Whether you are a truck driver working as an owner-operator or an independent contractor or for a big company, you have to deal with trucking insurance. A trucking insurance policy is required for all carriers and cargo. Besides, certain minimum amounts must be maintained to comply with federal regulations. Recently the government indicated that minimum coverage levels might be increased across the board. Unfortunately, this is a price that most trucking companies can’t afford to pay. Learn more about the cost of trucking insurance for truck drivers and find out how you can reduce your expenses.

Ensuring the Trucking Industry

In the trucking industry, there are several types of drivers. You can work as a company driver for a bigger carrier or as an owner-operator. Owner-operators and independent contractors are working independently, which means these drivers are responsible for insurance. The cost of trucking insurance covers equipment, truck drivers, and freight hauls. As a driver paying for your coverage, you are tasked with increasing freight rates for your shipping customers. Unfortunately, when you do this, your customers are more likely to go to the next trucking business. This is where small-to-medium trucking businesses struggle and end up folding. 

Now, take a look at the Census data on the trucking industry. The US Census data released in June 2019 shows that the largest number of trucking businesses is those with one to four employees at nearly 90,000 carriers. These workers are the ones who are more likely to struggle the most with trucking insurance costs. The primary issue with insurance expenses is that carriers have to pay for these out of pocket. In addition, carriers and owner-operators pay for any premium costs when accidents or cargo incidents take place.

Average Cost of Insurance

The question is whether the expense comes from higher premiums or incidents that are filed and claimed. And according to the ATA data, it doesn’t look like it is a premium problem. The American Trucking Associations (ATA) published a report on the operational expense of trucking. According to the data for 2017, truck insurance premiums were an estimated $0.075 per marginal mile. This is an increase from $0.054 in 2009 and $0.064 in 2013. In that same table, the ATA shows a curious figure. 

There has been 0.0% of a change in the motor carrier costs for truck insurance premiums. That would indicate that there has not been an increase in the cost of trucking insurance coverage. Overall, the cost of trucking insurance is at 4 percent of the total motor carrier costs as of 2017. This has been the same since 2009 with an increase to 5 percent in 2015 and 2016. 

What do all of these statistics and percentages mean? According to the ATA, the cost of commercial trucking insurance is complicated. There is not a single factor that can be taken for the golden standard when determining insurance costs. Trucking companies pay rates for insurance based on truck driver behavior, crash history, safety ratings with the CSA, and the haul types. The average cost of commercial trucking insurance was 7.5 cents per mile in 2017. This is for typical or standard freight, also known as general freight. For cargo that is specialized, the average cost is increased to 8.8 cents per mile.  

For example, in the category of “Other” that is used to reference tanker and OS/OW (oversized/overweight) freight. This is considered specialized hauls that have more cost associated with the freight services involved in transportation. An oversized freight load is going to cost more money per mile based on the additional expense for paperwork in receiving oversized loads permits. As a result, the total value of the freight is greater than the typical value of cargo. This results in the complication of trying to place a price tag on the premium of insurance.

Minimum Coverage Amounts Increased

Then you have the insurance premium minimums that must be maintained for regulatory compliance. Right now, the minimum coverage amounts for liability are as follows:

  • For-hire freight haulers over the road $750,000 minimum
  • For-hire and private carriers for hazardous waste including oil $1 million minimum
  • For-hire and private carriers of all other hazmat hauls $5 million minimum
  • For-hire passenger carriers transporting fewer than 15 people $1.5 million minimum
  • For-hire passenger carriers transporting more than 15 people $5 million 

This is one area that is of concern in the trucking industry. For owner-operators, fleet owners, and independent contractors who are working on their own without a major trucking carrier for support, it is difficult to pay for this amount of coverage. 

Regulation for the trucking industry involving insurance coverage is on the table. According to the Federal Motor Carrier Safety Administration (FMCSA), the agency is considering increasing minimum amounts based on inflation. The FMCSA states, “Larger general-freight carriers already voluntarily hold more insurance coverage than the minimum, but a large number of smaller carriers could be affected by higher insurance requirements above $1 million.”

Lowering Rates for Truck Drivers

The key to lowering trucking insurance rates comes with finding ways to better secure the cargo and equipment. Through technology like truck and trailer tracking systems, you are able to provide customers with real-time monitoring to ensure the security of freight. This also helps cut down on the incidents of theft and damage to cargo. While you may not be able to reduce the minimum coverage amounts, you can reduce the chances your freight is damaged or stolen resulting in those costly claims.