Step 3: Get insurance coverage
Now that you have your company and equipment set up, you’re just a couple steps away from getting your business running. But before you hit the open road, you’ll need to make sure you have the right insurance policy that fits your needs.
Minimum insurance requirements
The FMCSA (Federal Motor Carrier Safety Administration) requires specific insurance coverage. Auto Liability Insurance is a primary requirement, with coverage amounts varying based on the type of goods transported:
- Non-Hazardous Cargo: $750,000
- Hazardous Cargo: $1,000,000
- Portable Tanks: $5,000,000
You will need to submit various forms to the FMCSA through your insurance company to obtain an MC number, such as:
- BMC-91 - public liability insurance
- BOC-3 - processing agents
- MCS-90 - endorsement that creates an obligation to pay any judgment resulting from negligence of operations
Auto Liability Insurance covers damages to property and body caused by your truck.
Cargo Insurance covers damages to the goods you haul. When you take possession of cargo, you are liable for any damages that happen until you deliver.
Physical Damage Coverage covers the cost of repair to your vehicle in case of accident, theft, fire, weather, or vandalism. This coverage is usually required if you finance your truck, and strongly recommended even if you own your truck outright.
Auto liability insurance and cargo insurance are mandatory to work with brokers and shippers.
Additional lines of insurance
Here is a list of other types of insurance, in order of what is most commonly held by small carriers.
General Liability Insurance protects you in claims for bodily injury, personal injury, property damage liability, advertising injury liability, medical payments, product & completed operations, and seven days or less coverage for damage to rented properties.
Non-Trucking Liability Insurance provides coverage for the use of a tractor for non-business purposes.
Bobtail Insurance provides protection for a tractor when it is operated without a trailer, whether under load or not. This can often be confused with Non-Trucking Liability Insurance, which covers your vehicle when you are using it for personal use.
Trailer Interchange Agreement Insurance provides coverage for damage to non-owned trailers when they receive physical damage while under a trailer interchange agreement. This is usually required for drop-and-hook work.
Passenger Accident Insurance provides coverage for the driver if a truck accident occurs while an uninsured passenger is in the vehicle.
Mechanical Breakdown Insurance offers coverage for out-of-pocket expenses related to repairs of the insured vehicle.
Optional Downtime Coverage takes effect when your commercial truck undergoes downtime, such as during repairs or maintenance.
Limited Depreciation Coverage helps cover the gap between the fair market value that the insurance will likely pay out and what you owe on the vehicle or the cost to replace the vehicle.
On-Hook Coverage provides coverage for vehicles that are not owned by your business during towing or hauling.
When entering the trucking industry, it is a requirement to purchase insurance to work with brokers and to protect you from unexpected factors. While the minimums have been set by FMCSA and brokerage companies, you will likely want to purchase more coverage depending on your operations. Having only the minimums in place may not be enough to fully protect you, so discuss this with your insurance company.
Investing in an appropriate policy can save you money in the long run and provide peace of mind while on the road.
Continue the New Authority Checklist series below:
New Authority Checklist 1: First Things First (Business Setup)
New Authority Checklist 2: Choose Your Player (Equipment)
New Authority Checklist 4: Show Me The Money (Invoicing & Factoring)
About TrueNorth
TrueNorth pioneers a new era for truckers, new carriers, and owner-operators. Born from a legacy of trucking roots, it transforms the industry's landscape with a cutting-edge operating system. By replacing outdated processes with a unified mobile app, TrueNorth empowers truckers with superpowers – a dispatcher, CRM, financial dashboard, and real-time market insights. Bridging the gap between traditional fleets and tech companies, TrueNorth champions truckers' profitability, offering tools, and support for streamlined operations. In a world where autonomy looms, TrueNorth remains the ally ensuring profits and efficiency for the heroes steering the wheels of commerce. Get started with TrueNorth today, and see how a trucker-first tech platform can revolutionize your operations.