First, truckers, tractors, and trailers are insured as business equipment and do not automatically receive the coverage extensions of a personal auto policy. Electronic devices, cargo equipment, cargo securing equipment, rental reimbursement, and personal property are insured differently and are not automatically covered.
Commercial auto liability is pretty straightforward. If a trucker has ICC authority, a presentation of proof of financial responsibility will be given to the feds. Submissions are what makes a trucker compliant with the federal authority (ICC). Uninsured or underinsured motorist is also helpful for a trucker who has been injured by an uninsured vehicle. Medical payments come in handy when someone is injured in and on your truck.
Cargo insurance covers the trucker’s liability for other goods being transported. There are 3 different forms or policies: Designated Perils and Theft, which has restricted coverage, Comprehensive Form, which adds some coverage to the basic form, and Comprehensive Coverage, which offers coverage for all causes, unless excluded by the contract. language in the policy. Regardless of the form, there are certain coverages that a trucker would need. Truckers must purchase cargo coverage equal to the higher value of the goods they are transporting. Some policies have a coinsurance clause that may limit coverage limits if you are transporting cargo of greater value than the insured limit on your policy.
1) A refrigerated carrier would need Refrigerator Malfunction or Refrigerator Breakdown coverage to cover freezing or spoilage damage incurred if their refrigerated unit breaks down. Remember to find out if the policy covers an error in setting the temperature control device. Most refrigeration policies only cover in case of breakdown or malfunction of the unit.
2) A flatbed carrier must have a moisture coverage or endorsement in case your cargo is damaged due to rain or snow. Most policies have a tarpaulin endorsement that limits coverage to loads that are properly covered. Sometimes a tarp can become damaged or come loose due to no fault of the trucker, resulting in cargo damage that may not be covered unless moisture coverage is added. Coverage for tarps, chains and riggers is also desired to replace stolen or damaged tying equipment not otherwise covered.
3) A dry van carrier would be advised to ensure that the movement of a load is covered. Larger and longer trailers are used in this type of operation and cargo securing equipment can fail. These cases are rare but they do happen.
Every trucker should have obtained freight coverage on their cargo policy. This coverage pays for lost income when you are unable to deliver your cargo due to a covered loss. Removal and cleanup coverage for a loss must be at least $10,000.
Physical damage coverage is generally to repair the tractor and trailer in the event of a covered loss. This coverage is insured on an established value. The value set for the equipment is the responsibility of the trucker. The insurance company will pay a loss based on equipment of similar quality. That means market value. Therefore, the trucker must ensure that his values are accurate. Remember that he will pay a deductible for each unit unless your policy has a combined deductible endorsement. Also, the towing is only for a covered loss, not for disablement or breakdown. Many policies pay for losses and include towing and storage limits on the declared amount of the vehicle, so if you have a loss and a large towing or storage bill, the policy limit may not cover your entire loss. Towing coverage can and should be purchased in addition to physical damage. Make sure your towing policy covers decommissioning and roadside service.
Electronic devices like cell phones, televisions, and radios are generally not covered unless you purchase additional coverage. Your personal property is also not covered unless specifically covered in the policy, but it may be covered by your homeowners insurance. Rent reimbursement is also not automatically covered.
I have insured truckers for many years and I know that the emotional attachment to their trucks can be very strong, but insurance companies see them as equipment used to generate income. So the older they are and the more miles they have, the less money they are worth. Improvement issues also come into play. Tractors get many more miles than cars and have a longer life. The average tractor travels between 115,000 and 135,000 miles a year. Some insurance companies take this into account when replacing an engine or suspension part after an accident. If the life of the part is expected to be 500,000 miles and you have an accident at 250,000 miles, some insurance companies will only pay half the replacement value of the part because half the life has been used expected from the parts. If an agent doesn’t know how his insurance company handles this in advance, he may have a lot to pay.
General liability is for incidental liability exposure not covered by the commercial auto policy. This is good coverage for car carriers who may 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. Workers’ Compensation is a low-cost alternative with certain coverage advantages and disadvantages. It is always best to consult a trucking insurance specialist to explain all of these coverages and to get advice on particular types of trucking risks.
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