Things are always changing in the insurance industry. For the past two years, I have been reporting on the increases in your truck insurance premium. I have beaten the subject to death, but the issue continues, and must be reported. This article represents my opinion and not that of the industry. I am an independent broker and I do not have any influence over rates or underwriting guidelines. Our position here at California Plus Insurance Service is that of a retailer, and we provide a product and service that is offered by the insurance company. Many companies that have provided coverage in the past are no longer offering or have changed their underwriting philosophy as it relates to the trucking industry. The following are some recent examples that have impacted the industry.
Progressive, who has had a lock on the dump truck market, has increased their rates. I am seeing many existing Progressive customers searching for reduced rates. Century National has been a player in the local and intermediate market ever since I started in the business. It has been sold to National General, and their rates and underwriting philosophy have changed significantly. The majority of our Century National clients are being non-renewed. Argonaut Mid-West, which has provided excellent rates and service to our agency, were the first recent carrier to stop writing truck business, nationwide. Stratford Insurance, effective June 1, has issued non-renewal letters to their customers. I have just received word that Scottsdale Indemnity, who has been a mainstay in the California truck insurance market for the past 20 years, is issuing non-renewal letters to many of their insurance clients. They are continuing to write truck business, but their underwriting guidelines have changed, and that will impact this book of business.
Rates are changing, and that’s a fact of the industry. Instead of going through the directory, from agency to agency, after you get a feel for the rates, find someone that you feel comfortable with and that you feel has the knowledge, and discuss ways to save money on your premium. Review your equipment values and deductibles. Never overvalue your equipment – the end result, in the event of a loss, is that the insurance company will only pay out the actual value of that piece of equipment that has sustained the loss, no matter the amount of coverage you have given it. Find out if the company will offer any deductible on the liability premium. In the case of cargo, you might want to consider increasing that deductible. To maintain some sort of insurance cost control, you might consider taking a bigger part of the financial risk by lowering your coverages.
Not all is doom and gloom. Like all businesses, companies come and go, products change and, in the case of the insurance industry, underwriting and philosophies change. New and existing players in the game are eying the industry, and they are making a concerted effort to attract those insureds that are now in the pipeline for insurance. With lower rate increases, there are some companies that are treating their renewal book with respect and are offering renewals at near the previous year’s premium. But that is the exception, not the rule, for sure.
There are basically three parts to the owner operator’s book of coverage. Liability, which for the most part, is the one coverage that dictates where the premium is going. Physical Damage, which is based on the value of the equipment. This coverage is developed by a rate (percentage). Basically, the higher the values the higher the premium. As an example, if you had a rate of 3% and it was increased to 4%, the percentage is relatively small, but the premium has increased by 25% on a piece of equipment that was valued at $50,000. This is why values are important, and why you should insure correctly. If you have older equipment that has low values, the insurance company may require a minimum premium for the coverage. You might have a $10,000 tractor, but the company wants a $1,000 minimum premium, which is a 10% rate. Cargo is all over the place – if it is included in your complete insurance package, it will be much less than if it is written as a stand-alone policy. The premium could be based as a “rate to value” or as a premium based on receipts.
When I talk about guidelines, you must understand that each company has created these in an effort to develop the strategy that reflects their appetite for the business that they want to write. If it fits, they will write it. If not, they won’t deviate from their plan.
I constantly get calls from clients that compare their premiums with their buddy’s premium. “He does the same thing that I do, and we have the same equipment and coverage. So, why is his premium less than mine?” First of all, take his side of the argument with a grain of salt. Now there are differences. These are included in the guidelines that I have been talking about. Age of the driver, age of the equipment, experience, driving records and now, in many instances, your credit score, will all affect your rate. And that is just the start. But I will take this up in a future article.
Many outside factors will determine your premiums, including your credit score, SAFER report, and the CAB (Central Analysis Bureau), just to name a few. These days, they aren’t just looking at your equipment and driving history, they are looking at YOUR history! And everything they find will affect your rates and ability to find coverage. As insurance companies continue to provide coverage to the truck and transportation industry, the appetite for the insurance industry will continue to evolve. And you should, too. If you have any comments or questions, I can be contacted through California Plus Insurance Service at (800) 699-7101.