For the past two years, it seems that I have been beating a dead horse with the same stick. That dead horse is “increased insurance premiums” which I have watched go up 10, 20 and even 30 percent. It started gradually, at first, and at this point in time, I do not see any let-up in the escalation of rates for the foreseeable future, as it relates to the trucking industry. Before I go any further, let me clarify the market in general. If you are a small fleet operator, the increases are probably in the single digits and can be justified as the normal increase or inflation of goods and services within the normal operation of your business. For this article, I will focus my discussion on owner operators and their insurance coverages.
If you are an owner operator in trucking, you fit into one of three categories: existing renewal business, new ventures with experience, and new ventures without experience. If you have issues with losses or an unsatisfactory MVR, you may want to seriously consider whether you want to remain in this trucking game or not. Within the general category that you fall into is basic underwriting criteria. That criteria is made up of qualifiers that the insurance company has set up as “guidelines” for providing coverage they will consider. That criteria is usually made up of your driving record, age, experience, radius of operation, goods hauled and age of equipment – but now there is a new wrinkle.
These days, underwriters are now also looking at the various reporting agencies, such as Safer (FMCSA), CAB (Central Analysis Bureau), and Dunn and Bradstreet when considering applications for coverage. Credit and safety ratings have become a major factor for insurance companies in determining their decision to provide you coverage – or not. Renewal premiums are going up, but for the most part, they are modest if you are staying with your existing carrier. Certainly, you can go out and shop your renewal but, for the most part, the company that you have been with will probably still be the most competitive, in regards to pricing.
Recently, some of you have been thrown under the proverbial bus. Several companies have stopped writing truck business and, in some cases, have gone out of business altogether. If you have been put into that situation or if your present agent or broker has not provided you with a satisfactory renewal, it’s time to hit the streets to look for a new insurance agent.
No matter where you fall in the mix of acquiring insurance, it is important that you have as much information available as possible so the insurance agent that you are talking with has a complete picture of what he or she has to work with. Complete information is essential and, if you are shopping, make sure that you have at least three years of “Loss Runs” from your previous insurance agents or brokers. Many insurance companies will not even provide quotes without these “Loss Runs” to look at.
“What are Loss Runs,” you ask? A Loss Run comes from your current or previous insurance company or companies and indicates whether you have had any losses or not. Your statement, that you have not had a loss, is not good enough anymore – it must be in writing from the insurance company. This must be requested by you from your present insurance agent or insurance company. The companies that you have had insurance with in the past are required to provide you with this information. All accidents are recorded on your MVR (driving record), but this report does not differentiate between non-fault or at-fault accidents, so it is imperative that you get and keep “Accident Reports” in your insurance file, because you will be asked for them when shopping for coverage.
Many companies are limiting their acceptance of new ventures. At this point, I am talking about new ventures with experience. I have companies that will not take new ventures – period. Some companies will only take new ventures that are planning to operate within a 500-mile radius. Even with experience, companies look at age and then work backwards in their underwriting guidelines that define what type of risk that they will accept. Right now, companies only want to write those risks that they feel will be profitable.
Placing business for a new venture without experience (two years Class A, 25 years of age) can be done, but the deciding factors here are: 1) can you afford the coverage; and 2) does it make any sense to get into the trucking business just to pay insurance premiums? There are specialized companies that will write this type of risk, but again, they have their own criteria and they will only write what fits into their program.
Surviving as an owner operator in the trucking industry takes a unique individual with special business skills. Don’t get conned into the purchase of a truck without understanding the pit falls of the business. The trucking industry is made up of those that make money, those that are just hanging on, and those that are going out of business (but may or may not know it yet).
You should maintain all your insurance records for at least three years or, better yet, five years. My credo is, “No accurate information, no quote.” Nothing is more frustrating than to write a policy and then have it canceled for not providing the correct information at the time of inception. Being prepared is an essential trait for owner operators, including getting the correct insurance coverage, so make sure to do it right. If you have a comment or if you would like to reach me, I can be contacted through California Plus Insurance Service in Modesto, CA at 800-699-7101.