Have you heard of the “two-year rule”? It’s an unofficial policy many insurance markets have towards truckers dictating that they won’t provide insurance until a driver has at least two years of experience. This leaves new truck drivers in a difficult situation; how do you get insurance when you’re just starting out?
In this article, we spoke with Rose Peña from BTP Insurance to discuss the types of coverage you need, why finding commercial truck insurance for new drivers and new ventures can be so hard, and give some advice on how to do so successfully.
Types Of Insurance Commercial Truck Drivers Need
While there are endless types of commercial truck insurance for new drivers, a few policies are non-negotiable:
Auto Liability Insurance
Auto liability insurance provides protection against bodily injury and property damage that you may cause to others while on the job. It also covers your legal expenses if you are sued in court for damages caused by hitting another car, injuring someone, etc.
Cargo coverage policies cover damage to cargo being transported and stolen cargo.
Physical Damage Coverage
Physical damage coverage can be a separate policy or packaged with Auto Liability coverage. This will cover the costs of repairing damage to your own truck in the case of an accident, such as replacing damaged fenders, broken windshields, or mirrors.
Commercial General Liability Insurance
Commercial General Liability (CGL) insurance protects against bodily injury, personal injury, or property damage claims made by third parties in the event that you cause an accident off of the road (for example, if someone is injured while unloading pallets). It is recommended to be proactive and obtain a CGL policy at inception or renewal. If the policy isn’t added on inception or renewal, it can take 2-3 days to obtain a quote and add the coverage to your policy. Therefore, if you wait until a shipper requires CGL coverage to ask about adding it, you may miss out on a load. About 65% of BTP customers add CGL coverage at renewal for this reason, according to Ms. Peña.
Occupational Accident Coverage
Occupational accident coverage will provide wage replacement benefits and medical treatment if you get injured while on the job.
(Highly) Recommended Additional Insurance
Underinsured and Uninsured Motorist Coverage
If an accident occurs and the other driver is at fault, underinsured and uninsured motorist coverage protects you if the other driver doesn’t have enough insurance to cover your damages. Some, but not all, markets automatically include these coverages, and removing them does not lower the premium; it’s simply part of the package.
Non-Trucking (Bobtail) Liability Insurance
Non-trucking liability insurance, also known as Bobtail insurance, covers a truck that’s being driven without a trailer attached. For example, if after dropping off your load you travel to another city to pick up new cargo, this will cover you during the portion of the trip in which you are not hauling freight. (It does not, however, cover you if you are carrying an empty trailer – only if no trailer is attached.) It will also cover any damage to your truck or trailer that occurs when you are off the clock, for instance, if you get into a wreck while driving home from work or taking a lunch break.
Trailer Interchange Policy
A trailer interchange policy covers any damage done to trailers that are leased or rented from another entity, assuming both parties have signed a written trailer interchange agreement. It’s important to remember that Non-Owned Trailer coverage and a Trailer Interchange policy are not the same thing, and if you have Trailer Interchange and have an accident with a trailer considered non-owned, insurance will NOT cover the damage to the trailer.
Non-Owned Trailer Coverage
If you lease or rent a trailer without a trailer interchange contract, you’ll also want to invest in non-owned trailer coverage, as your trailer interchange policy will only protect you if you have a signed contract.
How Rates Are Determined
When determining how much to charge for commercial truck insurance for new drivers, insurance companies will look at many factors, including (but not limited to) the following:
The cargo you haul:
The heavier and more dangerous the cargo you carry is, the more damage it can cause, increasing the risk for the insurance company.
The distances you drive:
Trucks that are driven across the nation naturally experience more wear and tear than those driving local trips, and the longer a driver travels, the higher the risk that they could get drowsy or fall asleep at the wheel.
Type of truck you’re driving:
There are many different types of commercial vehicles, including tractor-trailers, straight trucks, combined units, etc., and each type carries its own set of risks.
Your driving history:
Your premium is partially determined by whether or not the insurance company deems you to be a good driver. When making this assessment, they’ll look at things like speeding tickets, DUIs, and if you have been involved in any recent accidents.
The area where you operate your trucking business plays a big role in how much you’ll pay for coverage because it affects risk levels (such as crime rates) and driving conditions (such as snow).
Is it Possible To Get Commercial Truck Insurance For New Drivers?
Getting commercial truck insurance for new drivers is a bit of a catch-22; no insurance company is going to cover a driver without experience, so it’s ideal to spend some time working in the industry first. You could choose to work at a yard, but the most ideal path for new drivers to get insurance is to start by working as a company driver at a large trucking company, preferably, with a 100+ truck fleet.
