First, truckers, tractors and trailers are insured as commercial equipment and do not automatically receive the extended coverage of a private auto policy. Electronics, loading equipment, load securing equipment, rent refunds and personal belongings are insured differently and are not automatically covered.
Commercial motor liability insurance is pretty simple. If a trucker has ICC authority, an application is made to the Feds for proof of financial responsibility. Submissions ensure a trucker meets federal agency (ICC) requirements. Uninsured / Under Insured Motorist is also helpful for a trucker who was injured by a vehicle without insurance. Medical payments come in handy when someone gets injured in and on your truck.
Cargo insurance covers the trucker’s responsibility for other goods he is transporting. There are 3 different forms or policies: Named Perils and Theft which has narrow coverage, Broad form which adds some coverage to the basic form and All Risks coverage which provides cover for all causes except where indicated by language excluded from the policy. Regardless of the shape, there are certain covers a trucker would need. Truckers should purchase cargo cover that reflects the highest value of the goods they are transporting. Some policies have a co-insurance clause that may limit coverage limits if you are transporting cargo in excess of the limit insured under your policy.
1) A refrigerated carrier would need refrigeration equipment malfunction or refrigeration equipment breakdown insurance to cover the damage from freezing or spoilage that would result if their refrigeration unit failed. Remember to find out if the policy will cover a temperature control device adjustment error. Most reefer policies only cover equipment failure or malfunction.
2) A flatbed van should have a wet guard or notice in case its cargo is damaged by rain or snow. Most policies have a tarpaulin notation that limits coverage to loads that are properly covered. Sometimes, through no fault of the trucker, a tarp can become damaged or come loose, causing damage to the cargo that may not be covered unless a wet cover is added. Cover for tarpaulins, chains and ties is also desired to replace stolen or damaged tying equipment not otherwise covered.
3) A dry van should ensure moving a load is covered. In this type of use, larger and longer trailers are used and load securing devices can fail. These cases are rare but do occur.
Every trucker should have earned cargo coverage on their cargo policy. This coverage pays for lost revenue if he is unable to deliver his cargo due to insured damage. Disposal and cleanup coverage for a loss should be at least $10,000.
Physical damage coverage generally consists of repairing the tractor and trailer in the event of covered damage. This coverage is insured for a declared value. The value set for the equipment is the responsibility of the trucker. The insurance company pays a claim based on equipment of the same quality. That means market value. So the trucker should make sure that his values are correct. Remember, unless your policy includes a combined deductible, you will pay a deductible for each unit. Towing is also only for covered damage, not disability or breakdown. Many policies pay losses and include towing and storage limits in the advertised amount of the vehicle. So if you have damage and a large towing or storage bill, the policy limit may not cover your entire loss. Towing insurance can and should be purchased in addition to physical damage. Make sure your towing policy covers disability and roadside assistance.
Electronics such as cell phones, televisions and radios are generally not insured unless you purchase additional coverage. Your personal belongings are also not covered unless specifically covered by the policy, but may be covered by your homeowners insurance. Rent refunds are not automatically covered either.
I have been insuring truckers for many years and know that the emotional attachment to their trucks can be very strong, but insurance companies see them as a revenue generating device. The older they are and the more kilometers they have, the less money they are worth. Improvement questions also come into play. Tractors run many more miles than cars and have a longer lifespan. The average tractor drives between 115,000 and 135,000 miles per year. Some insurance companies take this into account when replacing an engine or suspension part after an accident. If the part life is expected to be 500,000 miles and you have a wreck at 250,000 miles, some insurance companies will only pay half of the part’s replacement value because half of the part’s expected life has been used. If an agent doesn’t know how their insurance company handles this up front, it can be hell.
General liability refers to incidental liability risks that are not covered by the commercial vehicle policy. This is good coverage for car transporters that can drive vehicles to a location after unloading them from a trailer. Also a trucker who uses his own forklift to load and unload cargo.
Workers Compensation is required for injuries to truck drivers or their employees. Occupational accident insurance is a cost-effective alternative with certain advantages and disadvantages of coverage. It’s always best to see a truck insurance specialist to explain all of these coverages and get advice on specific types of truck risks.
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