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BACK
TO THE BASICS
By Roland L. Enz - President,
California Plus Insurance Service, Inc.
The majority of calls
that come into my office are from those of you that are just getting
started in the ownership of a truck, or those of you that have been
away from being self employed for sometime and are now starting over.
I would like to take this time to review your insurance needs. With
this, it is important to understand how the insurance business operates
and what guidelines are imposed. The basic parts that make up the
insurance package, for the trucking industry, has remained the same
for over twenty years. Insuring limits have increased, but the concepts
remain the same.
For the most part, the insurance industry is made up of a network
of independent insurance agents and brokers. These agents and brokers
contract with various wholesale brokers for insurance products. There
are very few insurance companies, in the trucking business, that contract
directly with the agencies. The number of insurance companies that
offer coverages for the trucking industry have been declining. The
industry has been shrinking at an alarming rate. Many companies have
gone out of business and several others have initiated moratoriums
on new business. Underwriting has tightened. Your employment history,
driving experience, MVR and previous insurance history are all a major
influence in writing new or renewal business.
It is not uncommon, when going through the process of obtaining insurance
quotes, to go through a publication like this, or any other industry
publication, agency by agency, calling and giving the agents all of
your information, only to be informed by one of those that you have
contacted that the underwriter has already looked at the submission.
I have had submissions looked at by the same underwriter as many as
six times. When obtaining quotes, it’s best to contact only two or
three agencies. Beyond that you are just spinning your wheels.
Truck Liability is the primary part of your insurance package. The
coverage supports your operating authority with either the DMV or
FHA or both. Without this you do not operate. The filing is made in
the form of a Certificate of Insurance. This filing has to be made
in the same name as the policy. It is important that this is done
to prevent any delay in the filing process. Letter by letter, period
by period, it has to be the same.
Liability limits are set by law. California requires vehicles with
a GVW or CGVW over 10,000 lbs. to carry $750,000. The minimum required
by the FHA is the same. Many of you that are contracted to a prime
carrier will be required to carry even higher limits. Those hauling
hazardous materials will also be required to have higher limits. If
you have any questions contact the DMV or FHA.
In the event that a policy is canceled by either the insured or for
non-payment, the insurance company is required, by law, to give the
DMV and/or the FHA a Thirty Day Notice of Cancellation. Additional
time has to be taken into account for mail and processing.
Physical Damage covers your equipment. This is usually based upon
a percentage of value. It is important that you insure to value. In
the event of a loss, the insurance company will only pay what the
vehicle is worth. Do not overpay for your coverages. It is the same
for under-insuring. Many of you want to cover only the loan. There
are policies that have co-payment clauses in them. In the event of
a loss, the insurance company will only pay that percentage that you
have insured to. Discuss the terms of your requirements with your
agent and make sure that you understand them. It is not uncommon that
you will be required to cover the non-owned trailer that you are pulling.
This again is based upon the value insured. You may find the coverage
written in the policy with the physical damage of the tractor, or
it may show up in the cargo portion of the policy. There is a deductible
attached.
Cargo Liability, for the trucker, covers goods that you haul for others.
If you haul your own goods at any time, make sure that you discuss
this with your agent. Premiums are based on the value and the product
that you carry. If at any time you make a change in your operation,
contact your agent. Coverage can be written as a broad form policy
or specified peril policy. Review with your agent what is and what
is not covered and review the exclusions. It is important that you
insure to value. It’s too late to understand coverages, limits and
exclusions when your load is laying on the side of the road. Again,
there is a deductible attached. Some policies, when written in a package,
will provide you with only one deductible in the event of a loss that
incorporates both physical damage and cargo.
These three coverages (Truck Liability, Physical Damage and Cargo)
make up the majority of all coverages that you will encounter as an
owner-operator. Other coverages that may be required by those that
you will be pulling for may include General Liability and/or Worker’s
Compensation. Throughout the entire process of obtaining insurance,
be sure to always give current and accurate information to the agent.
Also, you should always feel comfortable with the agent and agency
that you have chosen.
Here's wishing all the best to you and yours during this Holiday Season.
If you have any comments or would like to discuss an insurance-related
topic, please call me at California Plus Insurance Service at 1-800-699-7101
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