Large companies are more likely to have an insurance policy that does not require them to submit the drivers they have; instead, it’s the responsibility of the carrier to do the vetting. Large trucking companies are also more likely to facilitate shadowing and team driving programs to help new and first-year drivers become more experienced and comfortable behind the wheel. Ms. Peña’s recommendation for new drivers is to do your research and learn which companies will offer the best programs to support your level of driving experience.
Can New Ventures Acquire Commercial Trucking Insurance?
If you’re a new driver and you’re interested in becoming a business owner, it’s virtually impossible to do so without first driving for a trucking company. Once you have accumulated enough experience to start your own venture, getting properly insured will still be a bit of an undertaking, but it’s certainly more likely than when you were a fresh-faced new driver with zero experience under your belt.
When you approach an insurance agent, it’s helpful to have a resume ready to prove your experience thus far along with a business plan you can present. It’s also important to consider how much free cash you have on hand to help support “running your truck” the first year and for the following 2 years. Providing this information will help you look less risky to insurance markets who are reluctant to insure a new venture.
While there is a pathway to coverage for a fledgling venture, different insurance markets will treat you differently. Some markets simply won’t provide commercial truck insurance for new drivers or inexperienced owners—it’s seen as too much of a liability. Some specialized markets, such as those along the border, will also have restrictions on new ventures, but will offer better premiums if you have even a little experience (as little as 1-2 years) in the industry. Sometimes, your insurability simply comes down to the markets you must work with.
How To Get The Best Offer
New ventures often pay over double what businesses who have been in the industry more than two years do—there’s no avoiding this reality—but by working with an experienced insurance broker, also known as an independent insurance agent, you’ll be able to find the most cost-effective plan that provides the coverage you need.
Oftentimes, new owners believe they need to shop around with different insurance agents to find the best quote. Going this route actually won’t help you at all. That’s because most agents have access to the same or similar markets, and the first agent to request the quote is the one who receives the offer; all subsequent requests will be blocked. So, rather than going to multiple agents, find one who will take the time to service your business well. As long as you’re satisfied with the service, there’s no reason you need to shop around for a new agent.
Another thing to keep in mind if you shop around with multiple agents is that quotes are not always comparable. If one agent presents a quote with a premium that seems markedly lower than another quote, it’s likely not because they know how to get you a secret discount that nobody else knows about. Usually, the reason it’s so low is because it doesn’t include coverages that other quotes have included. By only comparing premiums and not delving deeper into what you’re actually being quoted for, you may miss out on coverages you need.
While it can be costly to get commercial truck insurance for new drivers or ventures, there are a few things you can do to lessen the financial burden over time, and one of the most important is to prioritize your safety scores. Businesses with multiple violations or crashes almost always see their next insurance premium go up (and that’s assuming they aren’t denied coverage altogether). By regularly servicing your vehicles, using technology such as ELD (an electronic logging device), and maintaining high driver retention rates, you’ll be able to lower your premiums over time as insurers see that you aren’t a high risk.
You can also lower your premium as a new venture and when renewing when you opt for a higher deductible in motor truck cargo and physical damage policies, but this isn’t an option for auto liability insurance. If you choose this route, you would have to pay more if an accident were to occur. Still, since the insurance company will have a smaller financial responsibility, they’ll typically give you a lower premium.
As you set yourself up for success in the future, remember that the markets and rates are always in flux and tend to change fast, and as a new venture, you need long-term vision. Recognizing the benefit of building long-standing partnerships with your insurance agent is just as important as building long-term partnerships with shippers and brokers. Your agent will shop your quotes while you focus on the other aspects of your business.
Simplify Your Trucking Activities With i2290
Finding affordable, comprehensive commercial truck insurance for new drivers is one of the biggest obstacles you’ll face as you set up a new venture. However, you can streamline some of your other essential trucking business activities. A great place to start? Filing Form 2290 and paying the HVUT with i2290. Our intuitive software will walk you through the process, automatically calculate your taxes for you, and get you your IRS-stamped Schedule 1 in a matter of minutes – it’s as easy as that. So, are you ready for a simpler, easier way to pay your trucking taxes? Create an account with i2290 today!
About BTP Insurance
For over 40 years BTP Insurance Services, LLC. has provided commercial insurance to large and small businesses across the nation with a unique focus on properly insuring commercial trucking and transportation businesses. Being an independent agency, BTP’s is a leader in experienced and objective insurance marketplace analysis with a daily focus on helping businesses land the right balance of insurance products to enjoy protection from that ‘one bad day’ without over-insuring.
BTP Insurance has offices in Laredo and Houston. Contact BTP Insurance today to get answers to all of your commercial trucking insurance questions!