Covered Or Not?

DecInsPicThe focus of this article is primarily offered to those of you that are owner operators and, more specifically, to the owner operator that provides only a power unit to the company or companies that you work or pull for. You can travel to any city or town and see trucks parked, with and without trailers, along with unattended trailers, on the street, in empty parking lots and in open fields. Is coverage offered in these situations? I will attempt to shed some light on the subject.

Insurance has its limitations, and when you make the decision to purchase coverage, you may not understand what is and what is not insured (covered). Your basic package usually consists of Liability, Physical Damage and Cargo. Each coverage has its own exclusions and conditions, which are often intertwined, and coverage for one part of a loss may not equate to the total loss.

The picture here of the unattended, non-owned trailer is typical of a potential loss that may or may not include all three of the coverages that you may think are covered. I’ll break down each coverage as to a potential loss that is not covered. Keep in mind that the trailer is covered on your policy as a non-owned or unidentified trailer. If you own a trailer or trailers, coverage does not exist unless they are specified on the policy.

Does Liability coverage exist? Third party liability is that part of your insurance package that provides coverage to the other party that has sustained damage or bodily injury from an action that you are legally obligated to pay a compensation for. It does not provide physical damage for the trailer. In our example here, liability only exists when the trailer is attached to the power unit, therefore, in this example, liability coverage does not exist.

You may consider the risk of anything happening small, since the trailer is not in use on the road. But, I have had a significant loss, involving the exact same situation, as the above example, when children were playing under the trailer and the landing gear collapsed. I have had pull trailers, parked on an incline, that rolled into parked vehicles. There is a potential for a claim, even if the trailer was not involved in an incident, but was considered to be a “participant” or “contributing factor” in an accident or close proximity to one. In this case, the possibility for a loss does exist.

What about Unidentified Trailer Physical Damage? This type of coverage only exists when the trailer is attached to the insured power unit and is not covered when it is detached. Your insurance policy only has the obligation to pay a loss as it is outlined in the policy.

How about Cargo coverage? As I have said many times before, cargo coverage is the most contested coverage that is offered to the trucker. There is more dissension in settling cargo claims than with any other type of coverage. If you only take the time to learn about one part of your insurance policy, this is the area that you should make yourself familiar with. Take the time to familiarize yourself with the exclusions and conditions of the coverage.

In our example here, a covered cargo loss would not exist in any event. Coverage only exists when the trailer is attached to the insured or named power unit on the policy. As you can see, the example here has the possibility of having a loss that covers all three areas of your policy. It is too late to look for coverage in your insurance policy, that does not exist, when you have been served a summons for a loss that you have a responsibility to pay damages for. This is typical of a majority of policies that are written for the owner operator. And, like most things, the issue may or may not be able to be mitigated.

Instead of buying your insurance coverage by choosing the policy that has the lowest premium, you should take the time to review your purchase and the coverage with the insurance agent that you have decided to work with. By understanding the coverage, it may change your thought process on how you manage your business. Price and price alone should not be what you make your decision on. Your purchase represents not only the premium that you are paying, but it also represents the potential payout of a million plus dollars by the insurance company that is providing the coverage to you. Would you take those odds?

As I indicated before, cargo claims create the most problems of any of the trucker’s losses. Coverage may not exist if the attached trailer is unattended. Coverage may only exist if there are signs of a forceful entry. Coverage may not exist in the event of a partial load loss. For those of you that haul refrigerated product, it is imperative that you understand the potential for claims being denied. And always insure to value – don’t be caught under-insuring, and don’t over-insure, either. Regardless of your coverage, your insurance company may only pay a prorated amount to the total loss. As you can see, we have only scratched the surface of the agreement that the insurance company has contracted to you by the purchase of the policy.

Many shippers or brokers may require additional coverage to provide protection for those potential areas of loss that they feel need to be addressed. Coverage may be available at an additional cost from your existing insurance company, or it may need to be purchased elsewhere. It is imperative that your insurance agent knows and understands what you are required to provide for your shipper. It is your responsibility to provide him/her with the correct information that is needed to satisfy those requirements. If you have any comments or questions, I can be reached through California Plus Insurance Service in Modesto, California at (800) 699-7101.

About Roland L. Enz

Roland L. Enz has specialized in insurance for the truck and transportation industry for over 30 years and he has written exclusively for 10-4 Magazine since 1995. Roland is currently the president of California Plus Insurance Service, Inc. in Modesto, California.