very helpful, and I appreciate the time its representative, Mr. Schueffner, dedicated to answering my questions.

INSURANCE FAQ:

1. Unfortunately, in several states insurance coverage is still not required of private vehicle owners. Since commercial vehicles are regulated by the Federal government, I assume that in all states heavy trucks are required to carry at the very least collision insurance.

True or false?

Answer: Commercial vehicle insurance is regulated at several levels. Some of these vehicles may not fall under federal jurisdiction. Jurisdiction is determined by a number of factors including whether a vehicle is a for-hire private carrier or a leasee of a private carrier; whether it is traveling intrastate or interstate; what commodity is being carried; weight class and normal use of the vehicle. [To be more specific] I think you're talking about the typical long-haul interstate carrier which does need insurance.

In fact, insurance filings are required by each state in which they travel. At the weigh stations the filings are inspected, and a trucker can be shut down if the forms are not filed properly.

This is one of the jobs of an insurance carrier: to get the proper filings in place for the proper states, guaranteeing that the trucker has appropriate coverage as required by that state.

2. Explain for us, please, the different levels of insurance available to truck owners, an idea of the rate plans available, etc. It can be confusing to even experienced owner operators.

Answer: This could be an entire course in truck insurance, and in the end, it comes down to the individual trucker's needs. This is why it's so important to deal with an established, reputable insurance agency which can examine the specific needs of the individual trucker. Typical coverages offered by Northland include:

Truck liability Physical Damage for vehicles Cargo coverage for loads being carried General liability, including for injuries claimed in an accident Property damage to cover buildings and contents

Coverage packages vary widely from insurance agency to agency. Even within a single company one can customize one's limits, peril coverages, and deductibles. All choices will affect the premium. For this reason you cannot compare two quotes and assume you're looking at identical coverages. Then, too, it's incumbent upon a good agent to help the trucker establish other coverages, such as workmen's comp, excess liability, employment practices liability, health insurance, etc.

A good agent will help his clients to understand just what his needs are because every individual trucker's needs vary according to his own unique situation. Insurance is not a commodity that can be plucked from a store shelf. When you're buying insurance, you're not buying clothes off-the-rack; it should be tailored to individual needs.

3. By how much may an individual's rates be reduced if he maintains proper records, and follows the recommendations of his agency?

Answer: Every insurance carrier has its own rating plan for coverages. Any cost savings generated by following agent's recommendations must be discussed with the agent.

Something which might affect our rate structure might not be mirrored in our competitors' rates. However, it is clear it is in an agency's best interest to offer the lowest pricing for a particular set of risks that the agency feels the fleet or individual trucker deserves, based on its safety record.

We have a number of company loss control reps nationwide who do nothing but work with our insureds and their safety practices to help reduce losses. It's a win-win situation if an insured does maintain good business practices, as it helps secure better pricing and reduces losses for both parties.

4. Are passengers coveraged by a trucker's injury insurance? How about personal belongings carried in the truck?

Answer: Passenger coverage varies by company, and even by type/age of the passenger. This is why so many fleets prohibit the carrying of passengers in their trucks.

Always, the trucker should ask his agent before allowing any passengers to determine whether his carrier will allow them. Coverage for a driver's personal belongings is available, but often not covered by his company's insurance package.

The trucker needs to know such things, so he definitely needs to ask the appropriate questions of the appropriate people.

5. Why does a driver need bobtail insurance if his truck is covered when connected to a trailer?

Answer: If an owner operator has primary insurance in his own name, then specific bobtail coverage is usually not necessary. However, if the owner is under lease, operating under someone else's policy, his coverage is in force only when he is conducting the business of the policyholder.

In this circumstance, the leased owner operator would not be covered while he is using the vehicle for his own purposes. A kind of policy rider, non-trucking liability coverage, exists to cover this gap. Again, here is where a few minutes' conversation with the trucker's agent can provide specific recommendations based on existing coverage.

WHAT YOU WISH ALL TRUCKERS UNDERSTOOD ABOUT INSURANCE:

Firstly, and most importantly, both company drivers and owner operators must understand that all insurance companies and insurance coverage packages are not the same.

Both the rates and the quality of the coverage varies widely from insurance carrier to carrier, and even from one agent of that company to another. Lowest price is not always the best price.

Apples are not oranges. Know what you're buying, and what you're comparing prices to. Too often, the understanding is gained only after a significant loss is suffered.

Insurance agencies do not have any options in this: they must adher to the terms of the policy that was purchased. If you only purchased $100,000 coverage with a $10,000 deductible, expect to pay out of pocket expenses of $10,000.

If you wish more coverage, or a lower deductible, you must purchase it. You cannot expect your agent to "doctor" the figures or the dates after an accident has occurred. If he/she did so, either the entire agency or the individual agent would be guilty of fraud against the insurance company.

Service does count.

Ask a prospective agency what they can do for you. Often, a good agent can secure discounts or in some cases totally free services for a client the agent believes will be with him awhile.

Seek a reputable agent; someone who has good communication skills. Truck insurance is complex. You're not going to buy it over the Internet and be happy!

Also, it's unlikely that you'll be satisfied with a be-all, do-all, cover-all agency. Find yourself a reputable insurance agency that speciliazes in truck insurance. And once you've established a good working relationship, stay with him, and he will stay with you, through thick and thin.

Don't be afraid to ask questions. Too often insureds believe they are adequately covered, when the agent might have folded to pressure applied by the insured who might mistakenly demand the rock bottom price. Keep in mind that rockbottom pricing may allow your business to sink when you need help staying afloat.

At Northland, we provide not only field loss control, we provide other services like reflective striping for all the vehicles we insure. This is important. One "under-ride" accident not the fault of the trucker, can be a $1 million claim! Northland aims to become a working partner with its clients. We help you all we can, because we succeed only if you succeed.

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