The majority of insurance coverages that are written for the owner operator consist of Truck Liability, Physical Damage and Cargo. These coverages make up 95% of the insurance that you need or are required to have. This is the “big three” of insurance, for the majority of you. You can purchase these coverages individually or as a package. It seems that I beat this horse with the same stick, article after article. With that in mind, we will look at some of the other coverages that you may need or that you may be interested in getting.
For the majority of you, you purchase only those coverages that you are required to have, or that you are forced into by either your prime carrier, shipper or broker. Other coverages that may be required of you, or that you might be interested in, consist of General Liability, Worker’s Compensation, Occupational Accident Insurance and Emergency Roadside Service. So, let’s go through each of these coverages, one by one, and explain what they are, what is (and isn’t) covered, what they cost, and why you might want or need this type of coverage.
General Liability. This coverage does not cover the operation of the truck. It basically covers those actions or claims that are brought about by someone that you have caused bodily injury or property damage to that is not associated with the truck’s liability coverage. General Liability is a business coverage that covers those claims, brought against you, that are not caused directly by your truck. If you rent property to park or house your business in, the landlord will most likely require General Liability. In this situation, it would provide protection for you and the landlord if any claims are brought about by a third party (like a slip and fall).
General Liability does not cover your employees, but it would cover their actions. Forklifts and vehicles that are not licensed for the road are also covered for liability. Many construction sites and other types of sites that require heavy equipment would be covered by this insurance. Lately, I have seen many requests by operators of material handling sites that are now requiring this coverage. Since it is a business coverage, additional protection offered consists of Personal Injury (other party), Advertising Liability, Competed Operation and Medical to name a few (the “Medical” does not cover you or your employees).
Worker’s Compensation. As time goes by, Worker’s Comp has become a big issue and the states are now reexamining work-related relationships. At the present time, if you have an employee, he or she has to be covered by a Worker’s Compensation policy. Do not think that you can avoid your responsibility by making them an independent contractor. In the event of an accident, your friendship and agreement will be out the door and he/she, along with their attorneys, will consider you as an employer for recovery of their loss. The Department of Labor will pursue settlement and may take everything from you if you have a loss relating to someone that they categorize as an employee that you do not have coverage for. Look at it this way – are you willing to take the chance of losing everything that you have worked so hard to build?
Worker’s Compensation is based on payroll. Policies can be purchased with a monthly audit or estimated annual premium. Keep in mind that this coverage is auditable, and the insurance company will reconcile the wages paid to the employee for the policy term. I always suggest to my clients that they should elect to pay as they go, with a monthly or quarterly audit. That way they are never behind the curve for premium owed.
Trucking rates are generally $17.00 to $19.00 per hundred dollars of payroll. Divide the payroll by a 100 and multiply by the rate for the premium. There are programs specifically designed for the trucking industry that may provide a discounted rate. The State Fund has many different industry organizational programs that, by belonging to them, may reduce the Worker’s Comp rate. If you use an independent contractor’s agreement, make sure that you have consulted with your attorney as to the legality and strength of that agreement.
Truckers Occupational Accident Insurance. Many of you that are permanently leased to a prime carrier and required to provide your own insurance may be required to carry this type of insurance coverage. This requirement would be outlined in your agreement with the prime carrier. This coverage takes some of the stress away from the prime carrier if you are involved in an accident involving injury or death.
Truckers Occupational Accident Insurance is a policy that you or your beneficiaries have to cover any accidental loss, to include a death benefit. This would provide coverage for an owner operator much like Worker’s Compensation would for an employee. The coverage, amounts and waiting periods vary from policy to policy and program to program. Take the time to review the program with your insurance agent. Coverage consists of Accidental Death & Dismemberment, Survivors Benefit, Accidental Medical Expense, Temporary Total Disability, Permanent and Total Disability. Each covered benefit has its own benefit period, waiting period and limit. The costs vary from as low as $100 per month to as much as $250. Most of the programs that I have written range from $135 to $160 per month.
Roadside Assistance. This is not an insurance policy, but it is an agreement between you and the provider for certain roadside services. This is “Auto Club” for your truck. At this time, the programs range from $300 to $400 per year. One tow will pay for itself. The benefits consist of unlimited roadside assistance, towing (up to 50 miles), vehicle jump starts, flat tires changed, vehicle extricating/winching, lockout/key replacement service, oil, fluid and water delivery service, navigational and concierge service, and more. As in all agreements, there is the fine print. Just like the insurance policies that I have outlined above, take the time to read and understand the programs that you have purchased.
It is always better to be safe than sorry. If you hope for the best, but prepare for the worst, you will never go wrong. If you have any comments or questions, please feel free to contact me at California Plus Insurance Service, Inc. in Modesto, CA at (800) 699-7101.